The company released its 2024Q3 financial report. In the first three quarters of 2024, revenue was 0.384 billion yuan, +4.58% YoY; net profit to mother was 68.03 million yuan, or -32.8% YoY. 24Q3 achieved revenue of 0.144 billion yuan in a single quarter, +14.91% year over month; realized net profit of 20.89 million yuan, -22.01% year on year, -27.89% month on month; achieved net operating cash flow of 32.1 million yuan, or -12.67% year over year.

24Q3 revenue grew steadily year over year, and downstream demand growth was still under pressure. Downstream connector demand is affected by macroeconomic factors such as the slowdown in global economic growth, and the overall growth of the company is relatively weak. The company's continued growth mainly benefits from the continuous growth of the new energy connector and automotive connector business. 24H1's industrial control/automotive/new energy connector business revenue growth rates were -14%/+24%/+28%, respectively. The overall business trend in Q3 did not change much in the short term. The industrial control business is still the company's basic business. Continuously expanding new application scenarios and diversified new products, and developing global markets are the company's business focus. Downstream customers in the automotive connector business are under high price war pressure, or it is transmitted upstream. The company continues to focus on medium- and low-voltage signal segments to develop new customers and application scenarios. The company's new energy connectors are mainly used in solar and wind energy inverter systems to further serve and develop strategic customers in the core business district of the Yangtze River Delta through Hefei Weifeng.

The 24Q3 gross margin was 39.4%, down 5.08pct from month to month, which may be related to short-term increases in depreciation and other generation costs after the company moved from a leased plant to a self-built plant, as well as due to an increase in the price of upstream raw materials such as copper and gold. 24Q3 The company's cost rate pressure increased month-on-month. Among them, the management cost rate increased significantly, mainly related to the increase in operating expenses during the period associated with the plant relocation. 24Q3 sales/management/R&D/finance expenses were +37.7%/+58.9%/-2.8%/+62.9% year-on-year, accounting for +0.3 pct/+3.3 pct/-1.5 pct/+0.8 pct in revenue, respectively. Net profit margin for 24Q3 was 15.04%, down 6.12pct from month to month, affected by declining gross margin and rising expense ratios. Looking ahead, business recovery is expected to be slow due to weak demand. The company continues to strengthen its core competitiveness, and there is still room for growth in customer share.

Investment advice: The company's net profit for 2024-2026 is expected to be 0.095/0.119/0.153 billion yuan, corresponding PE is 45/36/28X, respectively, to maintain a “buy” rating.

Risk warning: Market competition intensifies; market demand falls short of expectations; high pressure on customers to cut prices.