Event: On August 30, 2024, the company released its 2024 semi-annual report. The company 24H1 achieved revenue of 28.988 billion yuan, a year-on-year increase of 4.08%; realized net profit to mother of 1.922 billion yuan, an increase of 0.97% over the previous year.

In the 24Q2 quarter, the company achieved revenue of 13.071 billion yuan, a year-on-year increase of 7.94%; net profit to mother was 0.841 billion yuan, an increase of 19.85% over the previous year.

By 24H1 business situation, the low-pressure sector achieved revenue of 11.303 billion yuan, an increase of 2% over the previous year. The PV sector achieved revenue of 16.164 billion yuan, which was basically the same as the previous year. Among them, PV power plant development and operation was 3.617 billion yuan, up 33%; PV power plant sales and engineering contracts were 11.852 billion yuan, down 6% year on year; and energy storage and inverter sales were 0.695 billion yuan, up 18% year on year.

Profit & expense side: The company's 24H1 achieved a gross profit margin of 25.35%, a year-on-year increase of 3.06 pcts, a net profit margin of 8.75%, and a year-on-year decrease of 0.32 pcts. The cost rate for the 24H1 period was 12.94%, an increase of 2.06 pcts year-on-year.

Low-voltage appliances: China deepens channels & explores industry needs, and the international focus is on localization strategies.

1. Zhengtai China: 1) Continued channel deepening: Zhengtai took the lead in optimizing channel layout in provincial capitals, key industrial cities, and emerging markets. “R&D, production and marketing” collaboration, technology pioneering, and on-site service expansion, focusing on breaking through the OEM, factory, construction and other industry markets. The new generation of OEM-specific products achieved sales exceeding 100 million yuan, cooperated with more than 50 leading customers and signed annual cooperation agreements with commercial building customers such as hotel chains; 2) Exploring industry needs: Zhengtai accurately understands the new needs of new industry applications and segments, and is deeply involved in the industry and expanding the “four new” businesses in multiple dimensions. The “four new” performance contributed more than 20%, and the professional industry market increased 33% year-on-year. 3) Service empowerment: Continuously improve fast and efficient delivery services and delivery and fulfillment capabilities, establish technical service stations integrating “sales+customer service” in industrial clusters and cities with high market share based on on-site services such as “regional sales, technical solution support, installation and commissioning services, and equipment inspection, operation and maintenance”.

2. Zhengtai International: 1) Focus on localization: The company simultaneously accelerates the optimization of the global internal management and operation system infrastructure, strengthens the construction of regional headquarters and localized subsidiaries, and forms demonstration zones in countries such as Saudi Arabia and Mexico. 2) Increased global channel layout: The company has successfully added more than 30 new dealers and wholesalers, entered the short list of more than 10 leading new energy developers, and successfully won bids for more than 1 billion+ strategic projects such as the Italian National Electric Power Company, showing positive competitiveness and business vitality.

Household photovoltaics are developing with high quality, and market competitiveness continues to improve. In the first half of 2024, Zhengtai Aneng added more than 6GW of installed capacity and sold about 3GW of power plants. As of 24H1, Zhengtai Aneng's own installed capacity exceeds 17GW. Zhengtai An Energy continues to strengthen the depth and breadth of its channel network. As of 24H1, the company has recruited nearly 2,700 agents, covering 29 provincial administrative districts and nearly 1,800 districts and counties.

Investment advice: We expect the company's 2024-2026 revenue to be 65.604, 73.488, and 82.438 billion yuan, respectively, with corresponding growth rates of 14.6%, 12.0%, and 12.2% respectively; net profit to mother is 4.41, 5.095, and 5.806 billion yuan, respectively, corresponding growth rates of 19.6%, 15.5%, and 13.9%, respectively, based on the closing price of August 30, corresponding to the 2024-2026 PE will be 9X, 7X, 6X. Maintain a “Recommended” rating.

Risk warning: risk of raw material price fluctuations; risk of exchange rate changes; risk of asset impairment.