The company announced its 24 semi-annual report, with H1 revenue of 9.65 billion +36.6% YoY, net profit of 0.87 billion +6.4% YoY after deducting non-return of 0.77 billion, +40.5% YoY, gross profit margin of 45.2% yoy +2pcts, net profit margin 9.4% yoy -2.5pcts, and expenses rate of 34.2% yoy +0.4pcts year-on-year. Our review is as follows:

Q2 Performance exceeded expectations. Against the backdrop of pressure on the overall growth of the consumer industry, the company's H1 revenue growth rate is still accelerating. The difference between profit to mother and non-return growth rate is mainly due to a high non-recurring income base, such as changes in fair value in the first half of last year, and the main business profit growth rate continues to rise. Q2 alone, revenue 5.27 billion +42.4% YoY +20.4%. The year-on-year growth rate was mainly due to the company's new product launch and channel deepening, the performance of charging, energy storage, security, and smart video products all performed well, and the improvement of the cleaning business; net profit to mother 0.56 billion +9.2% YoY +80.7% month-on-month, minus 0.45 billion YoY +42.8% month-on-month; gross profit margin of 45.2% YoY +0.6pct + month-on-month 0.1 pct, net profit margin 11.0% yoy - 3.2 pcts month-on-month +3.5 pcts, and the period expense ratio was 33.4% yoy +0.2 pcts. The improvement in gross margin was mainly due to factors such as the company's efficiency improvement and cost reduction, and supply chain optimization.

All three H1 segments achieved growth of more than 30%. By product: 1) Charging energy storage: revenue 4.97 billion yuan +42.8% YoY, gross profit margin 43.0% YoY -0.4pct. The rapid revenue growth is mainly due to the rapid growth of core digital charging products as demand recovers and the company continues to innovate and launch new products, and the newly expanded consumer-grade energy storage business is also growing rapidly; 2) Intelligent innovation: revenue of 2.36 billion yuan +35.3% YoY, with a gross profit margin of 48.3% YoY +3.3pcts, mainly benefiting from the rapid development of new product lines for household security products, and eufy The competitiveness of new products such as the X10Pro Omni has improved, driving the improvement of the cleaning business; 3) Smart video: revenue of 2.31 billion yuan +30.8% year over year, and gross profit margin of 46.6% year over year +4.9 pcts, mainly from audio product contributions.

H1 Other third-party platforms and independent sites continue to grow rapidly, and key potential markets are expanding smoothly. Sub-channels:

Online revenue of 6.73 billion yuan was +38.5% YoY, with a gross profit margin of 48.6% YoY +1.3 pcts. Among them, Amazon platform revenue still achieved rapid growth of 27.7%, while other third-party platforms and six independent sites continued to develop rapidly, with revenue growth rates reaching 67.4% and 102.9% respectively; offline revenue of 2.92 billion yuan +32.3% YoY, with a gross profit margin of 37.3% YoY +3.2pcts, mainly because the company continues to rapidly develop offline channels in various markets. By region: Overseas revenue of 9.27 billion yuan +36.4% year on year, gross profit margin of 45.4% year on year +1.6 pcts. Companies in mature markets such as North America/Europe/Japan still achieved upward growth through new product expansion and channel deepening, with revenue growth of over 40% in the North America/Europe market; also showing impressive performance in markets that currently account for little but have potential for development, stemming from the company actively exploring platform and channel characteristics and consumer demand preferences. The revenue growth rate in Australia/Middle East/mainland China reached 22.9%/39.2% /39.3%

Looking forward to the future, I am optimistic that new products such as energy storage and security and channel deepening will help the company grow in the long term, and focus on the AI layout on the end side. In the short term, the second half of the year will enter the traditional peak season, and the overall demand for the company's main core products is expected to continue to improve. Looking at the medium to long term, in the charging and energy storage sector, the company hopes to consolidate its leading position in the digital charging field and continue the growth trend. In terms of energy storage, we are optimistic that the company will build on its long-term accumulation of small to medium charging products, and open up new growth space for the charging business with its channel advantages and competitiveness in overseas regions such as North America. In the intelligent innovation sector, the company's security products are competitive in overseas markets, there is still plenty of room for development, and the cleaning business continues to improve. In the smart video sector, the company's audio business continues to grow as products continue to innovate, and the brand's influence continues to grow. In terms of channels, the company is based on the “online+offline” omni-channel diversified sales development strategy, continuously improving the multi-channel and multi-level sales system, while strengthening the development of potential markets such as Australia, New Zealand, and Southeast Asia, and building the company's long-term growth potential.

Furthermore, the company stated that it is optimistic about the development of end-side AI, and suggests focusing on AI to empower the company's product line innovation and potential new product layout.

Investment proposal: The company is deeply involved in the field of digital charging and laying out new energy storage tracks. At the same time, it is actively expanding the fields of smart homes, wireless audio, etc., and continues to deepen the channel side to form a three-dimensional layout online, offline, and in multiple regions. Based on factors such as Q2 performance exceeding expectations and equity incentive costs, we raised 24-26 revenue to 22.92/28.68/34.78 billion, and net profit to mother of 1.93/2.29/2.72 billion, corresponding to PE 17.4/14.7/12.3 times. We are optimistic that the company will continue to open up the company's growth ceiling through product-side category expansion and channel side deepening layout, and maintain an “increase” investment rating.

Risk warning: trade frictions are intensifying, demand falls short of expectations, raw material prices fluctuate, and market competition intensifies.