Event: The company publishes the 2024H1 report. 2024H1 achieved operating income of 0.658 billion yuan, a year-on-year ratio of -16%; net profit to mother of 0.094 billion yuan, or -19% year-on-year; realized net profit without deduction of 0.078 billion yuan, or -31% year-on-year.

2024Q2 achieved operating income of 0.364 billion yuan, -14% year over year; net profit attributable to mother 0.05 billion yuan, -30% year over year; realized net profit deducted from non-mother 0.044 billion yuan, -36% year over year.

Comment:

Heat pump exports are expected to gradually pick up, and the NEV thermal management business is growing rapidly. 1) 2024H1's revenue in the field of HVAC and refrigeration equipment was 439.3426 million yuan, a year-on-year decrease of 32.13%. We believe that with the recovery of heat pump exports, the scale of the company's heat pump revenue is expected to bottom out and rise. 2) The NEV thermal management sector's revenue was 202.9523 million yuan, an increase of 68.50% over the previous year. With the construction of the company's fund-raising project, the company's NEV thermal management capacity is expected to gradually increase, which is expected to support the company's performance growth.

Emerging racetracks such as robots continue to be laid out. 2024H's R&D expenses were 55.011 million yuan, an increase of 37.27% year over year. The company continues to increase investment in emerging fields, increase R&D investment in market segments such as application industries and robots in the field of automation, focus on key industries and models, give full play to the experience and advantages of R&D, and develop servo products integrating customer customization, industry customization and drive control, which is expected to create new growth points.

Profit forecast and rating: We expect the company's net profit to be 0.24/0.37/0.45 billion yuan in 2024-2026, respectively, up 13%, 50%, and 23% year-on-year. As of September 3, the market value corresponding to the PE valuation for 24 and 25 was 18/12 times, respectively, maintaining the “buy” rating.

Risk factors: risk of industry demand falling short of expectations; risk of iterative changes in technology; risk of raw material price fluctuations exceeding expectations; environmental protection and production safety risks, etc.