FRD(SZ:300602) Guohai Securities·2024-08-21 15:37Investment Rating - The investment rating for the company is "Buy" (maintained) [1][6][9] Core Insights - The company's profitability continues to improve, driven by increased demand for AI-driven liquid cooling solutions and a strong performance in consumer electronics [1][3][6] - In H1 2024, the company reported revenue of 2.169 billion yuan, a year-on-year increase of 22.00%, and a net profit attributable to shareholders of 56.55 million yuan, a significant increase of 1,307.13% [3][6] - The company is positioned to benefit from the transition from air cooling to liquid cooling in the server market, with a projected CAGR of 45.8% for China's liquid cooling server market from 2023 to 2028 [6][7] Summary by Sections Financial Performance - In Q2 2024, the company achieved revenue of 1.187 billion yuan, up 18.11% year-on-year, and a net profit of 32.92 million yuan, an increase of 12.95% [3][6] - The gross profit margin for H1 2024 was 17.86%, a slight decrease of 0.13 percentage points year-on-year, while the net profit margin turned positive at 2.21% [3][6] - The company’s sales, management, and R&D expense ratios were 2.48%, 5.96%, and 5.55%, respectively, indicating improved cost control [3][6] Market Position and Growth Drivers - The company has seen a significant increase in market share in the consumer electronics sector, particularly in smartphones and laptops, contributing to revenue growth [3][6] - The company is also expanding its presence in the new energy vehicle sector, although margins have been impacted by rising raw material costs [2][3][6] - The demand for AI servers and AI terminals is expected to drive further growth, with a notable increase in global smartphone shipments by 12% year-on-year in Q2 2024 [6][7] Future Projections - Revenue projections for 2024, 2025, and 2026 are 5.568 billion yuan, 7.218 billion yuan, and 8.747 billion yuan, respectively, with corresponding net profits of 314 million yuan, 482 million yuan, and 657 million yuan [6][7] - The company is expected to maintain a strong growth trajectory, with EPS projected to reach 0.54 yuan, 0.83 yuan, and 1.13 yuan for the years 2024, 2025, and 2026 [6][7]