The company issued a three-quarter report announcement. Revenue for the first three quarters was 14.74 billion +19.4% year over year, net profit 1.37 billion plus 52.7% year over year, deducted 1.31 billion plus 55.8% year over year, gross profit margin 22.0% year over year +2.5 pcts year on year, and net profit margin 9.8% year on year +2.7 pcts year on year. Based on the company's recent situation, the reviews are as follows:

Q3 Performance growth slowed due to fluctuating demand. The increase in the company's performance in the first three quarters mainly benefited from: 1) the company's copper-clad board production and sales volume increased year-on-year, unit manufacturing costs declined, and sales structure was optimized, leading to a year-on-year increase in revenue and gross margin of copper clad products, as well as enjoying a value-added tax credit policy to increase other revenue and drive profit growth; 2) The subsidiary Shengyi Electronics continued to optimize the product structure and actively improve the regional layout of the product business. As the market's demand for high-rise, high-precision, high-density and high-reliability multi-layer PCBs increased, and net profit increased. Get a significant boost. Looking at Q3 alone, Q3 revenue 5.12 billion year over year +14.5% month-on-month -1.7%, net profit to mother 0.44 billion +27.8% month-on-month -18.6%, net profit margin +24.1% month-on-month -22.6%, gross profit margin 22.9% yoy +2.9pcts month-on-month +1.1pcts, net profit ratio 9.2% yoy +1.7pcts month-on-month, period expense ratio 13.3% yoy +2.7pcts month-on-month + 2.9 pcts The year-on-year growth rate of Q3 performance slowed compared to the first half of the year. The main reason is that since July, downstream PCB customers have had some inventory adjustments due to fluctuations in demand and falling copper prices. The market is worried that the CCL industry will be under price pressure in the future. Order volume and utilization rate declined sequentially in the third quarter, and the combined cost of equity incentives had an impact on the cost side.

Looking at the CCL sector, there is a possibility that both cost and demand will drive price increases in the future, and the overall valuation is relatively low. We generally believe that in the future, when the global economy continues to pick up, compounded by a cycle of interest rate cuts, upstream raw material prices will be in an upward channel, and expectations of a gradual increase in demand recovery will inevitably expand demand for upstream cargo delivery through the inventory factor. Therefore, we believe that the overall CCL in the medium to long term will be on an upward channel in the future. In the short term, raw material inventories in the PCB industry have been digested, and the peak season boom continues. CCL orders are expected to gradually pick up. CCL profitability may continue to improve due to rising copper prices or preparing new price increases in the industry.

Looking forward to the future, the company's operations are expected to overcome short-term fluctuations in the CCL industry, continue to achieve new progress and breakthroughs in high-end products, and are firmly optimistic about the long-term growth logic of Shengyi Technology. In the short term, although the market is concerned about subsequent price pressure in the CCL industry, the company is still maintaining a high operating rate through order structure optimization, and the overall price remains stable. Driven by superimposed national subsidy policies, order demand for home appliances and other products is expected to improve, and Q4 business performance is expected to improve month-on-month. We believe that the company's operations are expected to overcome short-term fluctuations in the CCL industry; in the medium to long term, in terms of high-end products, the company's M7/M8 materials have passed certification from overseas N customers and domestic H customers. It is expected to gradually start in the second half of the year and next year, and domestic computing power demand is also expected to gradually start this year With continued growth, the company has a card position advantage in the domestic core customer supply chain; the penetration rate of the traditional EGS server platform is rapidly increasing, and demand for M6 materials continues to be released to promote high-end product structure upgrades; in addition, the North American A customer project has also progressed well; ABF carrier board base film (SIF film) has cooperated with major domestic customers to verify it, and is currently progressing well. Moreover, the company has obvious card position advantages in high-end products such as automobile boards, digital communication boards, and Weitong boards, and is expected to continue to gain strength, bringing additional growth momentum. In addition, Shengyi Electronics has gradually broken through the leading overseas cloud vendor customers in the digital communication field, obtained large AI orders, and continued to release new production capacity, which is expected to contribute flexibly to Shengyi Technology.

Maintain a “Highly Recommended” investment rating. We believe that the high-end upgrading of the company's products is expected to continue to be realized. Based on factors such as the latest financial reports and short-term industry demand fluctuations, we recently forecast 24-26 revenue of 19.9/22.89/25.86 billion, net profit to mother of 1.87/2.51/3.06 billion, corresponding PE of 25.6/19.1/15.7 times, and PB of 3.2/2.8/2.5 times. We are optimistic about the company's product matrix, management capabilities and medium- to long-term business development space, and maintain a “Highly Recommended” rating.

Risk warning: raw material prices fluctuate, industry competition intensifies, demand falls short of expectations, technology upgrades fall short of expectations.