The company released the 2024 three-quarter report

In the first three quarters of 2024, the company achieved total revenue of 2.857 billion yuan (-1.71%), net profit to mother of 0.721 billion yuan (+6.11%), net profit after deducting 0.689 billion yuan (+6.35%), net operating cash flow of 0.469 billion yuan (-4.50%), and a weighted average return on net assets of 18.36%. Looking at a single quarter, in the third quarter, the company achieved revenue of 1.022 billion yuan (-10.16%), net profit to mother 0.271 billion yuan (-13.89%), and net profit of 0.264 billion yuan (-10.84%) after deduction.

Expense rate control was relatively stable, and profit margins declined slightly in the third quarter of a single

According to the company's three-quarter performance report, the company's sales/management/R&D expenses ratio for the first three quarters was 4.74%/3.84%/4.34%, respectively. Among them, sales and R&D expenses both declined year-on-year, falling 3.23%/17.98% respectively, while management expenses increased slightly by 8.91% due to rising personnel costs. The change in financial expenses compared to the same period last year was -41.86%, mainly due to an increase in exchange earnings compared to the same period last year. In terms of profit margin, gross sales margin and net margin for the first three quarters of 2024 were 40.74%/25.32%, respectively, up year-on-year. However, looking at the third quarter of a single quarter, due to product restructuring and a decline in gross margin of vacuum pumps and other businesses in the third quarter, the gross margin of Q3 2024 declined year-on-year and month-on-month, to 41.27%.

The company's net margin for Q3 2024 was 26.56%.

The air compression and refrigeration market demand is broad, and the pan-semiconductor industry vacuum pump product market continues to expand

In the field of air compression and refrigeration, the overall domestic market demand is currently weak, and the stock of equipment updates in the industrial sector still needs to be progressed steadily, so the short-term boom is not high, and it is necessary to observe the effects of subsequent policies; however, considering that the refrigeration sector still has room to improve the cold chain penetration rate in the long term, the company's products in the field of air compression have achieved results in incremental markets in various industries such as coal mines, chemicals, cement, etc., and are expected to grow steadily. In the vacuum pump sector, the photovoltaic industry's revenue share and growth rate will decline. The expansion of the domestic semiconductor industry will still take time, but considering the major trend of domestic substitution and autonomous and controllable supply chains, the business is still expected to accelerate in the future.

Investment advice

We are optimistic about the long-term development of the company, but considering the large environmental impact, the revised profit forecast is: 2024-2026 operating income forecast of 3.737/3.977/4.425 billion yuan (previous value was 4.235/4.847/5.58 billion yuan; net profit forecast to mother is 0.849/0.912/1.037 billion yuan (previous value was 0.969/1.118/1.305 billion yuan); calculated based on the current total share capital of 0.535 billion shares Diluted EPS was 1.59/1.71/1.94 yuan (previous value was 1.81/2.09/2.44 yuan).

The PE ratio corresponding to the current stock price is 13/12/10 times, maintaining a “buy” investment rating.

Risk warning

1) The risk that the subsequent expansion of production in the photovoltaic industry will fall short of expectations. 2) The risk that customer expansion in the semiconductor industry falls short of expectations. 3) Risk of fluctuations in overseas markets. 4) Risk of significant fluctuations in raw materials. 5) The risk of errors in estimating market space.