The company achieved operating income of 13.05 billion yuan in the first three quarters, +37.9% year on year; realized net profit of 1.49 billion yuan, +63.9% year on year, net profit after deducting 1.38 billion yuan, +86.7% year on year; 24Q3 achieved operating income of 4.73 billion yuan, +38.0% year on year, achieving net profit of 0.501 billion yuan, or +15.3% year over year. The gross profit margin for Q1-Q3 in '24 was 25.9%, of which Q3 gross profit margin was 25.4%, +1.96pct year on year, and -1.72pct month-on-month.

Demand orders in the fields of AI and automotive electronics led to continuous improvement in the PCB business, and the Q3 operating rate remained high. In terms of communications, driven by AI demand, the demand for high-speed switches, optical modules, etc. of 400G and above on the wired side is continuously optimized, and the company has benefited from the increase in stand-alone value and the increase in demand for high-speed PCBs; in the data center sector, demand for servers has generally picked up, benefiting from the continued release of AI accelerator cards and ESG platform products, and the company's orders have increased significantly year-on-year; in the automotive sector, the company focused on the direction of new energy and ADAS, and the demand for products grew steadily.

In the field of carrier boards, the company's BT products are in line with the recovery trend of the storage market and are steadily introducing new products, driving the growth of orders for storage-related products; processor chip products have achieved breakthroughs in large-scale manufacturing capacity based on the WB process, supporting the introduction of more new customers and new products in the substrate factory; in RF RF products, the company has also completed the certification of major customers. The company's ABF carrier board business is the product line with the highest growth expectations. Currently, the company's FC-BGA packaging substrates have mass production capacity for products with 16 layers and below, and sample manufacturing capabilities for products with 16 layers or more. Currently, the second phase of the Wuxi substrate has achieved a monthly profit and loss balance, and the Guangzhou packaging board project has gradually entered the phase of climbing production capacity.

The company's electronic assembly business is a downstream part of the PCB manufacturing business, and the scale is expected to continue to benefit from growing demand in fields such as data centers and automobiles.

Investment advice and profit forecasting

We expect the company's net profit to be 2.14/2.44 billion yuan in 24/25, corresponding to EPS of 4.18/4.76 yuan, maintaining a “buy” investment rating.

Risk warning

Upside risks: New project development exceeded expectations; ABF carrier board certification progress exceeded expectations; downstream demand recovery exceeded expectations. Downside risks: Downstream demand for communications, consumer electronics, etc. continues to weaken; new customer and project development falls short of expectations; ABF carrier boards are progressing slowly; recovery in the storage industry falls short of expectations; and adverse changes in international policies.