The company achieved net profit of 0.166 billion yuan in 2024Q3, +11% year over year and +81% month over month. The company's revenue for the first three quarters of 2024 was 8.517 billion yuan, which was basically the same as the previous year; net profit to mother was 0.268 billion yuan, or -7% year-on-year. The company's 2024Q3 revenue was 3.17 billion yuan, +3% YoY, +13% month-on-month; realized net profit to mother 0.166 billion yuan, +11% YoY and +81%. The company's gross margin for 2024Q3 was 28.28%, -0.55pct year on year, +4.13pct month-on-month; net margin was 4.24%, +1.01pct yoy, +2.11pct month-on-month.

The company's Q3 consumer battery sales continued to grow. We estimate that the company's 2024Q3 consumer battery sales were only 0.105-0.11 billion, up more than 20% year on year and 21% month on month. Q3 is the traditional peak season for consumer electronics. The company continues to increase its supply share with domestic and foreign customers to drive rapid sales growth. Looking ahead, the company's Q4 battery sales are expected to remain relatively stable with the release of new models from customers. We expect the company's consumer battery sales volume to exceed 0.38 billion for the whole year, an increase of more than 16% over the previous year.

The company's profitability of consumer batteries increased significantly from month to month. We estimate that in 2024Q3, the company's net profit for consumer batteries was about 0.255 billion yuan, +40% month-on-month; the net interest rate was about 8.7%, +1.5pct month-on-month. If exchange losses are added back, the company's net profit for consumer batteries in 2024Q3 was about 0.31-0.32 billion yuan, nearly doubling from month to month; the net interest rate was about 10.6%, +4.1pct month-on-month. The company's Q3 utilization rate increased significantly, the customer structure continued to be optimized, and profitability increased significantly from month to month.

The company's technical layout continues to improve, overseas bases are steadily advancing, and it continues to consolidate its leading position in the consumer battery industry. In terms of production capacity, the company announced on July 8 that it plans to invest about 2 billion yuan to build a consumer battery base in Malaysia to better explore the international market and meet the needs of overseas consumer battery customers. On the technical side, the company's advanced products with high energy density and high charging speed, such as sixth-generation flash lithium batteries, high-energy density steel-shell batteries, and seventh-generation ultra-fast charging lithium batteries, are all in the trial production stage.

Shipments in the company's mobile storage battery business continue to grow, and profitability is steady, moderate and improving. We estimate that the company's 2024Q3 dynamic storage battery business revenue will exceed 0.2 billion yuan, with start-stop battery revenue growing rapidly. The company's 2024Q3 mobile storage battery business lost 0.089 billion yuan, a year-on-year loss of 0.041 billion yuan and a month-on-month loss of 0.001 billion yuan. The company's mobile storage battery business continues to focus on the fields of drone batteries and automotive low-voltage batteries, and the profitability of related businesses is stable, moderate and positive. Since 2024, the company has successively received fixed positions such as Zhiji, Jaguar Land Rover, Stellantis, GM, a leading German car company, GM, and a leading domestic new energy car company, which will help the company start and stop the battery business to grow rapidly in the future.

Risk warning: demand falls short of expectations; new customer development falls short of expectations; raw material prices fluctuate sharply.

Investment advice: Maintain profit forecasts and maintain ratings that are superior to the market. We expect the company to achieve net profit of 0.456/0.846/1.286 billion yuan in 2024-2026, +32/+86/ +52% year over year, EPS 0.40/0.75/1.14 yuan, and dynamic PE 44/24/16 times.