Incident: The company released its 2024 semi-annual report. 24H1 achieved a year-on-year increase of 46.84% in operating income of 2.961 billion yuan; realized net profit of 0.233 billion yuan, an increase of 8.46% over the previous year; realized net profit after deducting non-return to mother of 0.192 billion yuan, a year-on-year increase of 6.72%. Q2 achieved operating income of 1.598 billion yuan (yoy +43.42%, qoq +17.20%) and realized net profit of 0.111 billion yuan (yoy -12.22%, qoq -9.81%). By product, 2024H1 benefited from the continued recovery of the consumer electronics market. Chargers and adapters achieved revenue of 2.341 billion yuan (accounting for 79.08%), +57.07% YoY; energy storage and other realized revenue of 0.462 billion yuan (15.6%), +44.42% YoY; NEV electronic control products and solutions achieved revenue of 0.157 billion yuan (5.32%) YoY.

Eight years of international layout, adding new members to the global intelligent manufacturing base:

As the company's sixth largest intelligent manufacturing base, Vietnam's business will focus on R&D and manufacturing of power electronics technology. The relevant property rights certificate was completed in July 2024. The establishment of Aohai Vietnam is in line with the overall development strategy of Aohai Technology and helps the company expand its market share and influence on a global scale. Relying on excellent quality control, the company has passed a number of international certifications and authoritative agency qualifications, continuously optimizes the information platform, realizes digital management of the entire process, improves operational efficiency, accurately captures market demand, further consolidates its leading position in the global energy application products market, and establishes steady cooperation with world-renowned brands. The products are exported to more than 200 countries and regions. The gross profit of the company's export products is 28.41%, which is much higher than the gross profit of 16.73% of domestic products. As the company's global layout deepens, it is expected that the company's gross profit level will continue to improve.

Four core competitive advantages drive innovation in global energy applications:

(1) Comprehensive breakthrough in energy efficient application technology: With the widespread application and penetration rate of Al technology in mobile phones, PCs and other terminal devices, users' demand for device functionality and performance is also increasing, driving a significant increase in charger power to meet the needs of fast charging and efficient battery life.

Through technology expansion and mergers and acquisitions, the company is expanding its development from consumer electronics power supply technology to systems integration, optical storage and charging integration. Based on power device modules, hardware systems, and software control, the company has built an efficient, lightweight, low-carbon and environmentally friendly power electronics technology infrastructure, and has obtained many patents through technological breakthroughs in various fields, such as high-frequency magnetic devices and high-power motor drives, enhancing the company's leading position in technology. (2) Leading layout of global intelligent manufacturing and information management: The company has laid out six intelligent manufacturing bases around the world. With multi-base flexible manufacturing and large-scale manufacturing capabilities, it quickly responds to the needs of international customers. The degree of automation and informatization of power supply product production lines is leading in the world, and electronic control products for new energy vehicles have achieved fully automatic manufacturing and testing. By implementing information systems such as MES and SAP, the entire process of R&D, production, and sales can be digitally managed to improve global manufacturing consistency and product quality. (3) Ecological brand cooperation and deep integration with international customers: Implementing the big customer strategy, Aohai Technology has established long-term and stable cooperative relationships with many of the world's leading A1 and IoT eco-brands and new energy vehicle companies, and has become the main supplier for many internationally renowned brands. The company's products are widely used in more than 200 countries and regions around the world. The certification standards cover 93 countries, and have successfully obtained more than 2,500 certifications worldwide, further enhancing the company's global competitiveness. (4) Supply chain collaboration and strong promotion of global local supply: Achieve supply collaboration in various business segments through unified group procurement, and build a self-built supply chain in the charger adapter and NEV electronic control business to reduce dependence on external agency procurement. In addition, the company actively promotes localized procurement strategies, enhances global local supply capacity, better serves international customers and integrates into the global industrial chain, and further consolidates the company's market position.

Investment advice:

We expect the company's revenue for 2024-2026 to be 6.623 billion yuan, 7.858 billion yuan, and 9.253 billion yuan, respectively, and net profit to mother of 0.552 billion yuan, 0.745 billion yuan, and 0.91 billion yuan, respectively. The corresponding target price for 2024 is 18 times PE, and the corresponding target price is 36.00 yuan, maintaining a “buy-A” investment rating.

Risk warning: increased market competition, exchange rate fluctuations, raw material price fluctuations, etc.