Event: The company released the 2024 three-quarter report reviews:

The company's revenue growth is steady, and the general aviation business is developing strongly

2024Q1-3 achieved revenue of 11.37 billion yuan, or -1.97% year over year, mainly due to the inclusion of the Wuxi Xiongwei high-strength steel stamping parts business in the same period last year. If this business were excluded for the same caliber comparison, revenue was +4.23%; realized net profit to mother of 0.564 billion yuan, +5.07% YoY, net profit of 0.499 billion yuan (YoY), +3.20% YoY. Looking at 2024Q3 in a single quarter, the company achieved revenue of 3.999 billion yuan, -2.28% year-on-year, net profit of 0.165 billion yuan, or -24.02% year-on-year, after deducting non-return net profit of 0.14 billion yuan, or -30.23% year-on-year. By business, the company's automotive metal parts lightweight business achieved revenue of 9.383 billion yuan, -3.76% year-on-year, mainly due to the impact of Wuxi Xiongwei's performance, which led to a year-on-year decrease in revenue; the innovative manufacturing business of general aviation aircraft achieved revenue of 1.987 billion yuan, +7.49% over the same period last year.

Profit margins have declined, and expense ratio control is good

2024Q1-3 achieved a gross sales margin of 17.50%, a year-on-year decline of 2.45 pct. The sales expense ratio, management expense ratio and R&D expense ratio were 1.22%/4.89%/2.86%, respectively, down 0.15/0.00/0.07 pct year on year, respectively. The company's expense ratio was well controlled during the period.

The lightweight business card is a new energy circuit, and the low-altitude economy opens new space for general aviation growth. The company continues to strengthen cooperation with core new energy customers, optimize the product structure, increase support for large wheels, popularize the application of large magnesium alloy die-castings such as magnesium alloy dashboard brackets in domestic high-end vehicles and new energy vehicles, promote the localization of large magnesium alloy die-castings, and continuously meet the rise of new energy vehicles and the lightweight development needs of automobiles. In addition, the company's general aviation aircraft manufacturing business has sufficient orders, sales business continues to be optimized, global private jet market development and production capacity is gradually released. In the future, with the development of the low-altitude economy, Diamond Aircraft will continue to explore new application scenarios based on application markets such as aviation school training, and further match and develop domestic private flight, short-distance transportation, and special use scenarios through a rich model series, while increasing research and development of new aircraft such as electric aircraft and eVTOL, to seize new opportunities for the country's low-altitude economic development and work with strategic partners to accelerate the low-altitude economy market layout.

Investment advice and profit forecasting

As an international company with advanced manufacturing as the core in the field of transportation, the automotive metal parts lightweight industry and two-wheel drive in the general aviation aircraft innovative manufacturing industry, we expect the company to achieve revenue of 16.587/18.06/19.849 billion yuan in 2024-2026, with an EPS of 0.45/0.52/0.61 yuan, corresponding to PE40/34/29X, maintaining an “gain” rating.

Risk warning

The risk of macroeconomic and industry fluctuations, the risk of barriers to international trade, the risk of fluctuations in raw materials and energy prices, the risk of exchange rate fluctuations, and the risk that domestic air space is less open than expected.