Key points of investment:

Incident: Milkway announces results for the first three quarters of 2024. 24Q1-Q3 achieved operating income of 9.55 billion yuan, +25.3% year on year, net profit of 0.49 billion yuan, +21.7% year on year, net profit of 0.45 billion yuan after deducting non-return net profit of 0.45 billion yuan, or +18.1% year on year. Looking at 24Q3 alone, the company achieved operating income of 3.56 billion yuan, +14.9% YoY, net profit to mother 0.18 billion yuan, +19.9% YoY, net profit not attributable to mother 0.16 billion yuan, +15.6% YoY.

24Q3 revenue was +14.9% year-on-year, and continued to grow. 24Q1-Q3's revenue was 9.55 billion yuan, +25.3% year over year, gross profit 1.06 billion yuan, +18.7% year on year, net profit to mother 0.49 billion yuan, +21.7% year on year, after deducting non-return net profit of 0.45 billion yuan, +18.1% year on year. Looking at 24Q3 alone, the company achieved operating income of 3.56 billion yuan, +14.9% year on year; gross profit of 0.38 billion yuan, +11.9% year on year, net profit of 0.18 billion yuan to mother, +19.9% year on year, net profit of 0.16 billion yuan without return to mother, +15.6% year over year.

The net profit margin for 24Q1-Q3 was 5.1%, and the net profit margin for the Q3 quarter was 5.0%. 24Q1-Q3 achieved a gross profit margin of 11.1%, -0.6pp year on year, 5.1% net profit margin to mother, -0.2pp year on year, and 4.7% net profit margin after deducting non-return to mother.

Looking at 24Q3 alone, the gross profit margin was 10.8%, the year-on-year net profit margin was 5.0%, the year-on-year net profit margin was +0.2pp, and the non-return net interest rate was 4.6%.

Profit forecasting and investment advice. In the first three quarters of 24, the company continued to promote steady operation. Looking ahead, industry demand has bottomed out, and the company continues to promote a steady business plan. We maintain the company's 24-26 net profit of 0.66, 0.75, and 0.87 billion yuan, corresponding to the current market capitalization PE of 14/13/11 times, respectively, to maintain a “buy” rating.

Risk warning: risk of market fluctuations in the chemical industry, risk of production safety accidents, risk of production capacity construction falling short of expectations.