occurrences

On October 28, 2024, the company released its 2024 three-quarter report. 24Q1-Q3 achieved operating income of 2.745 billion yuan, +36.73% year-on-year, realized net profit of 0.109 billion yuan, +28.64% year-on-year, and realized net profit without deduction of 1.06 yuan, or +30.63% year-on-year.

On a quarterly basis, 24Q3 achieved revenue of 0.893 billion yuan, -8.31% year on year, -15.55% month on month; realized net profit of 30.2626 million yuan, or -34.56% year on month, and realized net profit without return to mother 29.2676 million yuan, -6.45% year on year and -32.55% month on month.

Profitability declined compared to the previous month

The company's 24Q3 gross profit margin and net margin was 16.26%/3.54%, -1.61 pcts/ -1.63 pcts year on year, and +1.08 pcts/ -0.89pcts month-on-month. In terms of the cost rate for the period, the fee rate for the 24Q3 period was 11.07%, +2.19 Pcts/0.63 Pcts compared to the same period, respectively. All cost rates increased month-on-month. We judge that the decline in the company's profitability is mainly due to increased competition in the photovoltaic industry, reduced profitability of welding belts, and increased costs brought about by the company's business expansion.

The three major businesses go hand in hand, and the scale of revenue continues to grow

The company focuses on the three major businesses of power distribution equipment, energy storage systems and new photovoltaic materials, and continuously carries out R&D and market development to continuously enhance the company's market competitiveness. In the first three quarters of 2024, the company's three major businesses went hand in hand, and the revenue scale all achieved good growth. The year-on-year growth rates of power distribution equipment, energy storage systems and new photovoltaic materials businesses reached 16.99%/114.42%/40.53%, respectively.

A joint venture was established with ABB, and the bus market share is expected to continue to increase. On September 19, 2024, the company reached an agreement with ABB, a technology leader in the field of electrical automation, to establish a joint venture to cover the R&D, production and sales of ABB low-voltage bus products in China, with the aim of further enhancing the competitiveness of ABB bus products. This cooperation is expected to rely on the advantages of both parties in the electrical industry, empower each other, and jointly expand the market coverage of bus products and low-voltage power distribution system products to better meet customer needs.

Investment advice

The company's 24-26 revenue is estimated to be 4.052/5.919/7.247 billion yuan, and net profit to mother is 0.152/0.254/0.383 billion yuan, respectively, and the corresponding PE is 19x/12x/8x. Overall, the company's bus base market is stable. After establishing a joint venture with ABB, the market share is expected to increase, the energy storage business is expected to accelerate, and the profit of welding belts is expected to recover after the PV pattern improves, maintaining the “recommended” rating.

Risk warning

Downstream demand falls short of expectations, capacity construction falls short of expectations, market competition intensifies, etc.