Investment Rating - The report maintains a "Buy" rating for the company with a target price of HK 2.85 [1]. Core Insights - The company experienced a disappointing revenue growth of 8% in the first half of 2024, with a further decline in gross margin to 15.9% and net profit margin dropping to 3.4% [1]. - Revenue growth was the lowest since 2021, primarily due to weak performance in the automotive market, which negatively impacted the company's key revenue segments: new energy and intelligent driving [1]. - Despite the increasing penetration rate of new energy vehicles, intense price competition has compressed profit levels for upstream participants, limiting growth potential for the company [1]. - The report indicates that the company needs to enhance pricing and offer upgraded product combinations to achieve significant improvement, although a major turnaround is unlikely before downstream price wars improve [1]. - Positive signals for recovery are anticipated in 2025, with new solutions expected to contribute significantly to profits by 2026 [1]. Summary by Sections Financial Performance - Revenue for 2024 is projected at RMB 6,277.2 million, with a year-on-year growth of 8.2% [5]. - Gross profit is expected to be RMB 1,002.7 million, with a gross margin of 16.0% [5]. - Net profit is forecasted to decline by 31.9% to RMB 212.9 million in 2024 [5]. Market Position - The company holds a market capitalization of approximately HK$ 1.3 billion [1]. - The report highlights the competitive landscape, noting that the average price-to-earnings ratio for similar companies is significantly higher, indicating potential undervaluation [2]. Future Outlook - The company is expected to see initial recovery in 2025, with profit margins normalizing by 2026 as new solutions are launched [1]. - The anticipated increase in the proportion of self-produced batteries by GAC is expected to bring more orders to the company [1].
英恒科技：维持保守展望预期