Key points of investment:

Anke Innovation released its 2024 semi-annual report. 1H24's revenue was 9.648 billion yuan, up 36.55% year on year; net profit to mother was 0.872 billion yuan, up 6.36% year on year, after deducting net profit of non-return to mother of 0.766 billion yuan, up 40.53% year on year. The diluted EPS was 1.65 yuan, and the return on net assets was 10.44%. Net operating cash flow was $0.841 billion, up 37.91% year over year. Mid-term dividend: Cash dividend of 6 yuan for every 10 shares.

Brief review and investment advice.

1. 1H24's revenue was 9.648 billion yuan, up 36.55% year over year, of which 2Q revenue was 5.271 billion yuan, up 42.43% year on year. 1H24 gross profit margin was 45.18%, up 2 pcts year on year. Among them, the gross margins of charging energy storage, intelligent innovation, and smart video products were 42.98%, 48.30%, and 46.62%, respectively, with year-on-year changes of -0.42, 3.27, and 4.91 pcts; 2Q24 gross profit margin was 45.23%, up 0.55 pct year on year.

(A) Subregion: 1H24 North America, Europe, Japan, Middle East, mainland China, and Australia each increased 40.68%, 44.60%, 21.50%, 39.17%, 39.30%, and 22.91% year-on-year, accounting for 47.95%, 21.27%, 13.40%, 5.89%, 3.91%, and 3.56%, respectively.

(B) By product: Revenue from charging and energy storage, intelligent innovation, and smart video increased by 42.81%, 35.33%, and 30.84%, respectively, over the same period last year, with main revenue accounting for 51.56%, 24.46%, and 23.93%, respectively.

(C) By sales channel: Online revenue of 6.73 billion yuan increased by 38.48%, accounting for 69.75% of revenue; offline revenue of 2.918 billion yuan increased by 32.30%, accounting for 30.25% of revenue. Online revenue sub-platforms: Amazon's revenue of 5.042 billion yuan increased by 27.71%, accounting for 52.26% of revenue; revenue from third-party platforms other than Amazon increased by 67.36% by 0.763 billion yuan, accounting for 7.91% of revenue; revenue from independent websites increased by 102.85% by 0.925 billion yuan, accounting for 9.59% of revenue.

2. The expense ratio increased by 34.22% by 0.41pct during the 1H24 period, mainly due to an increase in sales expenses and management expenses.

Among them, the sales expense ratio increased by 21.92% by 0.62 pct; the management expense ratio increased by 4.14% by 1.05 pct; the financial cost ratio decreased by 1.08 pcts by -0.12%; R&D investment increased by 0.8 billion by 33.46%, and the R&D expense ratio decreased by 0.19 pcts by 8.29%.

Looking at the breakdown of sales expenses: 1H24 sales platform fees increased by 37.81%, accounting for 7.59% of revenue, up 0.07pct; marketing expenses increased by 54.21%, accounting for 8.42% of revenue, a year-on-year decrease of 0.96pct; wages and remuneration increased by 18.82%, accounting for 3.92% of revenue, a year-on-year decrease of 0.59pct.

3. 1H24 net profit to mother of 0.872 billion yuan increased 6.36%. 1H24's net income from fair value changes was $97.4 million, asset impairment losses of 0.178 billion yuan, credit impairment losses of 13.36 million yuan, asset disposal income of 0.01 million yuan, and other income of 25 million yuan. The final total profit of 1H24 was 0.999 billion yuan, up 9.61% year on year; net profit to mother was 0.872 billion yuan, up 6.36% year on year; after deducting non-net profit of 0.766 billion yuan, up 40.53% year on year.

Among them, 2Q24's net profit to mother was 0.561 billion yuan, up 9.19% year on year; after deducting non-net profit of 0.45 billion yuan, the year-on-year increase was 49.89%.

Maintain judgment on the company. The company is the world's leading consumer electronics brand with strong core competitiveness: ① Continuous innovation product capabilities: The company continues to promote the three major product lines. Among them, energy storage products have been rapidly launched in recent years, which is expected to drive the upgrading of Anker's main brand strategy. ② Excellent supply chain management capabilities: Since 2023, the company's gross margin has increased significantly in every quarter. Our judgment is mainly due to the contribution of supply chain cost reduction and efficiency and exchange rate fluctuations. ③ Omni-channel operation capability: The company has formed a multi-channel layout such as Amazon, other third-party platforms, and independent websites online, accounting for about 30% of offline revenue.

Updated profit forecast and valuation: Revenue of 2024-2026 is expected to be 22.9 billion yuan, 28.3 billion yuan, and 34.1 billion yuan, respectively, up 31%, 24%, and 20% year-on-year net profit of 1.9 billion yuan, 2.4 billion yuan, and 2.9 billion yuan, respectively, with a year-on-year increase of 20%, 23%, and 21%, giving 20-25 times PE in 2024, corresponding to a reasonable market value range of 38.8 billion yuan Billions of yuan, reasonable value range of 72.96-91.21 yuan/share for A shares, “superior to the market” rating.

Risk warning: changes in market demand, risk of inventory management, uncertainty in the global economic and political environment, etc.