Charging module business drives year-on-year increase in revenue

1H24 achieved revenue of 0.459 billion yuan, +39.1% year-on-year, and net profit of 0.02 billion yuan to mother, or -43.8% year-on-year. We maintain our profit forecast. We expect the company's net profit to be 0.154/0.23/0.379 billion yuan in 2024-2026, respectively. Referring to the consistent expectations of comparable company Wind, the average PE value for 24 years was 17 times. We gave the company 17 times reasonable PE for 24 years, corresponding to the target price of 14.96 yuan (previous value 20.32 yuan), maintaining the “increase” rating.

Charging modules increased revenue and efficiency, and net interest rate declined year-on-year

1H24's revenue was 0.459 billion, +39.1% year over year, mainly driven by a year-on-year increase in revenue from the charging power supply business for charging and switching stations (mainly charging modules). Net profit to mother was 0.02 billion yuan, or -43.8% year on year, after deducting non-net profit of 0.018 billion yuan, or -18.6% year over year. It is mainly due to intense market competition in fields such as charging power supplies for charging and switching stations for new energy vehicles. 1H24 achieved a gross profit margin of 29.08%, -2.80pct year on year; a net profit margin of 4.40%, -6.48pct year on year. Profitability declined year-on-year, mainly due to a decrease in other earnings in the current period. The cost rate during the 1h24 period was +1.38 pct to 25.87% year on year. The main reason was that the R&D cost rate and management cost ratio were +0.79/+0.64 pct year on year. The main reason was that the company continued to increase investment in R&D and that the new Tonghe Plant in Shaanxi increased the cost rate when it was put into use.

Charging modules continue to be iterated to speed up overseas deployment

1H24's charging and switching station charging power business revenue was 0.294 billion yuan, +55.34% year over year, gross profit margin 22.87%, -2.58pct year on year. The company has been deeply involved in charging modules for more than ten years, has a stable dominant position, and has achieved nine generations of changes. The company takes a two-pronged approach through R&D and process improvement to create a cost-effective product. The company introduced fully automated gluing production equipment and first introduced double-sided gluing for all products in the industry, greatly improving product reliability. The company's products have obtained CE certification and UL certification. Many products have entered the European and North American markets, and the global market share of charging modules continues to increase. With scaling+improved product structure+increased overseas share, there is plenty of room for improvement in the company's gross margin.

Grid business revenue increased year-on-year, and the profitability of military power supplies significantly increased 1H24 power grid industry business revenue of 0.083 billion yuan, 11.75% year-on-year, gross profit margin of 37.01%, year-on-year - 3.02 pct, and profitability remained stable. The aerospace industry's business revenue was 0.043 billion yuan, -6.97% YoY, with a gross profit margin of 52.20%, +12.35pct YoY. Revenue declined but profitability increased significantly.

The transformation of the new power system is accelerating, and grid investment is expected to maintain a high growth rate. Among them, intelligent power grid construction has become the focus of investment, and the company is expected to benefit and maintain steady growth.

Risk warning: Sales volume of charging module products fell short of expectations, gross margin in overseas markets fell short of expectations, fluctuations in raw material prices and domestic substitution fell short of expectations.