Brief performance review

On October 28, the company released its three-quarter report. 1-3Q24's revenue was 8.59 billion yuan, +10.6% year over year, net profit due to mother 1.02 billion yuan, +27.9%, net profit without return to mother 0.985 billion yuan, +27.7% year over year; single Q3 company revenue was 3.15 billion yuan, +7.1% month on month, net profit to mother 0.368 billion yuan, +8.5% month on month, net profit of non-return to mother 0.357 billion yuan, +7.2% month on month. The results exceeded expectations.

Management analysis

1. The reduction in the rate made up for the decline in gross margin, and the net interest rate remained stable. 1-3Q24's gross profit margin was 23.2%, -0.1 pct year on year, 4 rate 8.9%, -0.7 pct year on year, asset+credit impairment -0.048 billion yuan year on year, and other income +0.073 billion yuan year on year, after deducting non-return net interest rate of 11.5%, +1.5 pct year on year. In Q3 alone, the company's gross profit margin was 23.4%, the four-month rate was 8.4%, and the month-on-month -0.8 pct. The net interest rate after deducting non-return mother was 11.35%, which remained flat month-on-month.

2. Continue to consolidate the profit gap with the second-tier and strengthen the leading position. Q3 The pressure to reduce prices in the industry increased, and the profits of second-tier enterprises for structural components were generally under month-on-month pressure. The company's profits bucked the trend, and the gap with the second tier increased rather than decreased. It stemmed from the company's excellent cost & expense control capabilities, and better products (some fast charging products constituted premiums due to more complex premiums) and customer structure (the company's customers were widely distributed).

3. Follow-up outlook: It is expected that Q4 will maintain month-on-month revenue and profit growth compared to Q3. Shipments are expected to increase by 20%-30% in '25, and overseas output is expected to double as overseas demand is gradually released, further increasing the profits of overseas factories.

Profit Forecasts, Valuations, and Ratings

As a global leader in structural components, Kodaly continues to maintain its leading position with leading technology, strong customer stickiness, and ability to reduce costs on scale, and its profit stability has been verified. We expect the company's net profit to be 1.415/1.6/1.82 billion yuan in 24-26, and the corresponding PE will be 18/16/14X, respectively, maintaining a “buy” rating.

Risk warning

Demand for new energy vehicles and energy storage fell short of expectations, structural component prices fell beyond expectations, and overseas production capacity fell short of expectations.