HUAMING(SZ:002270) CAITONG SECURITIES·2024-08-12 02:23Investment Rating - The investment rating for the company is "Buy" (maintained) [4]. Core Views - The company's core business profitability is strong, with a clear growth path ahead [2]. - In the first half of 2024, the company achieved revenue of 1.121 billion yuan, a year-on-year increase of 23.2%, and a net profit attributable to shareholders of 315 million yuan, a year-on-year increase of 9.6% [2]. - The company maintains a high dividend payout, proposing a cash dividend of 490 million yuan for 2023, which, combined with the interim cash dividend of 240 million yuan, totals 740 million yuan, accounting for 136% of the net profit for the period [2]. Summary by Sections Financial Performance - In Q2 2024, the company achieved revenue of 670 million yuan, a year-on-year increase of 34.7%, and a net profit of 188 million yuan, a year-on-year increase of 11.1% [2]. - The net profit margin for Q2 2024 was 28.3%, down 6.0 percentage points year-on-year and 0.3 percentage points quarter-on-quarter [2]. - The core business of the company, particularly the tap changer business, showed stable profitability, with the power equipment business achieving revenue of 832 million yuan in the first half of 2024, a year-on-year increase of 8.16%, and a gross margin of 59.6%, up 0.38 percentage points year-on-year [2]. Growth Prospects - Short-term growth is supported by domestic demand, with a projected 13% increase in State Grid investment in 2024, primarily directed towards primary equipment [2]. - Medium-term growth is expected from the domestic substitution of high-value-added products, including ultra-high voltage and nuclear power sectors, with all contracts for ultra-high voltage products under batch sales completed by June 2024 [2]. - Long-term growth will be driven by overseas market expansion, with active layouts in Southeast Asia and the United States [2]. Revenue and Profit Forecast - Revenue forecasts for 2024-2026 are 2.339 billion yuan, 2.758 billion yuan, and 3.259 billion yuan, respectively, with net profits of 664 million yuan, 783 million yuan, and 953 million yuan, respectively [2][3]. - Corresponding valuations are projected at 25.86x, 21.95x, and 18.03x PE for 2024, 2025, and 2026, respectively [2].