Incident: The company released its 2024 three-quarter report. In 24Q1-3, revenue was 6.841 billion yuan, +42.6% year over year; net profit to mother was 0.465 billion yuan, +56.2% year over year, in line with the previously released performance forecast center; gross profit margin of 21.5%, -0.6 pp year on year, net profit margin 6.9%, and +0.6 pp year on year. Among them, 24Q3 achieved revenue of 2.648 billion yuan, +37.3% year-on-month, and +20.2% month-on-month; net profit to mother of 0.178 billion yuan, +53.5% year-on-year and +22.9% month-on-month, showing impressive performance.

Gross margin remains basically stable, and cost ratio control is effective. The 24Q3 company achieved a gross profit margin of 21.1%, -0.8 pp year on year, 6.8% net profit margin, -0.7 pp year on month, and +0.2 pp month on month. The month-on-month increase mainly came from effective cost rate control. The cost ratio during the 24Q3 period was 12.7%, -1.8 pp year on year, and -1.2 pp month-on-month. Among them, sales expenses, R&D expenses, and financial expenses were all effectively controlled.

Automotive electronics continued to develop, and precision die-casting grew steadily. 24H1 automotive electronics revenue of 3.07 billion yuan, +65.4% YoY, accounting for 73%, +8pp. New product lines such as cockpit domain control, precision motion mechanisms, and digital acoustics entered large-scale mass production, and sales revenue increased significantly year over year; sales revenue of large-scale mass-produced products such as screen displays, LCD meters, HUD, in-vehicle wireless charging, and in-vehicle cameras increased dramatically; the customer structure continued to be optimized, and the revenue of customers such as Chery, Geely, Cyrus, BAIC, Changan Ford, GAC, and Ideal increased dramatically. The 24H1 precision die-casting business had revenue of 0.91 billion yuan, +23.6% year over year. Among them, sales revenue for components related to optical communication modules increased significantly year-on-year; revenue from Bosch, UMC, Behrhela and other important customers increased significantly. Orders for components such as new energy three-electric systems, intelligent driving systems, high-speed high-frequency automobiles, and 3C connectors have increased dramatically.

R&D investment has increased, and production capacity expansion continues to advance. The company continued to increase R&D investment. Q1-3 R&D investment was 0.531 billion yuan, an increase of 21.8% year-on-year, accounting for 7.8% of revenue. The company plans to increase its various fund-raising projects. Among them, the new Huizhou plant for the precision die-casting business has already been put into operation, and the new Huizhou plant for the automotive electronics business will be put into operation in July 2024; the first phase of the company's construction of a precision die-casting parts production base in the Changxing Development Zone of Zhejiang using its own funds is expected to be put into operation within this year, and construction of a new plant in Huizhou Industrial Park has already begun.

Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 1.28/1.55/ 1.86 yuan respectively, corresponding PE is 24/20/16 times, and net profit CAGR to mother is 28.1%, maintaining a “buy” rating.

Risk warning: risk of increased competition; risk of new product promotion falling short of expectations; overseas market risk, etc.