Incidents. On August 27, the company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 0.645 billion yuan, an increase of 28.10% year on year; realized net profit of 93.8271 million yuan, an increase of 29.05% year on year; realized net profit of 72.4923 million yuan after deduction, an increase of 49.89% year on year.

24H1's revenue performance has been growing steadily, and the production capacity layout has been continuously improved. The company focuses on automotive electronics, intelligent consumption, medical and personal care, industrial automation, etc., and continues to promote product technology innovation; continuously strengthens the “Project Iron Five” operation mechanism, enhances collaboration capabilities, ensures rapid progress and successful delivery of projects, and helps the company's performance grow steadily. In the first half of 2024, the company achieved revenue of 0.645 billion yuan, a year-on-year increase of 28.10%; net profit to mother was 93.8271 million yuan, an increase of 29.05% year-on-year. By product, the company achieved revenue of 0.34 billion yuan/0.153 billion/ 87.2298 million/ 15.4934 million yuan/ 15.4934 million yuan in the first half of the year, accounting for 52.65%/23.71%/13.52%/2.40% of total revenue, respectively. Looking at a single quarter, 2024Q2 achieved revenue of 0.333 billion yuan, up 18.20% year on year and 6.52% month on month. 2024H1's gross margin level was 31.23%, up 3.19pct year over year. The company continued to increase investment in product technology research and development. 2024H1 incurred 76.3472 million yuan in R&D expenses, an increase of 33.11% over the previous year, and the R&D cost rate was 11.83%. The company continuously upgrades products, improves the precision of equipment manufacturing, and better matches customer needs. Furthermore, in line with business development, the company continues to promote the construction of Dongguan Zhaowei Electromechanical Industrial Park and Suzhou Zhaowei Drive Industrial Park, and the production capacity layout has been continuously improved.

The multi-track layout for automotive electronics, robotics, etc., and the implementation of equity incentive plans boosts confidence. The company continues to carry out management changes, changing the R&D model for customized products to actively investigate customer application scenarios to accurately grasp market needs; at the same time, actively innovate products and upgrade processes. In the automotive electronics business, the company collaborated with automobile manufacturers and automotive smart screen suppliers to develop solutions for automobile ceiling screens, offset screens and rotating screens using a “DC motor+parallel drive+worm gear” transmission structure, which solved the problems of small space, low noise and high reliability requirements in human-computer interaction products; the company has completed the design and development of innovative products such as automobile spools, precision solenoid valve valve stem filters, and ceiling screens. Some products have already entered mass production stage. The company has a forward-looking robot technology circuit. Based on the high accuracy and small size characteristics of the company's micro transmission and micro drive system products, it is compatible and collaborates with motion control technology in the field of robotics, and has developed bionic robot dexterous hand products. The product uses a full driving mode with a high degree of freedom. It can simulate almost all human hand shapes and delicate movements, and achieve good application results in complex gripping and other scenarios. Meanwhile, in August 2024, the company issued a draft equity incentive plan to grant no more than 2.5254 million shares to incentive recipients. The target trigger values of the current equity incentive plan for the 2024-2025 performance assessment were revenue reaching 1.3 billion yuan/1.48 billion yuan, respectively, and the target values were revenue reaching 1.35 billion yuan/1.56 billion yuan, respectively. We believe that the company continues to increase investment in R&D, forwardly lay out the robotics business, and introduce equity incentive plans to continuously boost employee confidence, and the company's future performance is expected to grow steadily.

Profit forecasting and investment ratings. We expect the company's 2024-2026 net profit to be 0.204/0.255/0.325 billion yuan, and the 2024-2026 EPS will be 0.85/1.07/1.36 yuan, respectively. The current stock price corresponds to PE 45/36/28 times, respectively. As the company continues to increase investment in R&D, forwardly lay out the robotics business, and implement equity incentive plans to help the company develop in the long term, we continue to be optimistic about the company's future performance development and maintain a “buy” rating.

Risk warning: risk of macroeconomic fluctuations; risk of market competition; risk of tight supply of raw materials and price fluctuations; risk of rising labor costs.