Investment events

In the first half of 2024, the company achieved operating income of 5.446 billion yuan, a year-on-year increase of 10.75%; net profit to mother was 0.648 billion yuan, an increase of 27.38% year-on-year.

Key points of investment

Profitability is rising steadily, and operating cash flow is showing impressive performance

Looking at a single quarter: In the second quarter of 2024, the company achieved revenue of 2.937 billion yuan, up 13.36% year on year, up 17.09% month on month; net profit to mother was 0.339 billion yuan, up 27.03% year on year, up 10.02% month on month. In terms of profitability, as aluminum prices continued to rise in the first half of 2024 until the end of May, the company achieved a gross profit margin of 23.06%, an increase of 0.05 percentage points over the previous year; the net profit margin was 11.87%, an increase of 1.43 percentage points over the previous year, mainly due to factors such as increased capacity utilization, product structure optimization, and implementation of cost reduction measures. In terms of operating cash flow, it achieved 1.921 billion yuan in the first half of 2024, an increase of 234.76%; in the second quarter, 1.694 billion yuan, an increase of 184.71% year on year, mainly due to the company's continuous optimization of financial management methods. While the cash balance of various operating projects was stable in the first half of the year, a large amount of bill discounts expired.

Additional production capacity was gradually built and put into operation, and the global layout was continuously improved domestically. In the first half of 2024, the company completed the construction of the Jiangsu (Phase III) plant, and some production lines were put into operation at production bases in Jiangxi, Hubei and Jiangmen. In addition, it invested no more than 1.2 billion yuan in self-funded battery structural parts projects in Shenzhen Longhua to further expand production capacity in South China. Overseas, as of August '24, production sites in Sweden and Hungary have been put into production. Among them, the first phase of Hungary's production capacity achieved high utilization rates, and the second phase continued to increase investment.

In the first half of 2024, the company and Kodali of Hungary jointly invested no more than 0.049 billion US dollars to establish a subsidiary in the US and build a production base for precision structural parts of new energy power batteries to lay out the US market.

The humanoid robot structural parts project progressed steadily, and laid out a new growth point. In April 2024, the company established a joint venture holding subsidiary Shenzhen Science and Technology League (the company holds 40% of the shares) to enter the humanoid robot circuit to expand its business in key structural parts such as harmonic reducers, harmonic transmission equipment, precision mechanical parts, robot joints, controllers, drives, speed reducers, etc., and related automation equipment. As of August '24, the company has been steadily advancing equipment procurement, sample development and production, etc., and subsequent production capacity is expected to be gradually released.

Profit forecasting and valuation

Maintain profit forecasts and maintain a “buy” rating. The company's leading position in battery structural components is stable, and its cost control capabilities and global layout strengthen its competitive advantage. We maintain the company's 2024-2026 net profit of 1.412, 1.734, and 1.997 billion yuan respectively, corresponding EPS of 5.22, 6.41, and 7.38 yuan, respectively, and corresponding PE of 16, 13, and 11 times, respectively, to maintain a “buy” rating.

Risk warning

Increased market competition, risk of high customer concentration, risk of large power games exceeding expectations, risk of increased depreciation of fixed assets, etc.