WOLONG ELECTRIC(600580) 浙商证券·2024-09-21 08:23Investment Rating - Maintain "Buy" rating [3][6] Core Views - Revenue and gross margin improved quarter-over-quarter in Q2 2024, with Q2 revenue reaching 4.24 billion yuan, up 13% QoQ, and gross margin at 25.97%, up 0.57 percentage points QoQ [1] - Net profit declined 35.09% YoY in H1 2024, mainly due to lower gross margin, increased expenses, and asset impairment losses from Hongxiang shares [1] - The company is well-positioned to benefit from the low-carbon equipment upgrade trend, particularly in industries like petrochemicals, mining, and home appliances, with its high-speed permanent magnet direct drive system improving efficiency by 10%-40% [1] - The company is a leader in the global electric aviation sector, collaborating with major players like COMAC and Geely's Volocopter, and is expected to capitalize on the growth of the low-altitude economy [2] Financial Performance and Forecast - H1 2024 revenue was 7.98 billion yuan, up 2.09% YoY, while net profit attributable to shareholders was 393 million yuan, down 35.09% YoY [1] - Revenue is forecasted to grow to 24.83 billion yuan by 2026, with a CAGR of 16.28% from 2024 to 2026 [5] - Net profit attributable to shareholders is expected to reach 1.37 billion yuan by 2026, with EPS projected to grow from 0.75 yuan in 2024 to 1.05 yuan in 2026 [3][5] - ROE is forecasted to improve from 8.82% in 2024 to 10.11% in 2026 [5] Industry and Market Position - The company is a global leader in industrial motors and is expanding its presence in the electric aviation sector, particularly in eVTOL (electric vertical take-off and landing) applications [3] - The low-carbon equipment upgrade trend, supported by government policies like the 300 billion yuan ultra-long-term special treasury bonds, presents significant growth opportunities for the company [1] - The company's collaboration with major players in the electric aviation sector positions it as a key beneficiary of the growing low-altitude economy [2] Valuation - The current PE ratio is 14x for 2024, expected to decline to 10x by 2026 [3] - The company's valuation is supported by its strong position in the industrial motor market and its growth potential in the electric aviation sector [3]