Incident: On the afternoon of October 9, the company released the “Performance Forecast for the First Three Quarters of 2024”. 9M24 achieved net profit of 0.375-0.39 billion yuan (yoy +32.64%-37.95%), and realized net profit of 0.327-0.342 billion yuan (yoy +29.53%-35.47%).

Q3 Performance increased steadily, and industry applications of products and solutions were actively expanded. According to the company's performance forecast, 9M24 achieved net profit of 0.375-0.39 billion yuan (yoy +32.64%-37.95%) and realized net profit of 0.327-0.342 billion yuan (yoy +29.53%-35.47%). Looking at a single quarter, based on median calculation, 24Q3 achieved net profit of 0.131 billion yuan (yoy +22.70%) and realized net profit of 0.124 billion yuan (yoy +22.70%) (YOY +29.15%), the company actively expanded the application of products and solutions in the industry, and achieved steady growth in net profit.

9M24's share payment expenses due to equity incentives are about 41 million yuan, which is fully included in current profit and loss. The 24Q3 share payment fee is about 13.15 million yuan (about 8.64 million yuan during the 23Q3 period, an increase of about 4.5 million yuan over the previous year).

9M24 expects the impact of non-recurring profit and loss on current net profit to be 48 million yuan, and is expected to be 7.66 million yuan for 24Q3 (11.27 million yuan for the same period in 23Q3, a year-on-year decrease of about 3.62 million yuan, which is expected to be due to a decrease in government subsidies).

Based on exchange rate fluctuations in 24Q3, the impact of exchange gains and losses on net profit is estimated to be about 3 million yuan.

9M24 has achieved relatively rapid revenue growth in related business areas such as resources and utilities and geospatial information. 1) Resources and utilities: On the one hand, the company's agricultural machinery autonomous driving business continued to be booming, continuing a high growth trend in the first three quarters; on the other hand, benefiting from the trillion treasury bond policy, the company has continued to implement projects in the field of displacement monitoring such as disasters, water conservancy, and emergency, which has had a positive impact on the company's revenue. 2) Geospatial information: The company's independent research and development broke through the core technology of long-range lidar, and launched various new lidar products one after another. In the first three quarters, the company's self-developed products achieved good promotion results in domestic and foreign markets. As the products continued to be refined and mature, market acceptance continued to improve, there was plenty of room for subsequent growth.

The company concentrates resources to vigorously expand overseas markets. It is expected that the growth rate for the full year of '24 will increase compared to 24H1, and the gross margin of overseas markets will pick up. In the first three quarters, the company concentrated resources to vigorously expand overseas markets. Overseas regional revenue continued to grow rapidly. Overall, there is still plenty of room for growth. The company expects the overseas business growth rate for the full year of '24 to be faster than the first half of '24 (yoy +34.98%). At the same time, considering that the company's various products, including 3D intelligence, have gone overseas and are developing well, the superimposed company will adjust strategies and internal management goals according to overseas market conditions, and gross margin in overseas markets will pick up throughout the year.

Continued high investment in R&D to improve technology, product and solution capabilities. 24H1's R&D investment increased by 31.28% year on year, and the R&D expenditure rate reached 16.33% (yoy+1.05pct). It is expected that R&D investment will remain at a high level in recent years. The company continues to increase investment in basic devices such as chips, boards, and modules, improving technologies, products and solutions in high-precision positioning, integrated navigation, mechanized control, lidar systems, etc., and accelerating large-scale application of products and solutions for emerging markets such as autonomous driving and smart cities, which is expected to spawn new growth points in the future.

Investment advice: Leading high-precision navigation service provider, global layout accelerates expansion. It is estimated that in 2024-2026, the company's net profit to mother will be 0.589 billion yuan, 0.742 billion yuan, and 0.949 billion yuan, respectively. The corresponding PE is 32.4 times, 25.7 times, and 20.1 times, respectively, maintaining the “increase” investment rating.

Risk warning: the risk of macroeconomic disturbances exceeding expectations, the risk of increased industry competition, falling short of expectations in market segment expansion, falling short of expectations in product technology research and development, and the risk of exchange rate fluctuations.