CCA(SH:603100) Guotou Securities·2024-08-26 12:34Investment Rating - The investment rating for the company is "Buy-A" with a target price of 20.28 CNY, maintaining the rating [5]. Core Views - The company reported a steady growth in Q2 2024, achieving a revenue of 3.744 billion CNY, up 4.19% year-on-year, and a net profit of 362 million CNY, up 2.70% year-on-year. In Q2 alone, revenue reached 2.177 billion CNY, an increase of 7.04% year-on-year, with a net profit of 214 million CNY, up 0.23% year-on-year [2]. - The company is expected to benefit from equipment renewal policies that may drive capital expenditure recovery in downstream industries in the short term. In the long term, the automation level in process industries is anticipated to expand the market, while the trend towards domestic production of industrial instruments is expected to continue [2]. - The company is actively expanding its overseas market, achieving overseas revenue of 76 million CNY in H1 2024, accounting for 2.34% of total revenue, with new overseas orders increasing by 86% year-on-year [4][7]. Financial Performance - In Q2 2024, the company's gross margin was 31.66%, down 1.58 percentage points year-on-year, and the net profit margin was 9.84%, down 0.71 percentage points year-on-year. The pressure on gross margin is attributed to changes in product structure and intensified competition in the low-end market [3]. - The overall expense ratio for Q2 2024 was 22.26%, down 1.87 percentage points year-on-year, with sales, management, R&D, and financial expense ratios at 11.17%, 4.80%, 7.01%, and -0.73% respectively [3]. - Revenue projections for 2024-2026 are 8.132 billion CNY, 9.043 billion CNY, and 9.963 billion CNY, with year-on-year growth rates of 9.74%, 11.20%, and 10.17% respectively. Net profits are expected to be 800 million CNY, 928 million CNY, and 1.075 billion CNY, with growth rates of 7.56%, 15.99%, and 15.81% respectively [8].