海外：系统解决方案项目成为主流，看好毛利率保持较高水平。24Q3 公司综合毛利率达到49.4%，同比+6.1pct，我们认为主要系公司海外业务中解决方案占比不断提升，规模效应摊薄固定成本。从行业需求来看，发展中国家渗透率仍处于较低水平，提升空间大，24Q3 我国电表出口总金额约30.1 亿元，同比+22%，其中亚洲/非洲/拉美出口金额分别同比+37%/56%/-39%，发展中国家工业化拉动电表等用电基础设施升级，公司布局海外产能+开拓新市场，海外用电业务有望保持稳健增长。Key points of investment
Incident: The company's 24Q1-3 revenue was 3.41 billion yuan, +18.7% YoY, net profit 0.79 billion yuan, YoY +18.3%, gross profit margin 46%, YoY +5.8pct, YoY net interest rate 23.2%, YoY -0.1 pct; of these, 24Q3 revenue was 1.15 billion yuan, +16.1% yoy, net profit to mother 0.26 billion yuan, YoY +11.5%, gross profit margin 49.4%, YoY +6.1pct, net mother profit margin 22.4%, -0.9pct year on year.
The company accrued asset impairment of 0.023 billion yuan in 24Q3. We believe that it is mainly inventory accrual for overseas projects, and the accrual is expected to be recovered in the future as the project is executed and delivered. Considering the impact of one-time factors such as impairment and taxes, the company's overall performance is in line with market expectations.
Overseas: System solution projects have become mainstream, and gross margins are expected to remain at a high level. The 24Q3 company's comprehensive gross margin reached 49.4%, +6.1pct. We believe that the main reason is that the share of solutions in the company's overseas business continues to increase, and the scale effect dilutes fixed costs. In terms of industry demand, the penetration rate of developing countries is still at a low level, and there is plenty of room for improvement. In 24Q3, China's total electricity meter export value was about 3.01 billion yuan, +22% year-on-year, with exports from Asia/Africa/Latin America +37%/-39%, respectively. Industrialization in developing countries drives the upgrading of electricity infrastructure such as electricity meters. The company lays out overseas production capacity+opens up new markets, and the overseas electricity business is expected to maintain steady growth.
Domestic: State grid meters have entered a peak replacement period, and distribution investment has accelerated. State Grid electricity meters were tendered for three batches in '24, totaling only 89.3397 million, +25% over the same period. The company's share of the first two batches remained stable in the first tier. In the power distribution sector, as the State Grid strengthens investment in the power distribution sector, the company continues to break through in the State Grid+ South Grid market. Looking ahead to the whole year, we expect the company's domestic business to grow rapidly.
The increase in staff led to a large increase in expenses, and Q3 income tax increases put a slight pressure on profits. The company's expenses for the 24Q1-3 period were 0.62 billion yuan, +51.9% year over year, +4pct year on year. We expect the company to add 121 new employees and additional personnel input for the Romanian factory; 24Q3 corporate income tax was 0.067 billion yuan, +93% year over year, with a sharp increase in income tax, which put a slight pressure on profits; the debt contract at the end of 24Q3 was 0.16 billion yuan, +16% year over year, and on-hand orders are expected to maintain steady growth.
Profit forecast and investment rating: Considering the influence of factors such as exchange+expenses, we lowered the company's net profit to mother for 24-26 to 1.21/1.5/1.89 billion yuan (original value was 1.25/1.55/1.9 billion yuan), +23%/24%/25% year-on-year, and the corresponding current price valuations were 18x, 14x, and 11x, respectively, giving a 25-year 20x PE, and a corresponding target price of 61.5 yuan/share, maintaining a “buy” rating.
Risk warning: Overseas projects fall short of expectations, increased competition, etc.