Incident: The company released its 3Q2024 financial report. In the first three quarters, the company achieved revenue of 177.177 billion yuan, +13.67% year-on-year, and realized net profit of 9.075 billion yuan, +23.06% year-on-year, after deducting non-net profit of 8.117 billion yuan, +15.43% year-on-year, gross profit margin of 11.72%, year-on-year.

The company's performance was in line with expectations, and the exchange rate led to the difference in the growth rate between attributable to mother and net profit: 3Q2024 The company achieved revenue of 73.579 billion yuan, +27.07% /month-on-month +43.73% month-on-month, achieved net profit of 3.679 billion yuan year-on-year, +21.88% /month-on-month +25.76%, net non-net profit of 3.158 billion yuan, year-on-year +9.71% /month-on-month, gross profit margin 11.75%, year-on-year -2.01pct/month-on-month -0.94pct . The company's revenue grew rapidly. Our judgment was that the share of major customers increased, and other consumer electronics, automotive, communications and other businesses were driven by multiple wheels; overall performance was in line with expectations, once again verifying the company's steady growth capacity; the company's gross margin declined year-on-year. We determined that it may be influenced by multiple factors such as Likai's major customer headlining business, exchange rates, and module products; the net profit growth rate attributable to shareholders of listed companies in the first three quarters was included in the recurring profit and loss financial expense account, and foreign exchange hedging operations were included in the recurring profit and loss financial expense account, while foreign exchange hedging operations were not included in the recurring profit and loss accounts. Sexual profit and loss accounts As a result, there was a certain difference in the net profit growth rate with the return home, and the company's actual performance was normal and steady.

4Q2024 guidelines continue to grow steadily, and I am optimistic that AI will lead growth in the next three years: the company also released a 2024 performance forecast, which indicates net profit of 131.43 to 13.691 billion yuan, +20.00% to 25.00% year over year; guidelines deduct non-net profit of 114.86 to 12.713 billion yuan, +12.76% to 24.82% year over year; estimated net profit of 4Q2024 to mother of 40.68 to 4.616 billion yuan, +13.69% ~ 28.99%, after deducting non-net profit of 33.68 to 4.596 billion yuan, +6.83% to 45.77% year-on-year, maintained steady growth. Looking to the future, we believe that Apple AI is expected to lead terminals into a new cycle of switching and lead the growth of the company's consumer electronics business. At the same time, the company is also expected to use its superior capabilities to achieve a continuous increase in share/material numbers for major customers; the company is expanding its overseas market footprint through the acquisition of Leoni, and connectivity products in the communications business are widely recognized by downstream chip/cloud manufacturers, and there is broad room for growth in the long term.

Investment advice: The company's performance is in line with expectations, guiding steady growth, and there is broad room for future AI to lead growth.

We expect the company's 2024-2026 net profit to be 13.604/17.013/20.203 billion yuan, EPS 1.88/2.35/2.80 yuan, and the corresponding PE is 23.03/18.41/15.51 times, maintaining the “gain” rating.

Risk warning: risk of declining consumer electronics demand; risk of falling short of expectations in automotive and communications business development; risk of trade friction; risk of exchange rate fluctuations; risk of equity pledge; risk of high customer concentration.