Event: The company publishes its report for the third quarter of 2024.

2024Q3 is affected by the macro environment, putting pressure on revenue and net profit. 2024Q3's revenue was 0.721 billion yuan, down 7.88% from the same period last year; 2024Q3 net profit to mother was 0.023 billion yuan, down 41.62% from the same period last year. Mainly due to the adverse effects of the international macro environment, the operating performance of the company's overseas subsidiaries failed to meet the expected targets. With the gradual recovery of the global economy, market demand picked up, providing favorable conditions for the company's business expansion. As a key supplier to the automotive industry, the rapid development and transformation and upgrading of the automotive industry will provide the company with more business opportunities.

Gross margin increased to 17.20% in the first three quarters, and product structure optimization and cost control showed results. In the first three quarters of 2023, the company's gross margin was 15.84%. In the first three quarters of 2024, the company increased gross margin by continuously optimizing the product structure and strengthening cost control, reaching 17.20%.

The company's net interest rate has declined, and the expense ratio has increased. The company's financial expenses in the first three quarters of 2024 decreased compared to the same period last year, and the increase in sales expenses was affected by the merger and acquisition of WJB Holdings.

The company has made breakthroughs in the fields of new energy vehicle bearings and robot bearings, and the layout of screw products has accelerated.

The company has actively responded to market demand. It has successfully developed a full range of bearing products for new energy vehicles and expanded production capacity to meet domestic and foreign market needs, while successfully supporting new car builders. In the field of robot bearings, the company has completed a full range of product research and development to support many robot reducer manufacturers. In addition, the company's screw product layout has been continuously improved, small-batch sales have been achieved, and technical routes have been continuously optimized.

In the future, with the rapid growth of the robot industry chain, the company will usher in more opportunities for sustainable development.

Profit forecasting and investment advice. Due to the company's downstream demand falling short of expectations, we lowered the company's profit forecast. We expect the company's revenue for 2024-2026 to be 3.272/4.075/4.706 billion yuan, respectively, and net profit to mother 0.141/0.204/0.242 billion yuan, respectively. The PE corresponding to the current market value is 47.1/32.6/27.5X, respectively. Looking at the long term, the company is expected to enter the robot growth circuit. At the same time, the NEV and wind power roller business supports the company's long-term growth and maintains a “buy” rating.

Risk warning: NEV sales fall short of the expected risk; wind power installation falls short of the expected risk; the level of localization of the robot industry chain falls short of the expected risk.