Incident: The company released its report for the third quarter of 2024 on 2024/10/29, achieving operating income of 2.485 billion yuan, +2.97% year on year, net profit to mother 0.079 billion yuan, or -52.76% year on year; net profit without return to mother 0.074 billion yuan, or -53.54% year on year.

The slowdown in acceptance and the downturn in some downstream conditions put pressure on the company's short-term performance: in 2024Q3 alone, the company achieved operating income of 0.8 billion yuan, -2.70% YoY, -6.29% month-on-month, and net profit of 0.01 billion yuan to mother, -68.64% YoY and -65.62% month-on-month. On the profit side, the company's 2024Q3 gross margin and net margin were 26.31%/1.23%, respectively, -3.55pct/-2.45pct, and -1.78pct/ -2.06pct month-on-month, mainly due to a slowdown in the company's acceptance combined with an increase in the superimposed expense ratio (24.96%, +2.52 pct year-on-month).

Orders and inventory are rising steadily, and future performance is guaranteed. At the same time, it is expected to achieve import substitution: the company's liquid food filling line layout is complete. In the first half of the year, beverage packaging production lines and standard stand-alone equipment continued to grow steadily, and the dairy sector is under pressure in the short term. In the medium to long term, the company continues to invest in the development of high-speed sterile carton filling equipment for dairy products, which is expected to achieve import substitution.

At the same time, the company's 2024H1 inventory amount was 3.45 billion yuan, +27.91% year-on-year, and performance is guaranteed to a certain extent.

Investment proposal: We expect the company to achieve operating income of 3.258/4.032/5.088 billion yuan and net profit to mother of 0.104/0.21/0.369 billion yuan in 2024-2026. The corresponding PE was 30.83/15.28/8.70 times, respectively, maintaining the “gain” rating.

Risk warning: downstream demand falls short of expectations, new product development falls short of expectations, new customer expansion falls short of expectations, market competition intensifies, etc.