Wuxi Zhenhua(SH:605319) Southwest Securities·2024-08-22 05:31Investment Rating - The report assigns a "Buy" rating to the company with a target price of 18.46 CNY over the next six months [1][19]. Core Views - The company has successfully entered the new energy vehicle sector, optimizing its customer structure and increasing sales in this area. It is expected that sales from new energy vehicles will exceed 50% of total sales in 2024 [1][12]. - The electroplating business has shown significant growth, with revenue increasing by 52.1% year-on-year in the first half of 2024, and is expected to continue contributing positively to the company's performance [1][15]. - The company has effectively controlled costs, achieving a net profit margin of 14.2% in the first half of 2024, which is an increase of 4.8 percentage points year-on-year [2]. Summary by Sections Financial Performance - In the first half of 2024, the company achieved revenue of 1.12 billion CNY, a year-on-year increase of 15.3%, and a net profit of 160 million CNY, up 74.9% year-on-year. The second quarter alone saw revenue of 630 million CNY, a 14.9% increase year-on-year and a 27.9% increase quarter-on-quarter [1][7]. - The company's revenue from stamping parts remains stable, contributing 54.2% of total revenue in the first half of 2024, with a year-on-year growth of 13.8% [9][13]. Business Segments - The stamping parts business is the core segment, with a consistent revenue contribution of over 50% from 2016 to 2023. The company has also expanded into the electroplating business, which is expected to drive new growth [9][12]. - The company has established stable partnerships with major automotive manufacturers, including SAIC Volkswagen and Tesla, enhancing its competitive position in the market [6][12]. Growth Prospects - The company anticipates a compound annual growth rate (CAGR) of 24.2% for net profit over the next three years, supported by the expansion of its new energy vehicle segment and the growth of its electroplating business [2][19]. - The recent government policies promoting vehicle replacement and upgrades are expected to stimulate demand in the automotive sector, providing further growth opportunities for the company [13][12].