FIRST TRACTOR(SH:601038) Southwest Securities·2024-09-02 12:30Investment Rating - The report assigns a "Buy" rating for Yituo Co., Ltd. (601038) with a target price of 18.60 CNY over the next six months [1][18]. Core Insights - Yituo Co., Ltd. has shown robust growth in sales of medium and large tractors, with a net profit growth rate exceeding expectations. The company achieved a revenue of 7.807 billion CNY in H1 2024, a year-on-year increase of 7.78%, and a net profit of 905 million CNY, up 20.05% year-on-year [1][8]. - The company is positioned as a leader in the domestic medium and large tractor market, benefiting from a historical high in agricultural machinery purchase subsidies totaling 24.6 billion CNY in 2024, which is expected to stimulate demand further [1][15]. Summary by Sections Financial Performance - In H1 2024, Yituo Co., Ltd. reported a revenue of 7.807 billion CNY, with a year-on-year growth of 7.78%. The net profit for the same period was 905 million CNY, reflecting a 20.05% increase year-on-year. In Q2 2024, the revenue was 3.151 billion CNY, showing a 3.22% year-on-year growth but a 32.33% decline quarter-on-quarter [1][8]. - The company's gross margin improved to 17.01% in H1 2024, up 1.17 percentage points year-on-year, while the net profit margin reached 11.78%, an increase of 1.23 percentage points year-on-year [1][10]. Market Position and Strategy - Yituo Co., Ltd. is recognized as a leading player in the medium and large tractor market in China, with a market share increasing from 21% in 2017 to 24% in 2022. The company has been actively expanding its high-end product offerings and international market presence [1][15]. - The company has seen a steady increase in sales of medium and large tractors, with H1 2024 sales reaching 51,000 units, a 4.25% increase year-on-year, including 4,209 units exported, which is a 3.09% increase year-on-year [1][8]. Profitability Forecast - The report forecasts Yituo Co., Ltd.'s net profit for 2024-2026 to be 1.200 billion CNY, 1.396 billion CNY, and 1.611 billion CNY, respectively, with corresponding PE ratios of 14, 12, and 11 times [2][18]. - The company is expected to benefit from a recovery in the agricultural machinery market, with projected sales growth rates for medium and large tractors of 12%, 10%, and 10% for 2024, 2025, and 2026, respectively [15][18].