The company discloses its 2024 three-quarter report:

24Q3: Revenue 6.9 billion (-5%), net of 0.6 billion (-9%), deducted of non-0.55 billion (-10%) 24Q1-3: income 17.4 billion (+0%), mother 1.55 billion (-0.3%), deducted non-1.45 billion (-0%)

Q3 Volume-price split: phased pressure before policy implementation

We expect sales volume in Q3 to be around 3.46 million units (-10%), corresponding to bicycle revenue of 1986 yuan (+6%) and bicycle profit of 173 yuan (+1%).

Sales declined in Q3, similar to the same trend in the industry. We judge that before the implementation of the new national standard, distributors' willingness to pick up goods was relatively weak. The industry was still operating with low inventory in Q3, and there was some pressure on the short-term economy.

Bicycle profits were recovered as scheduled. The gross profit of the bike is 334 yuan (+10%), and the impact of equity incentives on the cost side. If equity incentive fees are not taken into account, bike profits are expected to increase more significantly in Q3. This year, the industry is in a solid phase. Competition intensity has weakened, and industry profits have recovered as scheduled.

Next year's outlook: Low inventory recovery can be expected, and policy increases are more worth looking forward to. Low inventory recovery is expected to bring about a basic incremental market next year. This year, the H1 deposit national inspection was disrupted, and the H2 national standard was revised, and the willingness of dealers to pick up the goods has always been suppressed. The industry will go to storage this year. The current low inventory level has also brought sufficient room for growth next year. It is expected that after the implementation of the new national standard, the industry is expected to make up for low inventories and usher in a relatively big year.

Policy is the more positive variable. The new national standard is currently in progress, and policies such as trade-in and whitelisting have all gradually entered a period of implementation. Compliance leaders are expected to fully benefit from this wave of policies, and they are optimistic that policy formation leaders will double their concentration and prosperity next year.

Investment advice: buy ratings

Focus on the big year opportunities catalyzed by the 25-year policy. Currently, industry inventories are low, and policy arrows are on the cutting edge. I am optimistic that the new national standard policy will be implemented next year to launch the firing gun.

We adjusted our profit forecast. We expect net profit to be 2, 2.4, and 2.8 billion (previous values 2.2, 2.6, 2.9 billion) for 24-26, corresponding to valuations of 15, 12, and 11x. Maintain a buy rating.

Risk warning: Product upgrades fall short of expectations, industry competition pattern worsens, industry sentiment fluctuates