SUPCON Technology (SH:688777) Southwest Securities·2024-08-20 05:07Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company reported a significant increase in net profit when excluding GDR exchange losses, with a 49.80% year-on-year growth in net profit to 5.19 billion yuan in H1 2024 [2] - The company launched two major new products: the Universal Control System (UCS) and the AI Time Series Model (TPT), which are expected to enhance its competitive edge in automation and industrial AI [2] - The company anticipates a compound annual growth rate (CAGR) of 26% in net profit from 2024 to 2026, with projected net profits of 13.60 billion yuan, 17.47 billion yuan, and 22.27 billion yuan for the respective years [2] Summary by Sections Financial Performance - In H1 2024, the company achieved revenue of 42.52 billion yuan, a year-on-year increase of 16.78%, and a net profit of 5.17 billion yuan, up 1.16% year-on-year [2] - The revenue for Q2 2024 was 25.14 billion yuan, reflecting a 14.49% year-on-year increase and a 44.59% quarter-on-quarter increase [2] - The gross margin improved to 33.23% in H1 2024, an increase of 0.76 percentage points year-on-year, while the net margin decreased to 12.32%, down 1.96 percentage points year-on-year [2] Business Segments - The control systems business generated revenue of 17.25 billion yuan in H1 2024, a 17.65% year-on-year increase, while the instrumentation segment saw a remarkable growth of 72.18% year-on-year, reaching 3.53 billion yuan [2] - The company noted strong growth in the petrochemical and chemical industries, with revenue growth rates of 26.95% and 26.03%, respectively, and an impressive 117.32% growth in the oil and gas sector [2] Product Development - The UCS product represents a significant technological advancement, moving away from traditional DCS architectures, while the TPT model has achieved over 95% self-control rates in various applications [2] - The company has initiated an equity incentive plan targeting the teams behind UCS and TPT, with performance targets set for net profit growth over the next three years [2]