PONY(SZ:300887) SINOLINK SECURITIES·2024-08-29 02:01Investment Rating - The report maintains a "Buy" rating for the company, expecting a price increase of over 15% in the next 6-12 months [4][10]. Core Views - The company reported a significant decline in revenue and net profit for the first half of 2024, with revenue at 730 million RMB, down 38.7% year-on-year, and a net loss of 170 million RMB, down 283.6% year-on-year [2][3]. - The second quarter of 2024 showed some recovery with a revenue of 390 million RMB, down 40.5% year-on-year but up 17.7% quarter-on-quarter, and a net loss of 70 million RMB, down 187.3% year-on-year but up 25.1% quarter-on-quarter [2][3]. - The company is undergoing a client structure adjustment, which has impacted revenue more than the reduction in fixed costs, leading to a decline in overall gross profit margin [3]. - Despite the challenges, the company is expanding its laboratory capabilities, with new facilities coming online, which is expected to support future business growth [3]. Summary by Sections Financial Performance - In the first half of 2024, the life sciences and environmental health segment saw a revenue decline of 45.4% with a gross margin drop of 21.4%, while the automotive and other consumer goods segment experienced a slight revenue decline of 1.9% but an increase in gross margin by 3.5% [3]. - The company forecasts net profits of 200 million RMB, 330 million RMB, and 400 million RMB for 2024, 2025, and 2026 respectively, with corresponding EPS of 0.37, 0.61, and 0.73 RMB [4][6]. Valuation Metrics - The report provides a projected P/E ratio of 18x for 2024, 11x for 2025, and 9x for 2026, indicating a potential undervaluation based on future earnings growth [4][6]. Market Position - The company is recognized as a leader in comprehensive testing services and is actively expanding into the biopharmaceutical sector, which is expected to enhance its market position [3][4].