Description of the event

The company released its 2024 semi-annual report, achieving revenue of 1.797 billion yuan, up 33.43% year on year; net profit to mother 0.13 billion yuan, up 48.89% year on year; after deducting non-net profit of 0.123 billion yuan, up 47.6% year on year.

Incident comments

The execution and settlement of the projects undertaken by the company in the first half of the year were good. Revenue also increased by 33.43%, which led to a 48.89% year-on-year increase in performance. However, the performance growth rate was faster than revenue. The main reason was the comprehensive gross profit margin of 16.33% in the first half of the year, an increase of 0.81 pct over the previous year.

Looking at a single quarter, Q2 revenue was 1.138 billion yuan, up 47.82% year on year; attributable net profit was 0.091 billion yuan, up 71.14% year on year, and the company's revenue performance accelerated in the second quarter.

There was a marked increase in gross margin in the first half of the year. The increase was higher than the four cost rates. Looking at the second quarter alone, it was even more obvious. The company's comprehensive gross profit margin for the first half of the year was 16.33%, up 0.81 pct year on year. Looking at the second quarter, the company's comprehensive gross profit margin was 18.23%, up 2.95 pct year on year; in terms of cost ratio, the company's expense ratio for the first half of the year was 6.87%, up 0.34 pct year on year. Among them, sales, management, R&D and financial expenses changed by -0.11, -1.51, 1.42, 0.54 pct to 0.63%, 3.91%, 2.22% and 0.11% year-on-year, respectively. 0.21pct. Among them, sales, management, R&D, and financial expense ratios changed 0.01, -1.51, 0.92, and 0.79pct year-on-year to 0.55%, 3.27%, 2.14%, and 0.05%, respectively. Taken together, the company's net interest rate for the first half of the year was 7.24%, up 0.75pct year on year, 6.86%, up 0.66pct year on year; net interest rate attributable for the second quarter was 8.00%, up 1.09pct year on year, and the net interest rate after deduction was 8.07%, up 0.77pct year on year.

The net inflow for advanced operations in the first half of the year was lower than in the same period last year, mainly due to the sharp outflow in Q1. The company's net cash flow inflow from operating activities in the first half of the year was 0.063 billion yuan, with a year-on-year decrease of 0.142 billion yuan, mainly due to project execution, an increase of 77.51% in revenue, down 25.55pct from the previous year. Looking at the second quarter, the net cash flow inflow from operating activities was 0.267 billion yuan, with a year-on-year increase of 0.016 billion yuan, a year-on-year decrease of 39.83 pcts; at the same time, the company's balance ratio declined year-on-year 5.84pct to 42.34%, and the number of accounts receivable turnover days increased by 2.48 to 38.70 days year-on-year.

New signings continued to make breakthroughs in the first half of the year. The company focuses on the design and manufacture of industrial modules. Its business involves various engineering disciplines such as structure, materials, electricity, HVAC, fire control, etc. At the same time, the company has “design-procurement-modular-construction” (EPFC) industry chain links and integrated service capabilities, which can provide customers with customized project construction services to guarantee the safety and economy of project construction. In the first half of the year, the company signed a total project contract of 0.65 billion yuan with Zhejiang Tuoyuan Optical New Materials Co., Ltd., and the consortium formed by Solvay SA won the bid for the North Huajin United Petrochemical Co., Ltd. fine chemical and raw materials engineering project with a discount of 0.2 million tons/year for the general contracting project of hydrogen peroxide plant, with a project amount of 1.095 billion yuan. The company is one of the few domestic enterprises with large-scale industrial module design capabilities. As the company's characteristic business, industrial modules are expected to continue to increase the penetration rate of the engineering market, drive the company's revenue performance to continue to grow, and be optimistic about the company's growth.

Risk warning

1. Order growth falls short of expectations;

2. The repayment for the engineering business fell short of expectations.