The company's third-quarter revenue remained flat at 23.78 billion yuan year on year, and net profit to mother fell 13% year on year to 3.04 billion yuan.

Revenue for the first three quarters increased 6% year over year to 64.99 billion yuan, and net profit to mother fell 8% year over year to 8.11 billion yuan.

The exchange loss in the third quarter was about 0.13 billion yuan; the total exchange loss in the first three quarters was 0.21 billion yuan, while the exchange gain in the first three quarters of last year was about 0.105 billion yuan.

Domestic business differentiation, active adjustment of SMBG inventory: 1) PBG's revenue growth rate in the third quarter was positive. Businesses related to digital governance such as water conservancy, disaster prevention and relief, emergency management, traffic management, and government governance were good, and public security and traffic police were weak. With the implementation of special debt funds, Xueliang Project and others are expected to meet the demand for renewal and upgrading. In the medium to long term, there is huge room for digital demand for water operations, river management, and road and bridge maintenance. 2) EBG increased slightly year-on-year in the third quarter, and digital demand for enterprises to reduce costs and increase efficiency is still active. Industries such as petrochemical coal, culture, sports and health, education and teaching, electricity, finance, smart commerce, and non-ferrous steel have continued to grow, and the growth of smart buildings and industrial enterprises is under pressure. 3) SMBG declined significantly in the third quarter, mainly because the company took the initiative to reduce inventory for dealer partners and ease the financial pressure on dealer inventory.

Overseas main business and innovative business continued to grow: 1) Overseas main business continued to grow in the third quarter, but the growth rate slowed, and business centers in the Middle East and Africa grew faster. The revenue growth rate for overseas non-video products is significantly faster than that of video products. The company is also expanding from simple product sales to project-based sales. Demand for projects in Southeast Asia, the Middle East and other places is quite obvious, and the share of project revenue continues to rise. 2) Domestic demand for innovative businesses is weak. The growth rate decreased compared to the first half of the year. Businesses such as Microfilm, automotive electronics, and fire protection grew faster.

We forecast the company's 24-26 earnings per share of 1.52, 1.75, and 2.01 yuan respectively (the original 24-26 forecast was 1.75, 1.99, and 2.24 yuan, which mainly adjusted revenue and expense ratios). Based on comparable companies' 25-year PE valuation level of 27 times, the corresponding target price was 47.25 yuan, maintaining the purchase rating.

Risk warning

Macroeconomic development fell short of expectations, overseas business development fell short of expectations, and innovative business development fell short of expectations.