Revenue is stable, and profitability increased steadily in Q3

Camel Co., Ltd. released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved operating income of 11.333 billion yuan, yoy +9.9%, achieved net profit of 0.487 billion yuan, yoy +21.6%, and realized net profit without deduction of 0.482 billion yuan and yoy +25.4%. Among them, 2024Q3 achieved operating income of 3.806 billion yuan, yoy +0.68%, QOQ -6.5%, net profit due to mother 0.174 billion yuan, yoy +44.25%, QOQ +10.0%, net profit not attributable to mother 0.14 billion yuan, yoy +0.02%, and QOQ -19.8%. Single Q3 gross margin and net margin were 13.4%/4.6%, respectively, -1.1 pct/+0.7 pct, respectively. The company's domestic operations were stable, and overseas sales continued to contribute additional volume. We maintain the company's profit forecast for 2024-2026. We expect the company's net profit to mother for 2024-2026 to be 0.804/1.09/1.405 billion yuan, corresponding to the current stock price PE of 12.5, 9.2, and 7.2, maintaining a “buy” rating.

International business continues to advance, supporting overseas leaders

According to the company's public account, in July 2024, Camel Co., Ltd. Brilliance BMW's designated AGM product production line successfully passed the Final-PZS audit, and the conditions for batch supply to BMW were in place. In September 2024, the Camel AGM46ah battery was approved by German Volkswagen's BMG. German Volkswagen plans to fully use AGM46Ah batteries in the European market in 2025. Camel Co., Ltd. is the priority domestic company to obtain BMG approval for this type of battery. As of October 2024, Camel Battery has successfully completed the development of 5 products in the Volkswagen AGM series, laying a solid foundation for future in-depth cooperation.

Expense control is strict, and net interest rate rebounded in Q3

Net profit for single Q3, yoy +44.25%. The large fluctuation was mainly due to the year-on-year decrease in the expense ratio and changes in the fair value of the company's equity investment during the period. The cost rate for a single Q3 period was 7.8%, with sales/management/R&D/finance expenses rates of 4.3%/2.9%/1.9%/-1.2%, respectively, -0.1pct/+0.2pct/-1.2pct month-on-month, respectively. Expenses were strictly controlled during the company period. Q3 net margin rebounded to 4.6%, +1.4pct year over year and +0.7pct month-on-month.

Risk warning: risk of technological change; risk of market competition; fluctuation in raw material prices; overseas business expansion falls short of expectations; raw material prices are difficult to transfer to terminals.