Incident: Achieved revenue of 0.811 billion yuan (yoy +0.79%), net profit of 83.8539 million yuan (yoy -26.05%), net profit of 72.3904 million yuan (yoy -40.18%) in the first three quarters of 2024; single Q3 achieved revenue of 0.279 billion yuan (yoy -1.14%), net profit due to mother of 32.0148 million yuan (yoy +8.20%), net profit not attributable to mother 24.1341 million yuan (yoy -17.19%)

Overseas business has maintained rapid development, and profitability has improved significantly: on the revenue side, despite pressure on the industry, the company achieved positive revenue growth in the first three quarters, and overseas business development maintained a good momentum, and its share increased further. 2024Q3's overseas revenue was 0.159 billion yuan, accounting for 57% of revenue, an increase of 0.55pct compared to 2024H1.

On the profit side, profitability continued to increase during the quarter, and the overall gross margin of 2024Q1-Q3 increased by 1.22pct/4.24pct quarter-on-quarter. Q3 net profit to mother reached 32.0148 million yuan, up 8.2% year on year and 24.26% month on month, improving the quality and efficiency of business development.

The cost ratio remained stable, and R&D investment remained high: the company's overall expenses were relatively stable. The sales/management/finance/R&D expenses rates for the first three quarters of 2024 were 11.62%/9.99%/-0.66%/5.61%, respectively, an increase of 0.62/1.13/3.12/0.5pct over the previous year. Meanwhile, R&D expenses increased 11% year-on-year in the first three quarters of 2024, and R&D investment remained at a high level, laying the foundation for the company's long-term development.

Investment proposal: We expect the company to achieve operating income of 1.105/1.246/1.406 billion yuan and net profit to mother of 0.115/0.141/0.174 billion yuan in 2024-2026. The corresponding PE was 28.06/22.87/18.52 times, respectively, maintaining the “gain” rating for the company.

Risk warning: risk of further decline in product prices, risk of inventory impairment, risk of exchange profit and loss, risk of stock ban lifting, etc.