Incident: The company released the “Report for the Third Quarter of 2024” on the evening of October 28. In the first three quarters of 2024, the company achieved operating income of 42.399 billion yuan, an increase of 20.79%; net profit attributable to shareholders of listed companies was 2.315 billion yuan, an increase of 28.32% year on year; and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 2.208 billion yuan, an increase of 30.20% year on year.

Actively seize development opportunities, and performance is in line with expectations. Looking at 2024Q3 in a single quarter, the company achieved operating income of 15.785 billion yuan, a year-on-year increase of 32.28%, and net profit of 0.705 billion yuan, an increase of 27.25%; net profit after deducting non-return to mother of 0.693 billion yuan, an increase of 40.94%, mainly due to the company actively grasping market opportunities and maintaining relatively rapid growth in related business areas such as UHV and power grid intelligence, industrial and new energy intelligence, marine energy and communications.

Continue to explore the market and have plenty of orders in hand. The company actively explores domestic and overseas markets. In September 2024, the COMVERGE TECNOLOGIAS plant, the company's industrial base in Queretaro, Mexico, was officially put into operation, taking a solid step in the process of deepening the Latin American market. By the end of the third quarter of 2024, the company had plenty of orders in hand. It has an on-hand order amount of about 20 billion yuan in the energy interconnection field such as submarine cables, marine engineering, and land cable products; has an on-hand order amount of about 6 billion yuan; and has an on-hand order amount of more than 0.3 billion US dollars for the PEACE trans-ocean cable communication system operation project.

It is proposed to implement a restricted stock incentive plan to promote a long-term reward mechanism. In order to further improve the corporate governance structure of the company, achieve long-term incentives and restrictions on the company's core personnel, fully mobilize their enthusiasm and creativity, integrate their interests more closely with the company's long-term development, and achieve the company's sustainable development, the company plans to grant no more than 21,553,532 A-shares restricted shares to some core technology and market backbone.

Among the company-level 2024-2026 performance assessment targets, the target operating income value is 54.765/59.527/64.289 billion yuan, the operating income trigger value is 53.336/57.146/60.956 billion yuan, the net profit target value to the mother is 2.584/2.8/3.015 billion yuan, and the net profit trigger value to mother is 2.498/2.67/2.843 billion yuan, which is expected to bring positive results to the company's ability to continue operating and shareholders' rights Positive impact.

Investment suggestions: The company actively exploits the advantages of communication networks such as optical communication and marine communication to create a full industry chain model integrating “product-service-operation”; at the same time, the company grasps the development opportunities of global energy connectivity and concentrates on building a global energy interconnection solution service provider. As the company's strategy continues to advance, the company's profits are expected to increase further. We expect the company's net profit to be 2.731/3.266/3.787 billion yuan in 2024-2026, respectively, with corresponding growth rates of 27%/20%/16%, and PE 16.1X/13.5X/11.6X respectively, maintaining a “highly recommended” investment rating.

Risk warning: the risk of fiber optic cable tenders falling short of expectations, increased risk of marine business competition, risk of marine business progress, and risk of costs and liabilities.