Incident: On October 29, 2024, the company released a performance report for the first three quarters of 2024. During the reporting period, the company achieved revenue of 1.44 billion yuan, +25.05% year over year; net profit to mother of 0.383 billion yuan, +12.95% year over year; deducted non-net profit of 0.354 billion yuan, +7.99% year over year. Among them, the third quarter achieved revenue of 0.535 billion yuan, +11.86% YoY, +17.48% month-on-month; net profit to mother 0.147 billion yuan, +45.89% month-on-month; and deducted non-net profit of 0.129 billion yuan, +45.89% month-on-month.

The expense ratio declined steadily during the period, and the net interest rate increased month-on-month. The company's gross margin for the first three quarters of 2024 was 48.29%, -0.49pct year on year; of these, the gross margin for the third quarter was 48.68%, -0.91 pct year on year, and +1.20 pct month-on-month, maintaining a high level. The company's total sales, management, and financial expenses for the first three quarters of 2024 was 4.42%, -1.14pct year on year; of these, the third quarter was 4.32%, -0.51 pct year on year, and -0.33 pct month on month, and the cost ratio declined steadily during the period. In the first three quarters of 2024, the company's R&D expenditure rate was 14.63%, +0.60pct compared to the previous year, maintaining a high level of R&D investment. The company's net interest rate for the first three quarters of 2024 was 26.63%, -2.85pct year on year; of these, the net interest rate for the third quarter was 27.56%, +5.37pct month-on-month.

XBC broke through orders, leading the upgrading of technology in the photovoltaic industry. On October 7, 2024, the company issued an announcement. The company and its subsidiary signed a “procurement contract” with leading photovoltaic companies and the same controlled entity. The total contract amount was 1.23 billion yuan (RMB, excluding tax), accounting for 76.4% of the company's audited main business revenue in 2023. The subject of the contract was “laser equipment and transformation”. The equipment corresponding to this order is an N-type BC laser device. Delivery is expected to begin in Q4 2024, reach mass production levels and complete delivery in Q1 2025. The signing of this order follows the company's TopCon Lif equipment in the first half of 2024, significant progress has been made in the new XBC laser process, leading to technological upgrading in the photovoltaic industry.

Investment advice: We maintain the company's profit forecast for 2024-2026, and expect the company's net profit to be 0.569/0.672/0.845 billion in 2024-2026. We believe that photovoltaic technology is still being iteratively upgraded. The company is leading the development market, and the future business is expected to blossom more and maintain a “buy” rating.

Risk warning: demand falls short of expectations; overseas policy risks; technology development falls short of expectations.