Incident: The company released its 2024 three-quarter report. In the first three quarters, it achieved revenue of 5 billion yuan, +17% year over year; net profit to mother of 0.74 billion yuan, +24% year over year; net profit after deducting non-return to mother of 0.68 billion yuan, +16% year over year.

Looking at Q3 alone, the company achieved revenue of 1.7 billion yuan, +8.4%/+7.3% month-on-month; net profit to mother of 0.29 billion yuan, +45%/+34% month-on-month, after deducting non-return net profit of 0.26 billion yuan, +32%/+34% month-on-month.

3Q24's profitability performance was impressive, and equity incentives showed confidence in growth. 3Q24 achieved gross margin/net profit margin of 29.7%/17.3%, +1.0/4.6pcts year over year and +2.1/3.2pcts month over month. The expected improvement in gross margin is mainly due to factors such as falling prices of raw materials such as aluminum & zinc. In terms of expenses, 3Q24's sales/management/ R&D/ finance rates were 1.2%/6.8%/5.5%/-1.8%, respectively, -0.05/+1.2/-3.0pcts year-on-year, and +0.1/-0.2/-2.4pcts compared to the previous month. Among them, the sharp decline in financial expenses ratio was the main reason for the year-on-month increase in net interest rate. In addition, the company issued a new draft equity incentive plan to grant the incentive target 8.032 million shares of restricted shares, accounting for 0.82% of the total share capital. The plan uses the revenue growth rate as the assessment target, and aims to achieve revenue growth rates of 19.19% and 25.90% in 2025/2026 (the highest indicators) using 2023 as the base, demonstrating the company's confidence in growth.

Growth is driven by large components of new energy, and the global strategy is progressing steadily. Product expansion cycle: The company's traditional advantages of small and medium-sized parts are stable, and it is gradually expanding to new energy medium and large die-castings such as automotive three-electric systems and body structural parts. As of the first half of 2024, the company's total production and sales of 1800-6000T die-casting products account for more than 15%. It is estimated that 2000-4400T die-casting machine products will account for more than 25%/40% respectively in 2025/2030, achieving product structure transformation and upgrading. Globalization continues to advance: 1) Mexico: Construction of the second phase of the plant will begin in 2023. The products cover structural parts for new energy vehicles and components for three-electric systems. It is expected to be put into operation in Q2 2025. 2) Malaysia: Construction of the Malaysian plant will begin in 2023 to ensure the company's stable supply of raw materials. The plant will be completed in June 2024, mass production of aluminum alloy material production lines will begin in July, and mass production of zinc alloy parts is expected to begin within the year. 3) Hungary: A wholly-owned subsidiary was registered and production base planning progressed in an orderly manner.

Investment advice: Continue to be optimistic about the company's new energy medium and large product cycle & globalization strategy. In 2024-2026, the company's revenue is expected to be 7.1/9/11.2 billion yuan, +19%/+24% year over year, and net profit to mother of 1.06/1.32/1.61 billion yuan, +16%/+25%/+22% year over year, maintaining the “buy” rating.

Risk warning: Overseas business development falls short of expectations; risk of fluctuations in raw material prices; risk of exchange rate fluctuations.