The company's revenue side has maintained high growth, expenses and costs are well controlled, and performance is expected to maintain a long-term positive trend.

In terms of profitability, the company achieved revenue of 9.942 billion yuan (+34% year-on-year), net profit of 95 million yuan (+7.61%), net profit after deducting net profit of 81 million yuan (+12.03%), net profit after deducting net profit of 81 million yuan (+12.03%), and maintained a marginal positive trend in revenue; judging from the 23Q3 single quarter, it achieved revenue of 3.37 billion yuan (+32.84% year-on-year), net profit of 0.36 billion yuan (+2.55% year-on-year), net profit of 0.36 billion yuan (YoY) +0.94% YoY ), the overall performance was good. The decline in the company's gross margin is mainly due to the increase in the share of overseas ODM revenue and the increase in procurement costs due to tight supply of core raw materials. It is expected that the gross margin of overseas business will remain in a relatively stable range in the future. In terms of cost ratio, the company's sales expense rate/management expense rate/ R&D expense ratio were reduced from 1.10%/1.33%/1.35% (22Q1-Q3) to 1.04%/1.13%/1.20% (23Q1-Q3), respectively, and the cost side was well controlled. Along with the company's satellite Internet business expansion and breakthroughs, capital increases and implementation of overseas subsidiaries, and increased coverage of communication towers have laid a solid foundation for the company's long-term development.

The rapid development of satellite internet has injected new profit momentum, and the performance of overseas subsidiaries that have increased capital is expected to exceed expectations.

Looking at the business sector, in terms of communication services, Haiweitong has brought high-and low-orbit satellite hybrid networking solutions and ship AI products to major international maritime exhibitions in Singapore, Japan, Norway, etc., adding nearly 10 overseas channels and partnerships, and is expected to find market opportunities for satellite applications in more scenarios. The company is expected to achieve multi-site coverage of tower projects throughout the year. As acquisition projects are implemented one after another, it is expected to become a profit growth point for the company. In the Internet advertising business, the company uses AIGC technology to deeply integrate with existing live streaming teams to help the company reduce costs and increase efficiency. The company launched a virtual live broadcast room to improve the practical application of digital human live streaming technology in live streaming business scenarios, reduce communication time costs, reduce production time, and save actor costs by more than 50%. The company maintains deep ties with leading customers, builds a quality service image, and effectively enhances the influence and penetration rate of the industry. As the economy recovers and picks up, the Internet advertising industry is expected to resume a rapid growth trend. In terms of overseas markets, the company is mainly located in developed regions, and its products are positioned in the middle and high-end markets.

In order to further enhance the company's international competitiveness and develop overseas markets through the country's “Belt and Road” policy, the company plans to use its own capital to increase the capital of 3D Communications (Hong Kong), a wholly-owned subsidiary, by 20 million US dollars. After the capital increase is completed, 3D Hong Kong's registered capital will increase from 20 million US dollars to 40 million US dollars. Overseas wireless coverage is mainly based on a co-building and sharing model for multi-operator scenarios. Customers require products that can meet their own customized needs. The company's product types are more diversified, overseas gross margin has more room for growth, and overseas profitability is expected to increase. Overall, the company actively participated in the 5G construction of domestic and foreign operators, and the development of overseas business injected new momentum into profit growth.

Based on the communications industry for a long time, we have been deeply involved in vertical applications, and have continued to increase R&D investment to enhance core competitiveness. The company's R&D expenses in the first three quarters reached 119 million yuan (+18.44% year-on-year), accounting for more than 15% of the communications sector's revenue.

The company's research and development is mainly invested in next-generation 5G products. It has been tested and approved by high-end customers such as global operators, and market space is expected to open up. We are optimistic about the company's high future growth. Combined with the company's latest performance, we gave the company net profit forecasts for 2023-2025 of 160 million yuan, 194 million yuan, and 244 million yuan, corresponding EPS of 0.20 yuan, 0.24 million yuan, 0.30 yuan, and corresponding PE of 37.79 times, 31.20 times, and 24.84 times. Considering the core advantages of technology and products, we maintain a “recommended” rating.

Risk warning: risk of exchange rate fluctuations; risk of rising raw material prices; risk of fluctuations in customer demand; risk of new product marketing falling short of expectations.