KYLAND(SZ:300353) HTSC·2024-08-22 08:03Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 8.96, down from a previous target of RMB 10.43 [1][6]. Core Insights - The company reported a revenue of RMB 420 million for H1 2024, representing a year-over-year increase of 2.20%. The net profit attributable to the parent company was a loss of RMB 93.13 million, but this reflects a year-over-year improvement of 16.01% [1]. - In Q2 2024, the company achieved a revenue of RMB 284 million, showing a significant year-over-year growth of 20.03% and a quarter-over-quarter increase of 109.12% [1]. - The company is expected to see an EPS of RMB 0.12, RMB 0.21, and RMB 0.31 for the years 2024, 2025, and 2026 respectively [1]. Revenue and Profitability - For H1 2024, the company's revenue from industrial network communication, smart controllers, and industrial operating systems was RMB 270 million, RMB 100 million, and RMB 50 million respectively, with growth rates of 2.5%, -14.3%, and 74.0% year-over-year [3]. - The gross margin for the industrial operating system segment was 66.7%, although it decreased by 10.6 percentage points year-over-year [3]. R&D and Cash Flow - The company has increased its R&D expense ratio to 29.94%, up by 3.41 percentage points year-over-year, indicating a strong commitment to R&D and technology transformation [2]. - The operating cash flow improved by 50.23% year-over-year, reaching a negative RMB 101 million, attributed to faster collections from long-aged accounts and increased government subsidies [2]. Market Position and Technology - The company has established a comprehensive self-controlled industrial internet product and technology system, which includes core technologies such as AUTBUS bus technology and TSN networks [4]. - The accumulation of "root technologies" is expected to provide a long-term competitive advantage and increase market share in the downstream market [4].