Incident: In the first three quarters, the company achieved revenue of 27.857 billion yuan, a year-on-year increase of 2.19%; achieved net profit of 3.059 billion yuan, an increase of 23.97% over the previous year; and realized net profit of 2.773 billion yuan after deduction, an increase of 26.66% over the previous year.

Profitability continues to improve, and business quality is consolidated and steady. In the third quarter, the company achieved revenue of 8.903 billion yuan, a year-on-year decrease of 1.49%; realized net profit of 0.897 billion yuan, a year-on-year increase of 14.14%; realized net profit after deduction of 0.836 billion yuan, an increase of 21.04%; gross margin of 23.90%, an increase of 2.56 pct; net interest rate was 11.05%, an increase of 1.84pct; the company's profitability continued to increase. In the first three quarters, the company's net cash flow from operating activities was 2.354 billion yuan, an increase of 93.20% over the previous year; the company's operating quality was consolidated and steady.

The coal machine sector is growing steadily, and the net interest rate level continues to rise. In the first three quarters, the company's coal machine segment revenue was 14.527 billion yuan, up 2.50% year on year; net profit was 3.136 billion yuan, up 25.90% year on year; net interest rate was 21.59%, up 4.01 pct year on year. In the third quarter, revenue from the coal machine sector was 4.722 billion yuan, down 1.24% year on year; net profit was 0.98 billion yuan, up 24.71% year on year. The company's revenue from hydraulic supports and coal machine equipment is relatively steady, the product structure is continuously optimized, the proportion of products with high profit margins continues to increase, cost reduction and efficiency are continuously promoted, and the profitability of the coal machine sector continues to increase.

Auto parts business is getting better, ASIMCO+SEG two-wheel drive. In the first three quarters, the company's auto parts segment revenue was 13.33 billion yuan, up 1.84% year on year; net profit was 0.179 billion yuan, up 20.32% year on year.

ASIMCO's revenue for the first three quarters was 3.864 billion yuan, up 21.42% year over year. Mainly, ASIMCO's revenue related to shock absorption and sealing systems is growing rapidly, while revenue related to commercial vehicle parts is rising steadily, driving ASIMCO's overall revenue growth. SEG's revenue for the first three quarters was 9.375 billion yuan, a year-on-year decrease of 5.57%, mainly due to a year-on-year decline in sales in the European market.

Investment advice: The company has a stable position as a leader in the domestic hydraulic support and intelligent business, and the auto parts business has gradually ushered in marginal improvements. We expect the company to achieve net profit of 3.877/4.219/4.59 billion yuan in 2024-2026, corresponding PE 6.12/5.62/5.17 times, respectively, and maintain an “increase in holdings” rating.

Risk warning: Macroeconomic recovery falls short of expectations, downstream demand continues to weaken, market competition intensifies, raw material prices fluctuate greatly, and the risk of deterioration in the overseas trade environment.