Description of the event

The company released its 2024 three-quarter report: the company achieved revenue of 2.352 billion in the first three quarters, an increase of 23.1%; realized net profit of 0.117 billion, an increase of 21.0%; and realized net profit of 0.115 billion yuan without return to mother, an increase of 29.4%.

Equivalent to Q3, we achieved revenue of 0.888 billion yuan, an increase of 23.9%; realized net profit of 0.039 billion yuan, an increase of 26.3%; realized net profit without deduction of 0.039 billion yuan, an increase of 37.4%.

Incident comments

Revenue improved markedly in the first 3 quarters, and earnings remained stable. The company's revenue for the first three quarters increased by 23.1% year-on-year, which is expected to be mainly brought about by the release of automotive products and shipping products. In terms of profitability, the company achieved a gross profit margin of 18.1% in the first three quarters, the same as the previous year. The cost rate increased by 0.5 pcts to 10.6% during the first 3 quarters, with sales rates increasing by 0.3 pcts, R&D rates increasing by 0.6 pcts, and management rates falling by 0.4 pcts. Other income increased by 4.76 million yuan, mainly affected by VAT deductions; in addition, asset impairment losses increased by 6.33 million year over year, and credit impairment losses decreased by 7.82 million yuan.

In the end, the net interest rate was 5.0%, down 0.1 pct, deducted 4.9% of the non-net interest rate, and increased 0.2 pcts.

Q3 Revenue continued to grow, and gross margin declined year-on-year. Q3 achieved revenue of 0.888 billion, an increase of 23.9% over the same period, and revenue continued to grow month-on-month. The gross margin also fell 2.3 pcts to 17.1%, or mainly due to the high base for the same period; the cost ratio remained flat at about 10.7% year over year, with sales and management rates falling 0.3 pcts and R&D rates increasing by 0.6 pcts. Credit impairment losses were high during the same period, with a year-on-year decrease of 15.7 million in the current period. In the end, the net attributable interest rate was 4.4%, an increase of 0.1 pct over the previous year, deducted 4.3% of the non-net interest rate, and an increase of 0.4 pcts over the previous year.

From sunroof support to new opportunities for vehicle sealing. Relying on the customer resources accumulated by sunroof seals, the company is comprehensively advancing its vehicle business and gradually entering vehicle sealing systems for many car companies such as Guangzhou Automobile, SAIC Motor, Changan, Great Wall, and Ideal. Furthermore, the company uses automobile seals to drive automobile vibration damping, and has received approval from factories such as Chery, Guangzhou Automobile, Geely, and Great Wall Motors and important orders for vehicle mounts or shock absorbers and bushings. We expect the company's complete vehicle seals to enter the fast track of growth.

The leader in short frames is expected to expand in partnership with Longji. PV module installation requires the use of rectangular aluminum alloy frames to protect the components and increase mechanical strength. Many years ago, the company developed pressure block products used in the photovoltaic field, and has been continuously upgraded and iterated. The current product is defined as a fastener short frame product with better reliability, which can greatly reduce the amount of aluminum used in the photovoltaic industry and reduce costs. Recently, the company announced that its subsidiary Haida New Energy plans to supply snap-on products to Longji Green Energy. The two parties have signed a relevant agreement on this long-term cooperation. The expected purchase volume for the period from June 2025 to June 2027 is 8 GW. The signing of this agreement means that the company's short frame products have officially entered the release stage, opening up room for future growth.

Investment advice: Expected net profit of 0.16 or 0.24 billion in 2024 and 2025, corresponding to PE 58 or 40 times.

Risk warning

1. Prices of raw materials have risen sharply;

2. Demand in the automotive industry is weak.