Event: The company released the 2024 three-quarter report and 2024 performance forecast. 24Q3 achieved revenue of 73.6 billion yuan, yoy +27%, achieved net profit of 3.679 billion yuan, yoy +22%, and is expected to achieve net profit of 131.4 to 13.69 billion yuan and yoy +20-25% in 2024.

Comment: The 24Q3 performance was in line with expectations. After deducting non-growth rates, exchange gains and losses were affected. 24Q3 achieved revenue of 73.6 billion yuan, yoy +27%, net profit attributable to mother of 3.679 billion yuan, yoy +22%, and realized net profit of 3.158 billion yuan without deduction to mother, yoy +9.71%. The company's net profit to mother is in line with the previous performance forecast guidelines, slightly higher than the median value of the previous performance forecast. Net profit after deducting non-return to mother is below the lower limit of the performance forecast. It is mainly affected by exchange. Exchange profit and loss at the end of September are included in the recurring profit and loss account, while profit from foreign exchange hedging operations is included in the non-recurring profit and loss account. 24Q3's gross sales margin was 11.75%, a year-on-month decline, partly due to Likai absorbing large costs and expenses caused by customers' VR products. The 24Q3 company's sales/management/ development/ finance expenses rates were 0.4%/2.3%/3.8%/0.4%, yoy+0.0pct/-0.1pct/-0.4pct/+0.2pct, respectively. The overall cost rate declined, and the increase in the financial expense ratio was partly affected by the exchange evaluation profit and loss at the end of the month. 24Q3's investment income in joint ventures and joint ventures was 0.605 billion, a slight increase over the same period last year. It is expected that with the smooth integration of Shishuo's mobile phone assembly business, it is expected to contribute more performance flexibility in the future.

The company expects steady growth in 24Q4. The company also released a 2024 performance forecast. In 2024, it is expected to achieve net profit due to mother of 131.4 to 13.69 billion yuan, yoy +20-25%, and achieve net profit after deduction of 114.9 to 12.71 billion yuan, yoy +12.76%-24.82%. Corresponding to the single quarter of 24Q4, it is expected that 24Q4 will achieve net profit of 40.68 to 4.616 billion yuan, yoy +14% to 29%, and net profit without deduction of 33.69 to 4.596 billion yuan, yoy +7% to 46%.

Focusing on high-quality growth, the consumer electronics+communications+automotive business continues to grow steadily and with high quality:

Consumer electronics: Outstanding underlying capabilities are expected to benefit from the wave of consumer electronics AI. Excellent underlying technology with sound, light, electricity, heat, magnetism, and radio frequency as the core. With the support of new processes and new processes, combined with the rapid large-scale mass production and process innovation capabilities of the industry for many years, it provides one-stop product implementation services from components, modules to system solutions for leading global brand customers. Especially in the field of acoustic products, AR/VR, and smart devices such as home/office, have been highly recognized by many customers, and have become one of the strong driving forces for current and future growth; Communications: Communications and data centers continue to deepen optoelectronic connectivity and process solutions., air cooling/liquid cooling Products such as heat dissipation, power management, radio frequency, etc., have outstanding technical advantages and market competitiveness in the field of high-speed interconnection. In the field of high-speed data center connectivity, the company collaborated with leading chip manufacturers to proactively develop next-generation high-speed connection standards such as 800G and 1.6T for mainstream data centers and cloud service providers. Some segmented products such as external high-speed copper cables, cables and connector components, backplane connectors and backplane cables, HSIO, SSIO, etc. have won customer recognition with leading technology, cost advantages and excellent product performance. Based on this, the company used this as an entry point to comprehensively promote further in-depth cooperation with leading customers on products such as optical connectivity, heat dissipation, and power modules; automobiles: the multi-dimensional product layout targets the trillion-level market, and the port of departure strategy successfully accelerated the growth of the automotive Tier 1 business. The product layout in the automotive sector is diverse: products such as connectors, new energy, smart cockpits, and intelligent connectivity are further expanded based on wiring, and the multi-dimensional product line fully benefits from the electrification, intelligent and networked transformation of automobiles; cooperative automakers provide access to the sea for auto parts to accelerate product development, introduction and mass production processes: ① Chery: The group holds 20% of Chery Holdings's shares, and the listed company forms a joint venture with Chery New Energy; ② GAC: Establishing Shengli Automotive Technology with GAC Group and GAC Components; Group business collaboration: B-external acquisition CS has a deep accumulation of automotive electronics , master high-quality customer resources (BMW, Volkswagen, GM, Ford, etc.), and actively expand the boundaries of capabilities in the field of smart cockpit & intelligent driving.

Investment advice: Taking into account the company's results for the first three quarters of 2024 and the 2024 performance forecast, the net profit due to mother for 24/25/26 will be lowered from 15/21/25.3 billion yuan to 13.5/17.5/21 billion yuan to maintain the “buy” rating.

Risk warning: Sales of terminal products fall short of expectations, consumer electronics price cuts affect revenue volume and profitability, development of new products falls short of expectations, and performance forecasts are preliminary estimates. The specific financial data is subject to the “2024 Annual Report” disclosed by the company