Incidents:
On August 30, Green Harmonics announced its results report for the first half of 2024. In the first half of 2024, the company achieved total operating income of 0.172 billion yuan, +0.49% year on year; realized net profit of 0.037 billion yuan, or 27.69% year on year; realized net profit without return to mother was 0.034 billion yuan, or -25.76% year on year. The company's overall operation in the first half of the year was relatively stable, and net profit to mother declined, mainly due to a marked increase in expenses during the period.
Key points of investment:
2024Q2's revenue grew year over month, and increased expenses put pressure on net profit to mother. The company's 2024Q2 revenue was +8.96% and +10.44%, respectively, improving from 2024Q1; net profit to mother was -36.51% and -17.96% year-on-month respectively, mainly due to the continuous increase in the company's sales and management expenses, which specifically involved the company's overseas market development expenses and increases in employee salary expenses, land amortization expenses, and managers' wages.
The company continues to increase R&D investment to consolidate its market position, and new products have gradually entered the market. The company continues to increase investment in R&D and further develop vertically by developing new technologies and products to consolidate the company's market position in the field of precision harmonic speed reducers and broaden the application scenarios of its products. In the first half of 2024, the company's R&D expenses were 0.025 billion, +16.79% year-on-year; of these, 2024Q2 R&D expenses were +32.60% year-on-year. As of the 2024 semi-annual report period, the company has added 23 invention patents and 14 utility model patents; in total, it has 6 overseas patents and 160 domestic patents, and has applied corresponding patented technology and core technology to new products such as high-end precision CNC turntables, hydraulic grinding heads, adaptive mobile special equipment, and high-end CNC machine tools. At present, the company's mechatronic products and micro electrohydraulic servo products facing a new scenario have gradually entered the market.
Actively expanding overseas markets, the acceleration of commercialization of humanoid robots brings development opportunities. With its own technology and industrial chain advantages, the company actively participates in domestic and foreign industry-related exhibitions to strengthen the company's brand building and promotion, thereby enhancing the company's popularity and influence in overseas markets. At the same time, with the accelerated development of the intelligent robot industry represented by humanoid robots, the demand for harmonic speed reducers will also increase dramatically. Under this trend, the customized development capability, product consistency, and reliability and stability of harmonic reducers will become key factors in determining their market competitiveness. As a leading enterprise in the field of harmonic speed reducers in China, the company has also strengthened communication with overseas related intelligent robot companies. Therefore, as the pace of commercialization of humanoid robots accelerates, the company is expected to fully benefit from the development opportunities it brings and further open up room for growth.
Valuation and investment recommendations: We expect the company's revenue from 2024 to 2026 to be 0.41/0.496/0.605 billion yuan, respectively, and net profit attributable to the parent company of 0.076/0.102/0.127 billion yuan, respectively. Corresponding to the current stock price of 63.99 yuan, PE is 143/106/85 times, respectively. Considering that the commercial implementation of humanoid figures is expected to accelerate, the penetration rate of new products will gradually increase, giving them 150 times PE in 2024, with a target price of 67.5 yuan, maintaining the “gain” rating.
Risk warning: Economic recovery falls short of expectations, new product development and promotion falls short of expectations, commercialization of humanoid robots falls short of expectations, market competition intensifies, etc.