In the first three quarters, the net profit of homing increased by 34% compared with the same period last year, and the main business developed steadily. By the third quarter of 2023, the company had achieved sales revenue of 10.312 billion yuan, an increase of 7.70% over the same period last year, and a net profit of 401 million yuan, an increase of 33.86% over the same period last year. In the third quarter alone, the company achieved sales revenue of 3.781 billion yuan, an increase of 9.31% over the same period last year, an increase of 16.83% over the same period last year, and a net profit of 120 million yuan, an increase of 25.00% over the same period last year and 3.27% over the previous year.

In terms of revenue structure, according to our estimates, in the first three quarters of 2023, low-voltage lead-acid batteries accounted for 75% of revenue, recycled lead accounted for 23%, and low-voltage lithium and other batteries accounted for 2%, basically the same as the same period last year. Automobile demand gradually recovered in the first three quarters of 2023, the commercial vehicle market performed well, production and sales volume resumed growth, the company, as the industry leader, continued to increase its share in the front and rear loading market, and its performance grew steadily.

Profit margins improved compared with the same period last year, and the profits of the recycled lead business were under short-term pressure. As of the third quarter of 2023, the company's gross profit margin / net profit margin was 14.60% / 3.89% respectively, an increase of 1.11% / 0.72% respectively over the same period last year; the sales / management / R & D / financial expense rate was 4.76% / 2.98% / 1.79% / 0.41% respectively, an increase of 9.03% / 10.84% / 37.58max / 114.57% over the same period last year. In the third quarter, the company's gross margin / net profit margin was 14.59% and 3.23% respectively, an increase of 2.24% and 0.58% respectively over the same period last year, and the month-on-month change was + 0.60% and 0.29% respectively. The sales / management / R & D / financial expense rates are 4.53%, 3.08%, 1.76%, 0.42%, 0.41%, 0.39%, 0.62% and 0.52%, respectively. The month-on-month change is 0.52%, 0.11%, 0.04%, 0.71%. Since the third quarter of last year, the recycled lead industry has continued to expand production capacity, competition has become increasingly fierce, terminal recovery costs have risen, and profitability is under pressure.

The construction of terminal channels was accelerated, and 17 fixed points were obtained for low-voltage lithium electricity. In the first half of 2023, in terms of supporting market, the company formed a stable supply and demand relationship with more than 200 mainframe factories, and more than 40 new mainframe factories were designated.

Six new energy projects have been designated. In terms of replacement market, more than 2900 service providers and nearly 97000 terminals had been completed by the end of the first half of 2023. In terms of low-voltage lithium, 17 projects were assigned, and 12V/24V/48V lithium products were designated by Geely, FAW Red Flag, Ford Daimler and other high-quality car companies. The company uses the stable customer relationship and excellent brand reputation accumulated by traditional lead-acid battery products to actively open up new customers and new channels.

The undervalued subdivides the track leader, the channel upgrade, the business development opens the growth space. The future growth space of Camel shares mainly lies in: 1) channel upgrading, the afterloading market of lead-acid battery, the scale of overseas market is much larger than the domestic front market; 2) business development, the company actively develops lithium battery business.

Risk tips: fluctuations in raw material prices, changes in the international and economic environment, pressure on the demand of the automotive industry.

Investment advice: downgrade earnings forecasts and maintain a "buy" rating.

Taking into account the fierce competition in the recycled lead industry and the pressure on profits, we downgrade our profit forecast. It is estimated that the net profit of the company will be 627,802 and 1.115 billion yuan respectively in 2023, 2024 and 2025, respectively, and the EPS will be 0.53, 0.68 and 0.89 respectively, and the corresponding PE will be 0.95 times that of 16-12-9. Maintain a "buy" rating.