Net profit expected to return to mother in 24Q3 is 1.92 to 0.21 billion yuan

Silver Wheel Co., Ltd. announced the third quarter results forecast. It is expected to achieve a cumulative net profit of 5.95 to 0.61 billion yuan from 24Q1 to Q3; of these, Q3 is expected to achieve net profit of 1.92 to 0.21 billion yuan, an increase of 21.4% to 32.8% over the previous year, and achieved deduction of non-net profit of 1.83 to 0.198 billion yuan, or +18.1% to 27.7% year over year. The company is making joint efforts in emerging businesses such as new energy passenger vehicles, digital and energy, and overseas customers are actively expanding, and they are optimistic that performance growth will continue to be realized.

Maintaining the previous forecast, the company's net profit to mother for 2024-2026 is expected to be 0.89/1.15/1.43 billion yuan, respectively.

Comparatively, the company's 25-year Wind unanimously expected an average PE value of 16.6 times, giving the company 16.6 times PE in '25, with a target price of 22.91 yuan (previous value of 16.85 yuan), maintaining a “buy” rating.

Q3 deducted non-net profit is expected to reach a new high. The passenger car business benefited from the new energy customer production and sales climbing company's Q3 net profit center of 0.201 billion yuan, a slight decrease of 5% month-on-month and an increase of 27% year-on-year; it achieved a deducted non-net profit center of 0.191 billion yuan, an increase of 3% month-on-month and 23% year-on-year increase, which is expected to hit a new high of deducted non-net profit in a single quarter. In Q3, sales volume in the heavy truck industry fell 19/ 24% year over month to 0.177 million vehicles. Heavy natural gas truck sales also declined due to rising LNG gas prices. In a situation where the commercial vehicle business faced weak downstream demand and exchange fluctuations were adversely affected, the company maintained steady year-on-month growth. On the one hand, production and sales of new energy passenger vehicle customers increased. Q3 related car companies such as BYD, NIO, and Hongmeng Zhixing had sales of +14.9%/+7.8%/+10.7%, respectively. On the other hand, the results showed that the company's global factory operating efficiency continued to improve.

The global layout continues to improve, and we are optimistic about the release of profits from overseas players

The company clarifies the business policies and goals of internationalization and increasing industrial overseas, and the globalization process is being accelerated: 1) The layout is continuously improved. The second phase of production capacity at the Mexican plant will be mass-produced within the year, and the North American headquarters in Houston will be established to support territorial development. 2) Overseas project orders continue to increase. In September, a fixed point for thermal management of new energy vehicles in Europe was added. 3) Improve the efficiency of global factory operations. The company will continue to improve overseas profitability by strengthening the global supply chain and introducing lean management tools. The 24H1 Mexico Phase I plant has reversed losses. The North America/Europe silver wheel targets to turn profits within 24 years/25, respectively, and I am optimistic about the company's profit release from overseas players.

Actively explore the “third-fourth curve”, and the new thermal management scenario brings new opportunities for growth. The company concentrates resources to invest in the “third curve” and “fourth curve”, including AI artificial intelligence chips and data center thermal management. 24H1's digital and energy business orders have fully blossomed, breaking through 4 strategic customers and 2 major customers. Energy storage thermal management has obtained Ariston/BYD/CRD/Sunshine power projects; the data center business has received orders for oversized cooling modules and liquid cooling systems for backup power; the low-altitude sector will supply low-altitude aircraft thermal management products to well-known domestic customers, laying the foundation for rapid revenue growth over the next 2-3 years and opening up space for the company's medium- to long-term growth.

Risk warning: The release of digital and energy thermal management orders fell short of expectations; demand for passenger cars fell short of expectations.