In the first half of 2024, revenue increased 3.72% year over year, and net profit to mother increased 23.30% year over year. The company's revenue for the first half of 2024 was 1.835 billion yuan, up 3.72% year on year; net profit to mother was 0.451 billion yuan, up 23.30% year on year. The gross margin/net margin was 40.45%/24.63% respectively, with a year-on-year change of +2.08/+3.93 pcts. The reason why the company's net profit growth rate was higher than revenue: 1) the increase in the gross margin of vacuum pumps led to an increase in the company's profitability; 2) the company's exchange earnings increased year on year; 3) the price of raw materials was lower. Looking at a single quarter, 2024Q2's revenue was 1.085 billion yuan, up 0.60% year on year, and net profit to mother was 0.304 billion yuan, up 22.21% year on year. The increase in performance was mainly due to the company's ongoing acceptance of orders.

PV vacuum pumps are under pressure, and revenue for the first half of 2024 fell 7% year on year. In the first half of 2024, the number of PV projects put into operation, started, and planned declined year-on-year. Many PV projects were suspended or postponed, and the overall PV industry was under pressure. The company's vacuum pump revenue in the first half of the year was 0.693 billion, down 7.11% year on year, mainly due to the declining cycle in the photovoltaic industry. The gross profit margin of vacuum pumps in the first half of 2024 was 48.25%, an increase of 4.59pct over the previous year, mainly due to lower raw material prices and capacity conversion. The company has been deeply involved in vacuum pumps for many years, and has occupied the main market share in the PV long crystal and battery manufacturing process. Although the major domestic downstream photovoltaic manufacturers have maintained in-depth cooperation with the company. Although affected by the photovoltaic industry in the short term, the company's photovoltaic vacuum pumps are under pressure, judging from long-term energy reform and development, the photovoltaic industry still has great potential for growth, and the company's photovoltaic vacuum pumps still have a lot of room for growth.

The compressor business is growing steadily and is expected to benefit from the equipment renewal and iterative policy. The company's compressor business mainly includes refrigeration compressors and air compressors. In the first half of 2024, the commercial central air conditioning market was under pressure, but the large-scale engineering project market showed strong resilience and market demand was stable. The company maintained steady growth through continuous development of new models and the renewal of old models. In terms of refrigeration, China's cold chain logistics development showed a steady increase in demand in the first half of the year, but due to unstable consumer demand, the overall growth rate of screw compressors slowed down. In terms of air compressors, due to macroeconomic influence, domestic and foreign sales demand for air compressors was weak and competition was fierce in the first half of the year, but there was a large market space for equipment renewal demand. By launching high-end products such as oil-free and centrifugal, the company continued to improve its market competitiveness and achieved steady revenue growth. Currently, the country is actively promoting equipment renewal and iteration, and it is expected that the company's compressor business will fully benefit.

Risk warning: Economic recovery falls short of expectations; vacuum pump business expansion falls short of expectations; raw material prices fluctuate.

Investment advice: The company is a leading domestic screw compressor and vacuum pump. Considering the slowing of production capacity expansion in the photovoltaic industry, we lowered our profit forecast for 2024-2026. We expect net profit to be 0.923/0.959/1.075 billion yuan (original value of 0.925/1.03/1.209 billion yuan) for 2024-2026, corresponding to 10/10/9 times PE, maintaining the “superior to the market” rating.