Core Viewpoint - The company reported strong financial performance in the first half of the year, with significant revenue and profit growth driven by increased orders and cost efficiency improvements [1][2]. Financial Performance - The company achieved revenue of 839 million yuan in the first half, a year-on-year increase of 41.20%, and a net profit attributable to shareholders of 138 million yuan, up 110.25% year-on-year [1]. - In Q2, revenue reached 448 million yuan, reflecting a year-on-year growth of 38.07% and a quarter-on-quarter increase of 14.98% [1]. - The gross margin and net margin for Q2 were 41.35% and 16.93%, respectively, with year-on-year increases of 2.71 percentage points and 5.08 percentage points [2]. Cost Management and Profitability - The improvement in net margin was primarily due to product mix adjustments and enhanced cost control, along with a reduction in stock incentive expenses [2]. - The company reported a net cash flow from operating activities of 167 million yuan in the first half, a significant increase of 248.64% year-on-year, attributed to higher sales collections [2]. Industry Position and Growth Areas - The company is well-positioned as a leader in the domestic fuse industry and is accelerating its expansion into emerging and global markets [1][3]. - In the first half, revenue from the new energy vehicle sector was 556 million yuan, up 52.41% year-on-year, while revenue from wind power and energy storage was 188 million yuan, an increase of 13.54% [3]. - The company is focusing on high-end markets with products like incentive fuses and smart fuses, which are expected to see increased market penetration due to rising demand for active protection [3]. International Expansion and New Markets - The company is actively expanding into international markets, having entered the supply chains of major players like Tesla and Daimler in the new energy vehicle sector [4]. - The planned production capacity in Thailand is expected to account for about 10% of total capacity, primarily serving the European and North American markets [4]. Profit Forecast and Valuation - The company maintains profit forecasts for 2025-2027 at 320 million yuan, 410 million yuan, and 540 million yuan, with corresponding EPS of 3.22, 4.21, and 5.45 yuan [5]. - Based on comparable company PE averages, a 2025 PE valuation of 32 times is applied, resulting in a target price of 102.84 yuan [5].

Core Viewpoint - The Chinese automotive fuse industry is experiencing rapid growth driven by the booming automotive sector, particularly in the new energy vehicle (NEV) market, with a projected market size of 1.6 billion yuan in 2024, representing a year-on-year growth of 38.17% [1][10]. Industry Overview - Automotive fuses, also known as automotive circuit breakers, are critical components in vehicle electrical systems, designed to protect against overloads and short circuits by automatically disconnecting the circuit [2]. - The industry has evolved through four main stages: initial technology accumulation, standard transition, domestic replacement, and the current phase of intelligent transformation [3][4]. Industry Development History - The industry began with technology accumulation from the 1950s to the 1970s, followed by a transition to international standards in the 1980s, leading to improvements in product quality and reliability [3]. - From 1996 to 2010, domestic manufacturers began to close the gap with foreign brands, while the period from 2011 onwards has seen a shift towards high-voltage and intelligent fuses due to the rise of NEVs [4]. Industry Supply Chain - The upstream supply chain includes raw materials such as conductive metals (copper, silver), insulating materials (ceramics, glass), and arc-extinguishing materials [6]. - The midstream involves the manufacturing of automotive fuses, while the downstream is primarily the automotive industry [6]. Market Size - The automotive fuse market in China is expected to reach 1.6 billion yuan in 2024, with high-end products like incentive and intelligent fuses seeing a penetration rate exceeding 15% [10]. Key Companies' Performance - The competitive landscape is characterized by foreign brands dominating the high-end market, while domestic companies like Zhongrong Electric are gaining market share through technological advancements [12]. - Zhongrong Electric has achieved over 20% global market share in high-voltage fuses for NEVs, while Haoli Technology focuses on cost advantages in the traditional and mid-range NEV markets [12]. Industry Development Trends 1. **Technological Upgrades and High-End Breakthroughs** - The industry is moving towards higher voltage and current capabilities, with new products exceeding 1000V being developed [17]. - Intelligent fuses with integrated communication interfaces and self-diagnostic functions are becoming essential for safety in autonomous driving and vehicle networking [17]. 2. **Diversification of Market Demand and Scene Expansion** - The application of automotive fuses is expanding beyond traditional vehicles to include the entire new energy vehicle supply chain, with increasing demand in charging stations and energy storage systems [19]. 3. **Deepening Domestic Replacement and Global Layout** - Domestic manufacturers are accelerating the replacement of foreign brands and expanding globally, with companies like Zhongrong Electric establishing subsidiaries abroad to mitigate trade barriers [20].