Performance continues to increase, at the upper end of the forecast range: in the first half of 2024, the company achieved revenue of 4.418 billion yuan, +75.5%, of which PV equipment revenue was 3.898 billion yuan, accounting for 88.2%, and lithium battery equipment revenue was 0.131 billion yuan, accounting for 3.0%; semiconductor business revenue was 0.009 billion yuan, accounting for 0.2%; transformation and other business revenue was 0.379 billion yuan, accounting for 8.6%; net profit to mother was 0.769 billion yuan, +47.2% YoY; net profit after deducting non-attributable net income was 0.772 billion yuan, +53.7% YoY. The increase in performance is mainly due to the continuous acceptance of the company's on-hand orders. Q2 revenue for a single quarter was 2.453 billion yuan, +65.9% YoY, +24.9%; net profit to mother was 0.436 billion yuan, +44.8% YoY, +31.1%.

Profitability declined, and the level of cost control continued to rise: gross margin in the first half of 2024 was 33.8%, year-on-year -2.8pct, net sales margin was 18.2%, year-on-year -2.3 pct, mainly due to an increase in the share of other products. The net interest rate for the first half of the year of the monocrystalline furnace subsidiary Songci Electromechanical was about 16%; the cost ratio for the period was 9.7%, -3.4 pct, of which the sales expense ratio was 1.8%, -1.6 pct, and the R&D expense ratio was 4.0%, y-1.1 pct , the financial expense ratio was 0.3%, +0.1pct year-on-year. Q2 The gross margin for a single quarter was 33.2%, -3.4 pct year on month, -1.3 pct month on month; net sales margin was 18.1%, -2.1 pct year on year, -0.2 pct month on month.

Inventory & contract liabilities declined slightly month-on-month, and new orders continued to grow: as of 2024Q2, the company's contract debt was 3.26 billion yuan, -17% month-on-month, and inventory was 7.34 billion yuan, -4% month-on-month. 2024H1 signed a new order of 6.29 billion yuan (tax included), +8.7% year over year; as of the end of 2024Q2, the company's current order amount was about 14.34 billion yuan (tax included), +41% year over year. With the payment of downstream customer notes, 2024Q2's operating cash flow recovered to 0.194 billion yuan.

It has grown into an automation platform company spanning photovoltaics & lithium batteries & semiconductors: (1) Photovoltaics: a. Silicon chip subsidiary Songporcelain's electromechanical low oxygen monocrystalline furnace has received major orders from Jingke and Tianhe, totaling 3.18 billion yuan; b. Battery: The subsidiary Xurui Technology is responsible for screen printing line equipment, acquires Prue New Energy responsible for LPCVD coating equipment, and launches laser LEM equipment; c. Component: The leading sales market share of string welding machines in the main industry is 70% +, which is expected to benefit from the 0BB iteration. (2) Semiconductors: Orders for bonding machines and AOI testing equipment increased significantly in half a year. The first batch of orders for the scriber was obtained, and a Japanese team was introduced to set up a joint venture to lay out CMP equipment. The monocrystalline furnace has already received orders from Korean customers. (3) Lithium battery: Currently, the main products are module pack lines for energy storage, and laminators are being developed.

Profit forecast and investment rating: With the continued boom in component equipment and the smooth expansion of new fields, we maintained the company's net profit of 1.84/2.35/2.99 billion yuan in 2024-2026, corresponding to 6/4/4 times PE, maintaining a “buy” rating.

Risk warning: Downstream production expansion falls short of expectations, and R&D progress falls short of expectations.