Main points of investment:

On October 19, Inball released its third quarterly report for 2023. Revenue in the first three quarters was 1.26 billion yuan,-8.48% compared with the same period last year. The net profit was 43.055 million yuan, + 32.27% compared with the same period last year, and the revenue in the third quarter was 540 million yuan, + 6.25% compared with the same period last year. The net profit was 72.3557 million yuan, a year-on-year reversal of losses. Profit performance exceeded market expectations.

The company's revenue continued to grow month-on-month in the first three quarters. Taking into account the gradual expansion of new orders, we expect Q4 revenue to hit a new high.

The main factors that affect the company's performance during the Q3 reporting period include

The cost pressure realizes the effective transmission of the supply chain. The inventory of high-priced raw materials has been basically consumed, and the pressure on the cost side of Q3 has been effectively alleviated. At the same time, pressure transmission is also carried out at the end of the supply chain. Progress has been made in promoting the localization of electronic components, and joint development of cost reduction has been achieved in structural components, electronic components, permanent magnets and other materials.

Research and development and technology cost reduction to improve product profitability. Achieve cost reduction from the source of design, and create products with both cost advantages and technical advantages.

Complete the product switching and improve the capacity utilization rate. The company's orders increased, revenue increased in the first three quarters compared with the previous quarter, and fixed cost allocation declined.

Subsidies for production capacity construction and innovation projects are one-time income.

The management reduces the cost, the expense rate drops effectively. The equity incentive ended one after another, and the equity incentive fee of Q3 decreased significantly compared with the same period last year. At the same time, the implementation of comprehensive budget management, in the operation of the production and management costs to achieve fine management, effectively reduce costs.

Looking to the future, it is believed that with the gradual expansion of the three generations of integrated cores and the landing of new major customers, the company's revenue and profits will return to normal. It is expected that after the landing of major customers in 24 years, the company's revenue will exceed 3 billion yuan, and its profit is expected to exceed 180 million yuan. In the past 25 years, not only the contribution of overseas customers, but also the potential of new commercial vehicle products are worth looking forward to.

Investment analysis opinion: technology cost reduction is a better solution for Chinese manufacturing to achieve corner overtaking, and Inbol's "integrated core" scheme is the embodiment of this trend. The relief of cost-side pressure is expected to continue to contribute to the company's profits, and the future transformation will be more leisurely. Taking into account the existing operating inflection point, we have raised our revenue forecast for 23-25 from 100 million yuan in 18-29-42 to 100 million yuan in 19-32-45. At the same time, the 23-25 return net profit is forecast to be increased from 0.08 RMB 1.91 billion to 0.99 trillion USD, and the corresponding pre-PE is double that of 58-27-17. Maintain the company's overweight rating, taking into account the valuation premium expected for the company's high growth next year and the investment opportunities driven by the recovery in downstream demand in the sector as a whole.

Risk tips: price war continues to worsen, raw material costs fluctuate, downstream demand for new energy shrinks.