The company's 24Q2 revenue increased 24% year over year. The company's 24Q2 revenue was 0.26 billion yuan, +24.48% YoY, -2.55% month-on-month; realized net profit to mother 0.023 billion yuan, -1.55% YoY and -16.12%. Benefiting from the recovery of the global automotive market and the continued volume of customer orders, the company's revenue has maintained steady growth. At the same time, net profit to mother declined year-on-year due to increased storage fees due to increased scale and credit impairment losses and asset impairment losses totaling close to 20% of total profit.

Gross margin increased 0.22pct year-on-year in 24Q2. 24Q2's gross sales margin was 24.37%, +0.22pct year on year, -1.4pct month on month; net margin was 8.62%, -2.34pct year on year, -1.35pct month-on-month.

The core reason is that the company's financial expenses have risen sharply due to debt conversion costs, etc. 24Q2 The company's sales/management/R&D/ finance cost rates were 3.46%/3.85%/6.15%/-0.38%, respectively, -0.84/+0.02/-0.07/+4.40pct year-on-year, respectively.

Traditional center covers have evolved to low wind resistance wheel covers or wheel inserts, and the trend of industry upgrading is obvious. The company's core business is low wind resistance wheel covers, traditional center covers, conventional large wheel covers and wheel inserts (with traditional center covers and conventional large wheel covers). The industry has significant growth potential: 1) Low-wind resistance wheel covers are used for new energy vehicles, increasing the coverage area, reducing wind resistance, and increasing the cruising range by nearly 5%. Model 3, Tang EV, etc. are being deployed one after another. The penetration rate of this product is expected to increase from 16% in 23 to 43% in 25, and the market size is 1.1 billion yuan in 25; assuming a long-term sales space of 20 million NEV vehicles, the product market size is 2.8 billion yuan. The company's products support well-known overseas NEV companies and SAIC passenger car customers, etc., with a market share of 66% in '22, and more project support was achieved as NEV penetration increased in '23. 2) Wheel insert products provide personalized decoration and reduce wind resistance. Wheel inserts are 5-7 per wheel, for fuel vehicles (personalized decoration) and new energy vehicles (reducing wind resistance). The market size is expected to reach 2 billion yuan in 25 years. The average unit price of the company's inserts is about 10 yuan. They are equipped with BYD and the like for quick release, and there is plenty of space.

Actively expand interior products and gradually release new production capacity. The company's automotive interior parts business has been targeted for several projects, and some projects have been delivered in batches. The Nantong automotive interior and exterior parts and automotive lightweight materials production project has initially completed plant construction and is expected to be completed and put into operation this year. The company continuously explores the application of carbon fiber composites in new fields and products, continuously enriches the product matrix, and cultivates new business growth points.

Risk warning: Customer expansion is not as fast as expected, and capacity expansion is not as fast as expected.

Investment advice: Lower profit forecasts and maintain the “better than market” rating. The company's low wind resistance wheel hub cover volume; DAG enhances overseas customer acquisition capacity; continues to reduce costs and increase marginal profitability; optimistic about the company's customer expansion and profit improvement due to product structure changes. Considering that the sales volume of car companies fell short of expectations in the context of this year's price war, we lowered our profit forecast. The net profit for 24/25/26 is expected to be 1.16/1.58 /0.189 billion yuan (the original forecast value was 0.135/0.183/0.217 billion yuan), maintaining the “superior over market” rating.