SNS(300470) HTSC·2024-09-02 00:03Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 46.66 [6][7]. Core Views - In the first half of 2024, the company achieved a revenue of RMB 724 million, representing a year-on-year increase of 18.1%, and a net profit attributable to the parent company of RMB 173 million, up 7.6% year-on-year [1]. - The company is expanding its production capacity and enhancing its digital transformation, with a focus on the "Big Sealing" layout and mechanical sealing sector [4][3]. - The company’s gross margin was under pressure due to the rising proportion of lower-margin incremental business, with a gross margin of 47.1% in H1 2024, down 4.0 percentage points year-on-year [2]. Summary by Sections Financial Performance - For H1 2024, the company reported a net profit of RMB 173 million, a 7.6% increase year-on-year, and a non-recurring net profit of RMB 160 million, up 12.5% year-on-year [1]. - The second quarter alone saw a revenue of RMB 387 million, a year-on-year increase of 18.9%, and a net profit of RMB 91 million, up 12.4% year-on-year [1]. Business Expansion - The company is actively expanding its production capacity, with plans to build a new sealing plant expected to take about three years to complete [4]. - The company has secured significant orders in the mechanical sealing sector, including contracts for high-pressure gas sealing systems and large-scale reforming projects [3]. Cost Management - The company maintained good control over its expense ratios, with a total expense ratio of 19.8% in H1 2024, down 3.11 percentage points year-on-year [2]. - The sales expense ratio was 8.4%, down 1.02 percentage points year-on-year, while the management expense ratio was 6.7%, down 1.04 percentage points year-on-year [2].