Key points of investment
Net profit due to 2024H1 increased by +46~ 56% year on year, and net profit from non-return mother increased by +66~ 78% year on year. The performance exceeded expectations. The company released a performance forecast for the first half of 2024. 24H1 is expected to achieve net profit of 1.10 to 0.118 billion yuan, +46 to 56% year-on-year, and achieve net profit without deduction of 1.07 to 0.115 billion yuan, or +66 to 78% year-on-year. According to the median estimate, 2024H1 net profit was 0.114 billion yuan, +51% YoY, 0.111 billion yuan YoY, +72% YoY, including 24Q2 net profit 0.059 billion yuan, +47% YoY, +7% month-on-month, net non-attributable net profit 0.058 billion yuan, +81% YoY, and +9% month-on-month, which exceeded market expectations.
The core downstream performed excellently, and welcomed a profit recovery period after the transformation. 1) The pace of traditional downstream recovery, such as 3C, logistics, machine tools, and semiconductors, is relatively fast. We expect Q2's overall revenue to grow rapidly by +20-30% over the same period last year. At the same time, as the company's three-tier collaboration model came into effect, the distribution ratio gradually increased (previously direct sales accounted for the majority). 2) By providing “PLC system+module+servo+stepper” solutions for major customers, we expect high-margin stepping to resume this year, while servo & PLC will maintain rapid growth and steady increase in market share. 3) The additional costs brought about by system changes & equity incentives were significantly reduced compared to last year. Sales, management fee rates & equity payment costs were significantly reduced, and the company ushered in a profit recovery period. Looking ahead to 24, we expect the company's overall revenue to increase by 20% to 40%, and the profit growth rate is higher than revenue.
Rising stars are making great strides forward, and the robotics business is progressing smoothly. Since 24Q1, the company has successfully mass-produced high-density frameless torque motors, CD servo drives, hollow encoders, hollow cup motors and supporting micro servo systems. The overall functionality and performance of the company's robot-related products has reached a world-class level. Nearly 100 robot (collaboration & humanoid) companies have conducted tests, and the initial intention is to order nearly 10,000 units (sets). Among them, the annual production capacity of hollow cup motors has reached 0.12 million units, and samples have been sent to more than 10 customers (more than 10 robot customers). At present, the company has communicated with about 70% of leading humanoid robot companies and contacted European and American robots through various channels and partners, and it is expected that it will receive sample delivery opportunities in the future.
Profit forecast and investment rating: Considering the remarkable results of the company system transformation, we raised the company's 2024-2026 net profit to 0.232/0.32/0.369 billion yuan (previous value was 0.188/0.24/0.314 billion yuan), +68%/+38%/+15% over the same period last year. The corresponding current PE price is 24x, 17x, and 15x, respectively, maintaining the “buy” rating.
Risk warning: macroeconomic downturn, competition intensification, raw material price increases beyond expectations, etc.