Recodeal(SH:688800) HTSC·2024-08-22 08:03Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 31.05 [1][4]. Core Views - The company's revenue has shown continuous improvement over four consecutive quarters, with a 55.2% year-on-year increase in Q2 2024, driven by improved demand in the automotive and photovoltaic sectors, as well as customer expansion in new energy connector products [1]. - Despite the revenue growth, the net profit for Q2 2024 decreased by 9.3% year-on-year to RMB 0.23 billion, resulting in a net profit margin of only 4.7%, primarily due to rising raw material costs and increased management and R&D expenses [1][2]. - The company is expected to continue expanding its overseas business and product structure in the second half of 2024, with a focus on new energy and communication sectors [3]. Summary by Sections Revenue and Profitability - In 1H24, the company achieved revenue of RMB 9.58 billion, a year-on-year increase of 47.8%, mainly due to improved demand for photovoltaic products and expansion in new energy vehicle connectors [2]. - The overall gross margin for 1H24 was 22.8%, down 3 percentage points year-on-year, attributed to terminal price reductions and factory construction costs [2]. Future Outlook - The company is optimistic about its overseas expansion, with production capacity in Mexico and the U.S. ramping up and contracts signed with well-known European and American companies [3]. - The product structure is continuously expanding, with new products being developed for emerging strategic fields such as AI, data centers, and 6G communication [3]. Financial Projections - Revenue projections for 2024, 2025, and 2026 are RMB 19.89 billion, RMB 26.48 billion, and RMB 36.47 billion, respectively, with net profit estimates of RMB 2.07 billion, RMB 2.82 billion, and RMB 3.78 billion [1][5].