Incident: The company released its 2024 semi-annual report. Revenue for the first half of the year was 6.164 billion yuan, +33.07% year on year; net profit to mother was 0.411 billion yuan, +9.46% year over year; after deducting non-net profit of 0.411 billion yuan, +9.48% year on year.

Among them, Q2 achieved revenue of 3.117 billion yuan in a single quarter, +26.74% year on month, +2.30% month on month; net profit to mother 0.206 billion yuan, -7.66% year on year, +1.13% month on month; after deducting non-net profit of 0.209 billion yuan, -7.66% year on year, +3.22% month on month.

Exchange gains and losses cause financial expenses to impact profitability. 24H1's gross profit margin was 19.98%, +0.1 pct year on year, 6.62% year on year, and -1.5 pct year on year. The gross margin improved, and the net margin fluctuated due to exchange gains and losses during the period. Q2 The gross profit margin for the single quarter was 19.86%, -0.1/-0.2pct month-on-month, the net profit margin was 6.58%, and -2.4/-0.1pct, respectively. The company's rate for the first half of the year was 11.88%, +2.3 pct compared to the previous year, mainly due to a sharp increase in financial expenses due to exchange gains and losses.

Sales and R&D rates were reduced during the period. Among them, the sales/management/R&D/finance rates were 1.7%/4.9%/4.2%/1.1%, respectively, -0.3/-0.3/+2.4pct year-on-year, respectively.

The interior and exterior parts business grew rapidly. During the reporting period, the company achieved support for more new energy vehicle projects, such as Ideal Auto, Geely Automobile, GAC New Energy, BYD, NIO Auto, and internationally renowned electric vehicle companies. Interior parts in the pillar business continued to grow rapidly. Among them, instrument panel assembly/roof cabinet assembly/door panel assembly/interior accessories revenue was 40.80/0.072/0.931/0.206 billion yuan, respectively, up 35.48%/54.71%/18.70%/13.38% year on year; the volume and price of exterior parts in the expanded business rose sharply. Among them, bumper assembly sales volume +410% year over year, revenue +387% to 0.142 billion yuan, exterior accessories sales +81% year on year, revenue +148% year on year 0.096 billion yuan.

The internationalization process accelerates the creation of a leader in decoration parts. The internationalization strategy progressed steadily: In March 2024, the company held a board of directors to invest 45 million euros to meet the expansion of the production capacity of the Slovak Xinquan project to better serve local customers and develop business in the European market; in May 2024, the company set up subsidiaries in Delaware, California and Texas, respectively, to develop business in the US market, and the company's internationalization strategy was further promoted. Actively carry out base construction and rationally plan the industrial layout: During the reporting period, the company actively promoted the construction of an overseas subsidiary's Mexican production base expansion project and a Slovak production base construction project to better meet the automotive trim support needs of new models from existing customers and potential customers in the future. We are committed to better serving the company's customers, while continuously developing the international market, and striving to make the company's automotive accessories products an internationally competitive national brand.

Investment advice: As a leader in automotive accessories, the company continues to increase the value of bicycles through the expansion of interior and exterior parts categories, and is actively expanding at home and abroad. The company is growing into a leading global accessories company. Revenue for 2024-2026 is expected to be 13.8/17.9/21.9 billion yuan, and net profit attributable to mother is 1.07/1.451/1.848 billion yuan, respectively. The corresponding PE is 16.75/12.36/9.70 times, respectively, maintaining the “buy” rating.

Risk warning: Automobile sales fall short of expectations, overseas business expansion falls short of expectations, intensification of price wars exceeds expectations, and progress in new product development falls short of expectations.