Event: The company released its three-quarter report for 2024, and the company achieved revenue/net profit of 3.05/0.67 billion yuan in the first three quarters of 2024, +18.1%/+18.8% over the same period last year. 3Q24 achieved revenue/net profit to mother of 1.05/0.27 billion yuan, +14.0%/21.7% YoY.

Steady growth in performance and optimization of cost rates. 3Q24 achieved total revenue of 1.05 billion yuan, +14.0% year over year, achieved net profit of 0.27 billion yuan, +21.7% year over year; achieved net profit deducted from non-mother of 0.23 billion yuan, +12.1% year over year, with steady growth in performance. In terms of profit margin, the company's 3Q24 gross margin was 45.3%, +4.0pct month-on-month; net margin was 27.2%, +4.6pct month-on-month. Looking at the cost ratio for the period, the company's 3Q24 sales/management/R&D/finance expenses ratio was 3.2/6.7/6.2/ 0.0%, respectively. Among them, the sales expense ratio decreased significantly compared to the same period last year, -1.8% year-on-year, and the overall cost rate for the period was 16.1%, down 2.2 pct from the same period last year.

Strengthen business collaboration among various sectors and increase market development efforts. The proportion of commissioned business by the company's testing engineering division has further increased. The incremental business layout is beginning to bear fruit, and gains have been made in new business fields such as NCAP and intelligent wire-controlled chassis, storing momentum for the company's continued growth. The company's energy power division continues to focus on the three business areas of electric energy, hydrogen energy, and energy storage, and continues to make breakthroughs in new businesses such as hydrogen internal combustion engine projects, charging pile certification, and electric drive five-star certification. It continues to advance in technology development, channel construction, commercial inspection applications, etc., and has achieved breakthroughs in platform data services such as CCIC Auto Service, automobile financial inspection services, and NEV inspection and maintenance equipment. The company's equipment division completed the signing of contracts for key wind power projects and successfully won the bid for the General Administration of Market Supervision's industrial robot implementation rules project.

It has achieved remarkable results in capitalization, commercialization, ecology, and internationalization. In terms of capitalization breakthroughs, the national regionalization layout was improved, and strategic cooperation agreements were signed with the Shenzhen Nanshan District Government, the Pingshan District Government, and the Anhui Dingyuan County Government; major energy construction projects are progressing in an orderly manner, the main structure of the East China headquarters base construction project has been capped, the company's “Global Vehicle Communication Evaluation Technology Innovation Base” has been successfully completed, and a technical service platform for the entire chain of new energy intelligent connected vehicles has been established. In terms of commercialization breakthroughs, a virtual technology center for safety evaluation was established, and the operation mechanism of the big safety evaluation center was clarified, and 11 new product development projects were set up; in terms of ecological breakthroughs, pilot applications of upgraded prototypes of vehicle charging and testing equipment were promoted, and the first “new energy used vehicle testing” service product in China was released. Successfully developed the global standard data center (automobile) website version 2.0, and completed the filling of more than 0.01 million policy standard data items. In terms of international breakthroughs, an overseas road test service network covering key regions such as Europe, Southeast Asia, Japan and South Korea was basically established, the 5th overseas center was established in the Middle East and Saudi Arabia, a memorandum of strategic cooperation was signed with the Malaysian Road Traffic Safety Research Institute, a strategic framework cooperation agreement was signed with the Italian testing and certification agency CSI, completed the construction plan for Thailand's national new energy intelligent connected testing center, and signed a strategic cooperation agreement with the National Science and Technology Development Administration of Thailand.

Maintain a “Highly Recommended” investment rating. The company uses the new strategic layout as a starting point to focus on integrated development, pressurize and forge ahead, increase the business share of leading new car builders, and steadily grow in business performance. The revenue of the automotive technology service and equipment manufacturing business increased steadily. The estimated net profit for 24-26 will be 0.96/1.12/1.32 billion yuan, respectively, maintaining the “Highly Recommended” investment rating.

Risk warning: industry and policy risks; technical risks; talent risks; business risks, etc.