Sales expenses continued to rise, and Q3 results fell slightly short of expectations

Cowell released its 2024 three-quarter report, and the company achieved revenue of 0.377 billion yuan in the first three quarters of 2024, yoy +6.3%. Net profit attributable to mother was 0.052 billion yuan, yoy -31.5%, and net profit not attributable to mother was 0.045 billion yuan, yoy -32.6%. 2024Q3 achieved revenue of 0.123 billion yuan, qoq -13.7%, yoy -8.8%, net profit to mother 0.01 billion yuan, qoq -58.4%, yoy -61.1%, net profit of 0.007 billion yuan after deducting non-attributable net profit of 0.007 billion yuan, qoq -67.3%, yoy -68.1%.

The gross margin and net margin for single Q3 were 46.1%/7.7%, respectively, -3.6/-8.6pct month-on-month, respectively. Sales/management/R&D/finance expenses were 15.3%/10.2%/16.2%/-2.2%, respectively, +1.1/+1.8/+2.1/-0.1 pct.

24Q1-3 sales expenses accumulated 0.056 billion yuan, yoy +40.2%, single Q3 sales expenses 0.018 billion yuan, yoy +20.9%. Considering the decline in profitability of the company's test power supply business due to increased competition in the industry and the company's continued increase in sales expenses, we lowered the company's profit forecast. The company's net profit forecast for 2024-2026 is 0.104/0.128/0.179 billion yuan (originally 0.134/0.182/0.25 billion yuan), EPS is 1.24/1.52/2.14 yuan, corresponding to the current stock price PE of 26.3, 21.3, and 15.2 times. Consider leading companies with rigid demand for test power supplies The position is stable and the “buy” rating is maintained.

Competition in the new energy test power supply industry has intensified, and profitability has declined

The company's test power supply product line mainly serves the optical storage and new energy vehicle industries. After rapid development in 2021-2023, the industry's growth rate slowed in 2024, and competition for test power supplies intensified due to the slowdown in downstream demand, which led to a decline in the sales price of the company's products, and the gross margin was under relative pressure. However, considering that the demand for experimental testing of new energy vehicles and optical storage inverters is still rigid, the company is still expected to achieve steady growth in this business with its rich product range and customer relationships.

Hydrogen energy test power supply products cover a complete range, and revenue is growing steadily

The company's hydrogen energy test power supply business has achieved steady growth. The main reason is that the company's downstream and major customers continue to repurchase while demand for downstream hydrogen production equipment testing continues to increase. The company's hydrogen energy test power supply products can be used for the hydrogen generation end and the hydrogen use end. On the hydrogen side, the reduction in the cost of hydrogen fuel cell systems and electric reactors brought about by technological breakthroughs and strong support at the policy level have driven the continued release of domestic demand for hydrogen fuel cells. On the hydrogen production side, demand for power grid consumption is driving domestic investment in green hydrogen projects to continue to expand. Along with the booming development of the domestic hydrogen use and hydrogen production industry, the company's hydrogen energy testing and intelligent manufacturing equipment business is expected to continue to contribute steadily to the increase in performance.

Risk warning: The gross margin of test power products fell beyond expectations; the development of the hydrogen energy industry fell short of expectations.