Incident: Ruiming Technology released a performance forecast on the evening of July 10. Net profit attributable to shareholders of listed companies is expected to be 0.121 billion yuan to 0.135 billion yuan in the first half of 2024, an increase of 100.48% to 123.67% over the previous year.
The interim results exceeded expectations, and strong overseas demand led to an increase in both revenue and net profit. The company's 2Q2024 revenue range was 0.638 billion yuan to 0.658 billion yuan, up 56% to 61% year-on-year. In terms of net profit to mother, the company's 2Q2024 was about 0.068 billion yuan to 0.082 billion yuan, an increase of 87% to 126% year-on-year; both revenue and net profit to mother exceeded expectations. The company's net profit after deducting non-return to mother was about 0.066 billion yuan to 0.08 billion yuan in 2Q2024, an increase of 81% to 120% over the previous year. The core reason why the company's revenue and performance exceeded expectations may be due to strong overseas demand, compounded by a steady increase in the share of overseas business sales with high gross margins, which has led to a rapid increase in gross profit; this is reflected in the company's net profit growth rate being higher than the revenue growth rate.
Focus on the intelligent global market and open up a second growth curve. The company has continued to introduce more advanced products to the freight industry for many years, providing core values in the four aspects of people, vehicles, goods, and roads. Going overseas has benefited from the EU's Vision Zero vision, and European countries have implemented strong regulatory policies for road traffic safety. For example, the EU GSRII series of regulations require that new cars be licensed and equipped with intelligent products such as driving area information reminder systems and blind spot information reminder systems starting in July 2024. The company expects to generate demand for about 0.5 million intelligent solutions every year after the regulations are implemented. Based on an estimate of about $2000-3000 for a single vehicle, this portion of the market space is approximately $10-1.5 billion per year.
Investment advice: The company is deeply involved in intelligent commercial vehicles, and the global demand for intelligent commercial vehicles is expected to bring a new growth curve. We expect the company to achieve operating income of 2.161, 2.755, and 3.495 billion yuan in 2024-2026, and net profit to mother of 0.25, 0.316, and 0.403 billion yuan. Corresponding PE is 27x, 21x, and 17x, maintaining an “increase in holdings” rating.
Risk warning: risk of exchange rate fluctuations, risk of trade friction, risk of increased market competition, risk of technological upgrading, risk of global economic downturn, etc.