Nasdaq released its three-quarter report. In Q1-Q3 of 2024, it achieved revenue of 19.393 billion yuan (yoy +8.07%), net profit of 1.081 billion yuan (yoy +408.87%), deducting non-net profit of 0.682 billion yuan (yoy +152.84%).

Among them, Q3 achieved revenue of 6.6 billion yuan (yoy +16.91%, qoq +1.50%) and net profit of 0.108 billion yuan (yoy +177.64%, qoq -84.54%). The company's self-developed A3 printer products have been promoted smoothly, benefiting from the recovery in the downstream Xinchuang market. It has long been optimistic about the company's competitiveness in the field of domestic printers and consumables, and maintains a “buy” rating.

Bentu: 24Q1-Q3 A3 printer sales also increased 34%, and the Xinchuang market further picked up 24Q1-Q3 Bentu's revenue of 3.176 billion yuan, up 9.8%, net profit of 0.475 billion yuan, up 35.7%; 24Q3 Bentu's revenue was 1.074 billion yuan, which was the same month on month; 24Q1-Q3 Bentu printer sales increased 1.7% year on year (of which A3 printer sales increased 34.07% year on year), and shipments of original consumables increased 13.18% year on year. The Xinchuang market is picking up further. We are optimistic about the gradual expansion of A3 models developed by the company to drive the growth of Bentu's performance.

Integrated circuit business: marginal improvement in revenue, promotion in high-end fields or driving performance growth 24Q1-Q3, Jihaiwei (chip business) revenue was 1.038 billion yuan, down 5.4%, net profit 0.353 billion yuan, up 127.7%, net interest rate 34%, +20pct year on year; deducting non-net profit of 0.103 billion yuan, or -20.6% year on year. Overall chip shipments were 0.402 billion, up 13.9% from the same period. 24Q3's revenue in a single quarter was 0.363 billion yuan, up 10.7%, and the environment increased 1.1%; the chip business revenue improved marginally. With the gradual promotion of new products in the middle and high-end industries, automotive electronics, etc., Jihai Micro's performance is expected to gradually achieve steady growth.

Lexmark and General Consumables: Revenue grew steadily. Exchange rate fluctuations affected profit 24Q1-Q3 subsidiary Lexmark's revenue of 1.655 billion US dollars, an increase of 7.8%. Overall printer sales increased 29.5%, and EBITDA was 0.207 billion US dollars, an increase of 48%. In 24Q3, Lexmark's revenue was $0.57 billion, up 11.1% year on year, and continued to grow steadily. The 24Q1-Q3 general consumables business revenue was 4.851 billion yuan, up 13.8%, shipment volume increased 13.9%, and the net profit of the general consumables business was 0.072 billion yuan, down 37.8%.

Both Lexmark and General Consumables businesses operate globally. Fluctuations in the exchange rate of 24Q1-Q3 RMB against the US dollar may have a negative impact on related business profits. We are optimistic that with the recovery of the downstream printing market, Lexmark and General Consumables revenue will accelerate.

Profit forecasting and valuation

We expect the company's 2024-2026 EPS to be 0.87, 1.19, and 1.62 yuan, respectively (maintaining the previous value).

According to the segmented valuation, the printing/chip business is estimated to have a net profit of 0.83/0.41 billion yuan. The printing/chip business is comparable to the company's average 24E 30.8xPE/50.0xPE (Wind). Considering that the company's self-developed A3 printers have high technical barriers, the printing/chip business is estimated to have a market value of 30.6/20.4 billion yuan, corresponding to a target price of 35.87 yuan/share, maintaining a “buy” rating.

Risk warning: Macroeconomic fluctuations, increased market competition, risk of impairment of goodwill.