24Q3 revenue was 3.146 billion yuan, +10.35%/+7.12% YoY, net profit to mother 0.368 billion yuan, +28.70%/+8.49% YoY, less 0.357 billion yuan, +29.66%/+7.24% YoY, and performance achieved year-on-month growth. 24Q3 gross margin/net margin reached 23.42%/11.68%, -0.40/+0.17pct month-on-month. Net margin achieved a circular increase, mainly benefiting from internal cost reduction and capacity utilization.

The cost rate during the 24Q3 period reached 8.41%, -0.77pct month-on-month. Among them, sales/management/R&D/finance were -0.04/-0.37/ -0.41/+0.05pct respectively, with excellent cost control. As a leader in structural components, the company is expected to benefit from increased demand in the industry and further increase its market share. We maintain a “buy” rating.

The company's Q3 volume increased steadily, and capacity utilization increased month-on-month

The company achieved a month-on-month increase in shipment volume and net interest rate in Q3, and achieved profit growth in the face of falling product prices, demonstrating the excellent profit resilience of leading companies. According to the company's 24Q3 results, the company currently has an average capacity utilization rate of about 70%, and the capacity utilization rate is expected to continue to increase as domestic and foreign customer demand increases in 24Q4 and 25-26. The company expects 24Q4 shipments to continue to grow sequentially, and shipments will grow 20% to 30% in 25 years. In terms of overseas markets, the company currently has a small revenue base in overseas markets. Shipments to overseas markets are expected to double next year, boosting the company's overall performance.

Overseas construction continues to expand, and robot components are already in the verification stage

In terms of overseas expansion, the company announced in October that it plans to invest in the construction of precision structural components for lithium batteries in Malaysia, with a target annual output value of about 1.3 billion yuan. At the same time, the company's production sites in Germany, Sweden, and Hungary are expected to be put into operation one after another. The company continues to expand overseas with battery factories, and is expected to further expand its market share with nearby support. In terms of robots, the company took the lead and invested RMB 3 million in joint ventures with Weichuang Electric and Shanghai Mengli to set up a subsidiary to develop robot parts and other businesses. The products developed by the company are currently in the customer verification stage. Sales are expected to begin in 24Q4, and large-scale mass production is expected in '25.

Maintain a “buy” rating

Considering the increase in the company's capacity utilization rate to achieve scale effects and excellent cost control, we raised the 24-25 gross margin assumption, and estimated the company's net profit to mother for 24-26 was 1.401/1.655/1.926 billion yuan (previous value 1.306/1.593/1.853 billion yuan), respectively. Referring to the average PE 16 times the same as the company's 25-year Wind, considering that the company's cost advantage is clear, and profitability is more resilient, giving the company 25 years of reasonable PE 25 times, corresponding to the target price of 152.75 yuan (previous value 115.76 yuan), maintaining the “buy” rating.

Risk warning: Product price reduction was greater than expected; demand growth for power batteries fell short of expectations; progress in the construction of the company's new production capacity fell short of expectations.