Chongqing Machinery & Electric (2722) H1 2024 earnings summary

Executive summary

• Revenue for the first half of 2024 reached RMB4,225.7 million, up 8.7% year-over-year, with net profit attributable to shareholders rising 48.5% to RMB270.1 million and basic EPS at RMB0.07.

• Gross profit increased 1.5% to RMB744.0 million, while net assets per share rose 4.1% to RMB2.29 compared to the same period last year.

• All business segments reported revenue growth, with high-end smart equipment showing the strongest increase at 26.9%.

• Operating profit grew 40.3% year-over-year to RMB331.8 million, and investment income surged 55.0% to RMB281.7 million, mainly due to strong performance from joint ventures.

• The Group maintained a stable financial position, with a current ratio of 1.53 and a gearing ratio of 21.7%.

Financial highlights

• Revenue: RMB4,225.7 million (+8.7% YoY); Gross profit: RMB744.0 million (+1.5% YoY); Operating profit: RMB331.8 million (+40.3% YoY); Net profit attributable to shareholders: RMB270.1 million (+48.5% YoY); Basic EPS: RMB0.07 (+48.5% YoY).

• Net assets per share: RMB2.29 (+4.1% YoY); Net assets: RMB8,421.6 million (+2.2% from year-end 2023).

• Cash and bank deposits: RMB1,984.4 million (down RMB334.2 million from year-end 2023), mainly due to loan repayments.

• Finance costs increased 76.1% to RMB45.6 million due to lower exchange gains.

• Other income rose to RMB88.9 million, mainly from increased government subsidies.

Outlook and guidance

• Management expects steady growth for the full year 2024, with gross profit margin to remain stable.

• The Group will focus on expanding market share, driving innovation, optimizing capital structure, and strengthening risk management in the second half of 2024.

• Key strategies include digital transformation, green technology adoption, and capital operations for high-quality development.

• Clean energy equipment aims to expand exports and develop new products, while high-end smart equipment will focus on new product launches and European market expansion.

• Industrial services segment is expected to remain stable, with continued digitalization and risk management improvements.