The company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 0.374 billion yuan, a year-on-year increase of 21.21%; net profit to mother was 0.011 billion yuan, a year-on-year decrease of 41.95%; net profit after deducting non-return to mother was 0.009 billion yuan, a year-on-year decrease of 35.09%. In 2024Q2, the company achieved operating income of 0.208 billion yuan, a year-on-year increase of 32.24%; net profit to mother was 0.008 billion yuan, a year-on-year decrease of 13.86%; net profit after deducting non-return to mother was 0.007 billion yuan, an increase of 25.05% year-on-year. The company focused on building production capacity, upgrading the three production bases, cultivating future core growth points and enhancing competitiveness. The investment amount exceeded 0.3 billion, and the cost investment increased. In addition, the company has vigorously expanded customers, developed markets outside the province, strengthened agent sales policies, provided dealer fee support, and once again made concessions, increasing the company's turnover but putting a slight pressure on overall profitability. We look forward to a subsequent recovery.

The singularity of the humanoid robot industry has arrived, and precision lathes are essential equipment for transmission parts. The robotics industry has shown the triple resonance characteristics of AI development & industrial giants & policy support, saving strength at the starting point of the industry. The emergence of multi-modal big language models represents a breakthrough in the “brain” level of humanoid robots. At the same time, industrial giants have entered the market one after another since 2022, and policy support from China, the US and other countries have been introduced one after another. Under the triple resonance, humanoid robots are expected to form a global industrial chain similar to automobiles and smartphones.

Tesla humanoid robot linear actuators mainly use inverted planetary roller screws. Planetary roller screws are expensive and difficult to manufacture. Previously, there was little demand, and they were generally imported. However, import prices are currently expensive, making it difficult to meet the cost requirements for mass production of humanoid robots, so domestic companies are hoping to produce their own planetary roller screws. However, domestic companies produce their own products and need to import related lathes and thread grinders. Overseas lathes and thread grinders are very expensive and customized. At first, the quantity was small, and it was also customized. Foreign companies had limited production capacity and were not very willing to supply. In addition, the sales model of foreign manufacturers is based on sales. After the customer places an order, it usually takes 2 years to get the equipment. The production and delivery cycle is very long, making it difficult to meet the mass production needs of humanoid robots in the future. Therefore, the localization and customization of screw equipment is an inevitable trend. In addition to the screw, the rotary actuator of a humanoid robot requires a speed reducer, and the core equipment for making the reducer is also a lathe and grinder.

The company's core technical capabilities are strong, and its products are advancing towards high-end and diversification. Heidemann has achieved the autonomy of the three core components of the spindle, turret, and tailstock, and has strong core technical capabilities. In terms of sales, the company's high-end CNC lathes have a big advantage, and the distribution ratio has expanded in recent years, and the brand influence has gradually increased. It is expected that the future will benefit from the industrialization of humanoid robots.

Investment advice: Due to the decline in the company's profit in the first half of the year and vigorous expansion of distribution channels to support dealer expenses, we adjusted our forecast. We expect net profit to be 0.032, 0.066, and 0.088 billion yuan in 2024-2026. The company's PE corresponding to the current stock price is 69/34/25X. Heidman is a leading domestic lathe machine. Its products are advancing towards high-end and diversification. At the same time, it is expected to benefit from the wave of industrialization brought about by humanoid robots and maintain a “buy” rating.

Risk warning: risk of downstream demand fluctuation, risk of increased market competition, risk of new business development.