The company released its three-quarter report for 2024. Under the path of specialization and upgrading, the company's profit growth rate was higher than the revenue growth rate.

In the first three quarters of 24, the company achieved revenue of 0.58 billion yuan, +3.6% year-on-year. Net profit attributable to mother/net profit not attributable to mother was 0.14/0.12 billion yuan, +11.9%/+9.9% YoY.

The company released its report for the third quarter of 2024. In the first three quarters of 2024, the company achieved revenue of 0.58 billion yuan, +3.6% year-on-year. Net profit attributable to mother/net profit not attributable to mother was 0.14/0.12 billion yuan, +11.9% YoY, with earnings per share of 0.7 yuan. The company achieved revenue of 0.2 billion yuan in a single Q3, +0.6% year over year, and net profit attributable to mothers/net profit without return to mother 0.05/0.04 billion yuan, +13.6%/+15.2% year over year.

Adhere to the path of specialization and upgrading, and net interest rates maintain an upward trend. In the first three quarters of 2024, the company achieved a gross profit margin of 59.3%, +1.4pcts year on year, 34.0 pcts year on year, +2.7 pcts year on year. Sales/management/ R&D/finance expense ratios were 18.9%/11.1%/3.9%/0.0%, respectively, and -1.1/+1.2/+0.9/+1.7 pcts year over year. Achieved a net profit margin of 24.8%, +1.2pcts year over year. Looking at 24Q3 alone, the company achieved gross margin of 59.1%, year-on-year -1.1 pcts, year-on-year expense ratio of 32.9%, year-on-year -2.1 pcts, sales/management/R&D/finance expense ratios of 18.6%/10.1%/4.2%/0.0%, respectively, and -4.4/-0.4/+1.3/+1.5pcts year-on-year, respectively. Achieved a net profit margin of 25.7%, +2.1pcts year over year.

With the launch of Easy Control PRO 2.0 and the recall of PRO1.0 series products within the channel, the three star products among traditional lenses have also achieved significant growth. The company launched a new generation of Easy Control PRO 2.0 series products in the third quarter. Its 12-month equivalent ball mirror efficiency is 73.82%, which is a significant increase of 60% compared to Easy Control PRO 1.0. On the basis of the same price, Easy Control PRO 2.0 products are superior and prevention and control effects are better. Sales of the full range of “Easy Control” products in the third quarter were 45.97 million yuan, up 2.4% year on year; after excluding the impact of product upgrades and recycling, sales of “Easy Control” products in the third quarter were 53.52 million yuan, and sales of “Easy Control PRO” series products increased 34.2% year on year.

In addition, among traditional lenses, the revenue of PMC ultra-bright series products increased 50.62% year-on-year in the first three quarters, and 1.71 series products increased 16.5% year-on-year.

The company is a leading domestic lens company with leading products, channels and brands. The company is a leader in the domestic lens industry and has mastered the core technology of lens research and production. The products, channels and brands are in a leading position in the industry. In the context of fierce competition in the defocal lens industry, the company adheres to brand tone and continues to launch high-quality products. At the same time, cooperation with Leica and smart glasses manufacturers is expected to open up a new growth curve. Considering that the company will complete the adjustment of the product structure by the end of 24, we slightly raised our profit forecast for 25-26. We expect to achieve net profit of 0.18/0.2/0.23 billion yuan in 2024-2026, up 11%/14%/15% year-on-year respectively. Currently, the stock price corresponds to the 24-year PE of 29.9X, maintaining a “highly recommended” investment rating.

Risk warning: Downstream demand growth falls short of expectations, market competition increases risks, raw material price fluctuations risk, myopia prevention and control business expansion falls short of expectations.