The company announced its 24th mid-year report. 24H1 revenue of 1.973 billion was +24.64% year over year, net profit to mother was 0.096 billion +903.93% year over year, and net profit after deducting non-return to mother of 0.091 billion +3356.73% year over year. Gross profit margin 19.69% yoy +2.42pcts, net profit margin 4.87% yoy +4.27pcts. In the downstream application structure, servers accounted for 38.21%, +19.58pcts year on year; export sales revenue +21.49% year over year. The reviews are as follows:

The Q2 results were in line with previous guidelines, and profitability was further enhanced. Q2 revenue 1.09 billion +29.5% YoY +23.1%, net profit to mother 0.07 billion +412.8% YoY +163.3%, net profit not attributable to mother 0.066 billion +568.2% YoY +173.1%. Gross profit margin 20.36% yoy +3.95pcts month-on-month, net profit margin 6.40% yoy +4.78pcts month-on-month +3.29pcts.

Progress in various business areas: 1) Network communication sector: PCBs related to 800G high-speed switches have been certified by many important customers, and H1 has achieved small-batch delivery, and the company already has batch delivery capabilities. Currently, we are working closely with customers to actively promote the development of next-generation 224G products; 2) Servers: AI server PCBs have been certified for multiple customer projects, and H1 has achieved mass delivery, further increasing market share; 3) Automotive Electronics: H1 is growing steadily, strengthening cooperation with global automotive electronics and electric vehicle industry leaders, and successfully developing related products in key technology sectors such as autonomous driving/smart cockpit/power energy.

Looking ahead to 24/25, the company is expected to return to a rapid growth trajectory with strong development in communication networks, AI servers, and automotive electronics. In the field of high-end communication network equipment, the company continues to actively cooperate with leading customers to develop PCB products in application fields such as 5.5G&6G/satellite communication/800G switches/optical modules, and is expected to increase the unit price of the product over 24 years; in the server field, the company continues to optimize the server product structure and focus on AI server product research and development. It has developed many server customers including Amazon, and AI-enabled motherboards and accelerator card products have been mass-produced. With the release of production capacity in Dongcheng Phase IV, it is expected that AI product revenue will continue to expand; in the automotive electronics sector The company continues to increase investment in dedicated automobile lines and continues to develop more new technologies in segments such as intelligent driving/power energy/smart cockpit. With the increase in production capacity in Ji'an and Dongcheng and the introduction of batch orders from more new customers, the scale continues to grow rapidly. In summary, along with the continuous increase in global computing power demand, domestic data center expansion, demand for high-computing power servers, and new platform upgrades, etc., the three-phase automotive trend is evolving at an accelerated pace, and the company hopes to continue to benefit from the rapid development of segments and the dividends of new production capacity.

Investment advice: The company has been deeply involved in communication networks, HPC, and automotive electronics circuits for many years. It has mainstream customer resources and has strong core competitiveness. With the continuous release of new production capacity, the company will continue to benefit from the three main business lines in the long term and return to a rapid growth path. We forecast 24-26 revenue of 4.58/6.19/8.04 billion, net profit of 0.22/0.61/0.95 billion, corresponding EPS 0.27/0.73/1.14 yuan, corresponding to PE 72.5/26.3/16.9 times. The market is concerned about the recent lifting of the ban on restricted shares, that is, restricted shares of the initial original shareholder were lifted on August 26, accounting for 62.93% of the total share capital. According to our tracking, the majority shareholder of the company has no intention of reducing their holdings. This time The limited impact of lifting the ban does not pose a significant risk, so we maintain an “increase in holdings” investment rating.

Risk warning: Prices of upstream raw materials fluctuate; customer development falls short of expectations; downstream demand falls short of expectations; new production capacity falls short of expectations; industry competition intensifies.