Incident: In the first three quarters of 2024, the company achieved revenue of 0.52 billion yuan, +30.24% year over year; net profit to mother 0.093 billion yuan, +33.49% year over year; net profit after deducting non-return to mother 0.091 billion yuan, +40.82% year over year. Looking at a single quarter, the company achieved revenue of 0.18 billion yuan, +25.62% year over year; net profit to mother 0.026 billion yuan, -28.05% year over year; net profit after deducting non-return to mother 0.025 billion yuan, -28.18% year over year.

Profitability increased slightly in the first three quarters, and gross margin in a single quarter was under pressure. In the first three quarters of 2024, the company's gross profit margin was 41.91%, +4.51pct year on year; the net profit margin was 17.61%, +0.46pct year on year, which increased the scale effect of batch production, and cost reduction and efficiency continued to advance. 2024Q3, the company's gross profit margin was 40.47%, -6.13pct; the net profit margin was 14.03%, -10.39pct year on year, or affected by the product delivery structure, and the gross margin was under pressure in the short term.

On the cost side of the period, the company's R&D/management/sales expenses were 0.039/0.042/0.013 billion yuan, respectively, -0.51%/+50.57%/+64.51% year-on-year.

Downstream demand is rising, and we are actively preparing for production and preparation. During the reporting period, the company's advance payments were 0.019 billion yuan, +503.43% at the beginning of the period; contract debt was 2.5448 million yuan, +1005.22% compared to the beginning of the period; inventory was 0.191 billion yuan, +22.80% compared to the beginning of the period. Advance payments and contract liabilities increased dramatically or indicated that downstream demand was strong, and the company actively prepared for production and preparation.

The company's production capacity has advanced, and the construction of various production lines has begun to bear fruit. According to the semi-annual report, the construction of the overall plant and supporting facilities for the company's aero engine key components capacity expansion project has been fully completed, production capacity of the new specialized workshop has been gradually released, the adjustment of the automated production line production model has seen initial results, and the industrial energy level of compressor blades and overall impellers has been rapidly upgraded; the welding workshop for the R&D center project has also entered the equipment verification and product development stage. The quantity of some newly introduced products climbed steadily, and the delivery quality of mature blade products continued to improve.

Investment advice: The company's net profit for 24/25/26 is expected to be 0.13/0.168/0.216 billion YOY +43.9%/+29.2%/+28.6%. Maintain a “buy” rating.

Risk warning: risk of raw material price fluctuations; risk of exchange rate fluctuations; industry progress falling short of expectations.