Key points of investment:

Performance exceeds the forecast center, improving profitability

24H1 achieved revenue of 2.473 billion, a year-on-year increase of 30%; achieved net profit of 0.246 billion yuan, a year-on-year increase of 52%, exceeding the performance forecast center; withholding 0.244 billion yuan, an increase of 55% year-on-year.

Gross margin reached 23.3%, up 1.56pct year on year; net profit margin reached 10.0%, up 1.39pct year on year.

24Q2 achieved revenue of 1.438 billion, up 21% year on year and 39% month on month; realized net profit of 0.157 billion yuan, up 32% year on year, up 74% month on month; after deducting not 0.155 billion, up 37% year on year and 74% month on month. 24Q2 gross margin reached 23.4%, up 0.7 pct year on year and 0.3 pct month on month; net profit margin reached 10.9%, up 1.0 pct year on year, up 2.2 pct month on month.

Classification by industry line: energy storage/photovoltaic/wind power is growing faster

24H1 PV industry line revenue was 1.097 billion yuan, up 32% year on year; wind power industry line revenue was 0.588 billion yuan, up 25% year on year; energy storage industry line revenue was 0.332 billion yuan, up 62% year on year; data center industry line revenue was 0.118 billion yuan, up 4% year on year.

With its leading edge in box-type substation products in the domestic new energy market and overseas market layout (it has set up overseas teams, used in more than 40 countries, spread across Southeast Asia, Europe, the Middle East and North America markets), the company is expected to steadily achieve breakthroughs.

By product classification: transformers doubled, gross margin was basically stable, 24H1 box-type substation product revenue was 1.607 billion yuan, up 23.45% year on year, gross profit margin was 22.11%, up 1.63 pct year on year; revenue from complete switch cabinet products was 0.269 billion yuan, down 6.89% year on year, gross profit margin was 20.13%, up 1.13 pct year on year; transformer product revenue was 0.474 billion yuan, up 110.21% year on year, achieving rapid growth. The gross margin reached 25.79 %, a year-on-year decrease of 0.99 pct.

Profit forecasting and investment advice

We expect the company's net profit for 2024-2026 to be 0.65/0.83/1.04 billion yuan (previous forecast was 6.14/8.29/-), up 30%/28%/26% year-on-year, corresponding to the current market value PE of 14/11/9 times. We believe that the company has a strong position in the field of new energy photovoltaics and wind power, and the overseas layout is gradually opening up, which is expected to benefit more from the high demand in the industry and maintain a “buy” rating.

Risk warning

Domestic new energy installations fall short of expectations; the competitive landscape deteriorates; accounts receivable balance is at high risk; customer development progress falls short of expectations; raw material prices change; and customer concentration is high.