Affected by the slowdown in domestic demand for new energy sources and increased competition in the industry, the company's performance increased slightly in the first half of the year. In the first half of 2024, the company achieved revenue of 2.916 billion yuan, +0.79% year-on-year, and realized net profit of 0.222 billion yuan, or +16.43% year-on-year.

The second-quarter results showed strong resilience, and the revenue structure and copper prices dragged down gross profit margins in the short term. In the second quarter, the company achieved revenue of 1.611 billion yuan, +0.94% YoY, +23.50% month-on-month; realized net profit to mother 0.128 billion yuan, +23.02% YoY and +35.06% month-on-month. The gross sales margin for the second quarter was 21.71%, +0.72pct year over year. , month-on-month ratio - 3.68pct.

Domestic sales revenue has been dragged down by new energy sources, and other downstream revenue has increased dramatically. In the first half of the year, the company achieved domestic sales revenue of 2.11 billion yuan, -10.02% year-on-year, and its revenue from new energy sources in China was -19.29% year-on-year. The company's critical infrastructure sales revenue increased 104.7% year on year, power generation and power supply sales revenue increased 67.4% year on year, and new infrastructure sales revenue increased 83.4% year on year.

Overseas revenue is growing rapidly, and production capacity allocation in Mexico, the United States, and Poland is being actively promoted. In the first half of the year, the company achieved export revenue of 0.79 billion yuan, +48.53% year-on-year. The company has expanded the company's production capacity in Mexico and is preparing to expand production capacity for all products in Mexico and the US. At the same time, Europe has completed the layout of the Polish factory and European sales and after-sales service headquarters. The company is expected to prepare production capacity in Poland in the fourth quarter of this year.

Export orders have increased dramatically, and digital transformation continues to gain strength. As of the first half of the year, the company had orders of 6.562 billion yuan (excluding tax), +29.88% year over year, of which domestic sales were 3.713 billion yuan, -7.98% year over year, and export sales were 2.849 billion yuan, +180.16% year over year. The company continues to promote digital transformation, launch a large-scale artificial intelligence model training program, and signed a new digital overall solution order of 0.476 billion yuan (excluding tax) in the first half of the year.

Continuously expand product categories, and liquid immersion transformers enter the global market. In the first half of the year, the company developed dry-type transformers built into floating offshore wind power cabins, which will soon enter the pilot assembly stage; continue to develop various liquid immersion transformer products in different downstream fields with high voltage levels, and actively promote the industrialization process of the 110/120kV liquid immersion transformer series products in the global market.

Risk warning: Overseas market development falls short of expectations; raw material prices have risen sharply; industry competition has intensified.

Investment advice: Lower profit forecasts and maintain the “better than market” rating.

In view of the declining growth rate of domestic new energy installations, increased industry competition, and the pace of overseas project delivery, the profit forecast was lowered. The company is expected to achieve net profit of 0.655/1.008/1.317 billion yuan in 2024-2026 (the original forecast value was 0.754/1.068/1.348 billion yuan), and the current stock price corresponding PE is 29/19/14 times, respectively, maintaining the “better than market” rating.