Dawson shares released its 2024 semi-annual report. 2024H1 achieved revenue of 0.683 billion yuan, a year-on-year decrease of 35.5%, mainly due to the divestiture of the oil drilling business; net profit to mother 0.06 billion yuan, +21.3% year-on-year; net profit of 0.042 billion yuan after deduction of non-return mother, +16.0% year-on-year. Among them, the profit from the change in fair value of transactional financial assets is 18.22 million yuan. If this part of the change is not taken into account, the net profit returned to the mother increased by 70.0% in response to 24H1. The company's gross sales margin/net profit margin for the first half of the year was 24.4%/8.8%, an increase of 1.8/4.1pct. In the second quarter of this year, the company achieved revenue of 0.346 billion yuan, +2.5% month-on-month; net profit of 0.031 billion yuan, +6.2% month-on-month; net profit of 0.021 billion yuan after deduction of non-return mother, +4.0% month-on-month.

Q2 The company's gross sales margin/net profit margin was 23.8%/8.9%, and the month-on-month change was -1.2/0.3 pct.

Currently, the company's ultra-precision vacuum coating equipment includes three products. 1) Vacuum magnetron sputtering coating machine:

The first device was successfully commissioned at the customer site, and the device also began receiving orders in industries other than lithium batteries. 2) Vacuum magnetron sputtering evaporation composite coating machine: can achieve copper plating and aluminum plating on both sides. A press conference for this product was held in March this year. 3) Vacuum evaporation coating machine: At present, it has been possible to coat both sides of the roll with 1 μm aluminum foil. The operating speed is ≥17m/min. The first product was shipped on July 12 this year. The company is the first company in China to adopt a one-step full-dry process route. Subsequent products can be used in various fields such as lithium batteries, pan-semiconductors, photovoltaics, military aerospace, and consumer electronics.

Accelerate the “internal expansion and external expansion” layout and improve the strategic deployment of vacuum coating. In January of this year, the company increased the capital of Daniu Technology with 15 million yuan in cash. After the capital increase, it held 15% of the shares. Daniu Technology's business is mainly spot welding equipment in the lithium battery field, and has developed a complete ultrasonic roller welding machine, which has sold many units. In addition, the company invested 37.5 million yuan to jointly establish a joint venture with Ruishiwei. In the future, it will focus on the R&D and application of intelligent visual inspection equipment and process equipment such as semiconductors, optics, and new energy sources.

Share repurchase+equity incentives demonstrate confidence in the company's development. In July of this year, the company announced plans to repurchase shares for 30-60 million yuan within 3 months. By the end of August, the company had repurchased 1.668 million shares, accounting for 0.802% of the company's total share capital, for a total amount of 29.978 million yuan. In addition, in July, the company also announced an equity incentive plan. The plan is to grant 1.9418 million share options to no more than 50 people, including directors, executives, and core employees, accounting for 0.9336% of the company's total share capital. The performance assessment target is to increase net profit to mother by no less than 10% or increase in net utilization after deducting non-return to mother by no less than 25% in 2024; increase of no less than 10% of net profit due to mother or net utilization increase of not less than 25% in 2025. That is, if the exercise conditions are to be met, the company's net profit due to mother or net profit deducted from mother cannot be less than 2.25 or 0.184 billion yuan this year. The release of the share repurchase plus equity incentive plan demonstrated the company's strong confidence in subsequent development.

Profit forecast: Considering the slowdown in the expansion of production in the downstream lithium battery sector, we adjusted the company's net profit to mother for 2024-2026 to 0.226/0.296/0.376 billion yuan, an increase of 10.3%/30.9%/27.4%, corresponding to the 2024-2026 PE 16.0/12.3/9.6 times. Maintain a “buy” rating.

Risk warning: Downstream demand falls short of expectations, industrial development of composite fluid collectors falls short of expectations, and industry competition intensifies.