Incident: The company released its 2024 semi-annual report. 2024H1 achieved revenue of 7.529 billion yuan (+15.73%); net profit to mother of 0.709 billion yuan (+28.49%) in a single quarter: 2024Q2: realized revenue of 4.468 billion yuan (+23.20%); net profit to mother 0.431 billion yuan (+26.35%).

The sales cost ratio is continuously optimized, and R&D is continuously invested. 2024H1 gross profit margin 31.51% (YoY -1.07pct); net profit margin 9.85% (YoY +0.99pct); 2024Q2 gross profit margin 30.82% (YoY -0.52 pct); net profit margin 10.09% (YoY +0.17pct); 2024Q2 period expense ratio 18.18% (YoY +0.54pct), of which the sales expense ratio is 9.21% (YoY -1.77pct), management expense ratio 4.67% (YoY +0.53 pct), R&D expense ratio 6.03% (+0.33pct year on year), financial expense ratio -1.74% (year-on-year +1.44pct), mainly due to the company's reduction in promotions and sales expenses.

The export performance was outstanding, and the all-terrain vehicle product structure was upgraded. 1) All-terrain vehicles: The company optimized channel inventory and product structure. In the first half of the year, revenue was 3.532 billion yuan (-1.55%), sales volume was 0.0814 million vehicles (+3%), and the average price was 0.0434 million yuan (-4%). New mid-range and high-end U/Z products are expected to open up room for growth.

2) Motorcycles: Revenue 3.248 billion yuan (+41.95%), sales 0.1539 million units (+56%), average price 0.0211 million yuan (-9%). A number of high-displacement models were launched this year, and it is expected that the company's product matrix will continue to be expanded and the product structure optimized. 3) Electric two-wheeler revenue of 0.116 billion yuan, with sales volume of 0.0204 million units. Among them, domestic sales channels increased by 81.03% and export sales channels increased by 181.25%.

Profit forecast: Benefiting from the upgrading and optimization of the all-terrain vehicle structure, the increase in the proportion of the U/Z series, and the continuous expansion of all product channels, we expect the company to achieve net profit of 13.62 /1.698/2.114 billion yuan respectively in 24-26, corresponding PE of 16/ 13/ 11X, maintaining the “increase” rating.

Risk warning: Competition in the motorcycle market intensifies; the company's new product sales fall short of expectations; fluctuating shipping costs; fluctuating exchange rates, etc.