Event: The company released its 2023 three-quarter report. In the first three quarters, the company achieved revenue of 4.324 billion yuan, -6.03% year-on-year, net profit of 312 million yuan, +83.91% year-on-year, net profit of 161 million yuan, +7.03% year-on-year, gross profit margin of 14.45%, and +3.16 pct year-on-year. In the 23Q3 quarter, the company achieved revenue of 1,827 billion yuan, -7.77% /+29.45% month-on-month, net profit of 248 million yuan, +130.32% /+332.76% month-on-month, net profit of 107 million yuan, +4.72% y/y +104.08%, gross profit margin 16.87%, year-on-year +4.85pct/+3.42pct.

Investment income was driven by a sharp increase in net profit, and profitability increased significantly: 23Q3 overseas entered the peak consumer electronics season, the company's revenue and profit reached a seasonal high, and net profit in the single quarter increased sharply year-on-year, with a slight year-on-year increase in non-profit. Among them, non-recurring profit and loss was about 141 million yuan in a single quarter, mainly due to the capital increase in capital and stock expansion of Yibin Libao, a subsidiary of Guangzhou Lithium Bao, which lost control over Yibin Lithium Bao and confirmed investment income of about 280 million yuan. The company's equity method of accounting confirmed the investment income of about 113 million yuan.。 There was a clear increase in gross margin in the 23Q3 quarter over the same period. Our judgment is that the company's product structure has been optimized, and the share of high-margin products has increased. If it can be maintained, the profitability of subsequent quarters should be viewed more positively. Looking ahead, as the wave of AI speakers comes, automotive acoustics enters mass production, and XR acoustics is expected to pick up with new products, the company's growth momentum is abundant, and it is expected to enter a period of continuous growth.

AI speakers lead the card slot, and car acoustics are successfully mass-produced: 1) AI speakers: Jointly developed by the company and VIFA, the “ChatMini” AI speaker exclusively produced by the company was launched on the market in August 2023. Cooperation with domestic and foreign manufacturers with large model smart speakers continues, and research and development of various product types has been carried out, such as those with screens and emotional support functions. The company's leading card position in AI speakers is expected to help seize the opportunity in the AI speaker wave. 2) Automotive acoustics: The company has already mass-produced some third-generation automotive platform projects for leading new power P customers, has prepared mass production for new energy Z customers, and is actively promoting cooperation with many new energy/traditional car companies. The automotive business is expected to grow rapidly in the future, forming an important contribution to performance.

Investment suggestion: The profit of the company's traditional electroacoustic business is steadily rising, and AI speaker+car acoustics is expected to become an important growth driver. We expect the company's net profit for 2023/2024/2025 to be 374/3.04/422 million yuan, EPS to be 0.63/0.51/0.71 yuan/share, and the corresponding PE ratio is 24.82/30.53/21.98 times, maintaining the “increase in holdings” rating.

Risk warning: The progress of industrialization of new products falls short of expected risks; the risk of automobile demand falling short of expectations; the risk of falling consumer electronics demand; exchange rate risk; risk of trade friction; risk of raw material supply and price fluctuations.