Baolong Technology released its 2024 annual report: in the first half of 2024, it achieved revenue of 3.18 billion yuan, +21.7% year on year, net profit of 0.15 billion yuan, -19.4% year on year; gross profit margin 27.1%, -0.7 pcts year on year; net profit margin 4.9%, -2.3 pcts year on year. Among them, the second quarter achieved revenue of 1.7 billion yuan, +19% year over month; net profit of 0.08 billion yuan year on year, -11.4% year on month, +18.1% month on month; gross profit margin of 25.1%, -2.31 pcts year on year, -4.37 pcts month on month; net profit margin of 5.2%, -1.4 pcts year on year, and +0.6 pcts month on month.

Air suspensions, sensors, and TPMS continued to grow in the first half of 2024, with a variety of products exclusive to new energy vehicles. The year-on-year growth rates of air suspension, sensors, and TPMS revenue in the first half of 2024 were 44%, 52%, and 20%, respectively. In response to automobile electrification needs, products specific to new energy vehicles such as BUSBAR, liquid cooling plates, and current sensors are deployed.

Lightweight and intelligent products meet the needs of the industry. 1) With the promotion of energy saving and emission reduction policies and the acceleration of automobile electrification, the demand for lightweighting by automakers is urgent and the lightweight layout is being accelerated. The automotive lightweight market continues to develop rapidly, and the company's hydroformed structural parts and aluminum parts will benefit from it. 2) As the level of intelligent driving is upgraded, the demand for environmental sensing sensors in bicycles continues to rise, which will bring a huge incremental market to the company's intelligent driving products such as cameras, millimeter wave radars, ultrasonic radars, and domain controllers.

Profit forecast and investment advice: We expect the company to achieve revenue of 71/88/108 billion yuan in 2024/25/26, net profit to mother of 0.402/0.587/0.773 billion yuan, corresponding EPS of 1.90/2.77/3.64 yuan. Referring to comparable companies, we believe Baolong Technology's reasonable PE in 2024 is 20 to 25 times, and the reasonable value range is 37.93 to 47.42 yuan.

Risk warning: Global passenger car sales have fallen short of expectations, and raw material prices have risen sharply.