Incidents:

Ke Li Sensor released its 2024 semi-annual report. 2024H1 achieved operating income of 0.555 billion yuan, a year-on-year increase of 9.42%; net profit to mother of 0.117 billion yuan, a year-on-year decrease of 16.57%; after deducting non-net profit of 0.1 billion yuan, an increase of 5.73% year-on-year. 2024Q2 achieved revenue of 0.307 billion yuan in a single quarter, up 6.76% year on year; net profit to mother was 0.074 billion yuan, a decrease of 12.21% year on year; after deducting non-net profit of 0.061 billion yuan, a decrease of 2.22% year on year.

Huahong Technology is also driving steady revenue growth, and changes in fair value affect profitability.

2024H1, the steady increase in the company's revenue mainly comes from Huahong Technology's merger. In the first half of the year, Huahong Technology achieved revenue of 41.3075 million yuan and net profit of 6.0985 million yuan. Furthermore, the company's overall demand for mechanical sensors was stable. On the profit side, 2024H1, the company's comprehensive gross profit margin was 43.43%, up 0.79pct year-on-year, and relatively stable. Growth was also achieved after deducting non-net profit. The increase was lower than revenue mainly due to the influence of minority shareholders' equity in most of the new mergers and acquisitions subsidiaries. The net sales margin was about 23.55%, down 5.82 pct from the previous year, mainly due to the increase in 1. New consolidated subsidiaries and interest expenses in the current period, which led to an increase of 1.61 pct in the period; 2.

It is due to reduced return on changes in fair value and return on investment. For example, due to stock price fluctuations, Chicheng shares held by the company generated fair value change profit and loss of 21.105 million yuan in the first half of the year, affecting non-operating net profit of 17.9393 million yuan, etc.

Actively carry out mergers and acquisitions to continuously build a sensor forest. Focusing on the mechanical sensor business, the company focuses on investing in various physical sensors such as robotics, touch, vision, and inertial guidance, and lays out the Internet of Things and intelligent equipment based on sensor application scenarios.

With 2024H1, the company has basically achieved the strategic investment task of “three controls and one participation”. By holding Ningbo Zhixing IoT Technology Co., Ltd., Shanghai Feixuan Sensor Technology Co., Ltd. and Suzhou Yushan Sensor Technology Co., Ltd., the company has strengthened its business layout in the fields of smart storage, current sensors and water quality sensors. In addition, the company also participated in Ningbo Midfangge Semiconductor Technology Co., Ltd. to obtain high-quality and cost-effective domestic replacement chips.

The three additional holding subsidiaries will contribute to the company's development starting in the second half of 2024.

Machine sensors are actively arranged, and samples of six-dimensional force/torque sensors have been sent from many companies. Six-dimensional force/torque sensors and tactile sensors are key components of robots. By enabling robots to sense forces in the external environment in real time, they can achieve more accurate movements and operations.

2024H1, the company has completed the development of a six-dimensional force/torque sensor product series for humanoid robot wrists, ankles, industrial arms, and collaborative arm ends, and has sent samples to many domestic cooperative robot and humanoid robot customers. The tactile sensor has begun cooperation with many companies and universities, and is also being developed in a self-developed mode. Currently, it is still in the R&D verification stage.

Investment advice:

We expect the company's net profit to be 0.317/0.362/0.413 billion yuan in 2024-2026, an increase of 1.5%/14.1%/14.2%, corresponding PE levels of 20/18/16 times, respectively. Considering the steady expansion of the company's sensor business, it actively deployed robot sensors, and successfully developed a variety of six-dimensional force/torque sensor products. The target price for 6 months was 31.36 yuan, corresponding to 28XPE in 2024, and maintained a “buy-A” rating.

Risk warning: macroeconomic cycle fluctuations, robot promotion falls short of expectations, market competition intensifies, product iteration falls short of expectations, and impairment of goodwill.