24H1 achieved net profit of 0.72 billion yuan to mother, a year-on-year increase of 34.8%

Zhongding Co., Ltd. released its 24-year report. 24H1 achieved revenue of 9.67 billion yuan, +18.1% year-on-year, and net profit of 0.72 billion yuan to mother, an increase of 34.8% year-on-year, in line with the performance forecast released on 2024.7.13.

Among them, Q2 revenue was +15%/6.1% YoY to 4.98 billion yuan, and net profit to mother was +32.2%-1.6% YoY to 0.355 billion yuan. We maintain our previous forecast and expect the company's net profit for 2024-2026 to be 1.45/1.82/2.21 billion yuan, respectively. Comparatively, the company Wind agreed to expect an average PE value of 13.8 times in 24, giving the company 13.8 times PE in 24, with a target price of 15.18 yuan (previous value of 16.94 yuan), maintaining a “buy” rating.

The volume of idle and lightweight orders increased revenue over the same period last year

By business: 1) The revenue of the air suspension system business H1 increased by 59.8% year-on-year to 0.57 billion yuan. The air supply unit, which is mainly an advantageous product, continued to increase its share to meet the increase in revenue. At the same time, the company has successively harvested products such as air springs and air storage tanks, and the air suspension business is expected to achieve continuous growth; 2) The revenue of lightweight businesses such as forged aluminum control arms and ball hinges increased by 156.5% to 1.43 billion yuan, and the gross margin of the business increased by +3.7% year-on-year due to scale effects; 3) Traditional rubber business revenue +10.2% to 1.93 billion yuan; 4) The cooling system H1 revenue was 2.54 billion yuan, which was basically flat year on year; 5) The sealing system business achieved steady growth, and H1 revenue was +10.9 billion yuan year-on-year % to 1.94 billion yuan.

The results of reducing costs and increasing efficiency were remarkable, and the Q2 net interest rate increased year-on-year

24Q2's gross margin was +0.5pct year over year, -0.4pct to 22.1% month-on-month, a slight decrease from month to month or due to fluctuations in raw material prices. The Q2 net interest rate was +1.2pct year over year, a slight decrease of 0.4 pct month-on-month, but the net deductible interest rate increased month-on-month. Strong performance on the profit side may be: the results of integration and cost control measures of domestic subsidiaries/overseas business entities are gradually showing, and the profitability of the refined management model continues to improve. The net interest rate of 24H1 Wuxi and Anhui KACO increased by 2.8 pct to 18.5% compared to 23, and the net interest rate of WEGU in Anhui increased by 1.8 pct to 16% compared to 23. In terms of expenses, Q2's sales/management/R&D rates were 2.7%/5.8%/4.7%, respectively, +0.3/-0.6/-0.02pct year-on-year, and +0.2/+0.6/+0.1pct, respectively. The Q2 financial rate was +1.15pct year over year, -0.4pct to 1.1% month-on-month.

The layout of new air suspension products is progressing smoothly, and cooling products may become a strong growth point. In the air suspension business, in addition to air springs and air storage tank products that have achieved fixed points, the company is speeding up the layout of magnetorheological shock absorber products, which is expected to complete the construction of airborne system-level hardware supply capacity, increase supporting value and further expand competitiveness. In other business areas, the company continues to expand its cooling system product line. Its subsidiaries Zhongding Fluid and Zhongding Intelligent Thermal Systems have launched products such as energy storage liquid cooling units, supercomputing center immersion liquid cooling units, thermal management controllers, temperature and pressure integrated sensors, and refrigerant flow channel plates. In June '24, we obtained a thermal management pipeline supplier for the new model of the flying car project under a new power car company to further expand the product scenario. The company's lightweight business focuses on building factories in Slovakia and Mexico to expand or accelerate overseas business.

Risk warning: The expansion of new projects falls short of expectations; the progress of overseas supporting projects falls short of expectations.