The company released its report for the third quarter of 2024. In the first three quarters of 2024, the company achieved operating income of 0.544 billion yuan, a year-on-year increase of 16.92%; net profit to mother was 0.017 billion yuan, a year-on-year decrease of 27.47%; net profit after deducting non-return to mother was 9.67 million yuan, a year-on-year decrease of 42.05%. In 2024Q3, the company achieved operating income of 0.17 billion yuan, up 8.49% year on year; net profit to mother was 6.38 million yuan, up 26.97% year on year; net profit after deducting non-return to mother was 0.23 million yuan, a decrease of 89.25% year on year.

The development of new markets and the introduction of new production capacity temporarily affects performance. The slight pressure on the company's performance was mainly due to additional depreciation and amortization, expenses generated by new agent channels, and promotion of some eliminated models, which affected gross profit margins. The company focused on building production capacity, upgrading the three production bases, cultivating future core growth points and enhancing competitiveness. The investment amount exceeded 0.3 billion, and the cost investment increased. In addition, the company has vigorously expanded customers, developed markets outside the province, strengthened agent sales policies, provided dealer fee support, and once again made concessions, increasing the company's turnover but putting a slight pressure on overall profitability. We look forward to a subsequent recovery.

The singularity of the humanoid robot industry has arrived, and precision lathes are essential equipment for transmission parts. Tesla humanoid robot linear actuators mainly use inverted planetary roller screws. Planetary roller screws are expensive and difficult to manufacture. Previously, there was little demand, and they were generally imported. However, import prices are currently expensive, making it difficult to meet the cost requirements for mass production of humanoid robots, so domestic companies are hoping to produce their own planetary roller screws. However, domestic companies produce their own products and need to import related lathes and thread grinders. Overseas lathes and thread grinders are very expensive and customized. At first, the quantity was small, and it was also customized. Foreign companies had limited production capacity and were not very willing to supply. In addition, the sales model of foreign manufacturers is based on sales. After the customer places an order, it usually takes 2 years to get the equipment. The production and delivery cycle is very long, making it difficult to meet the mass production needs of humanoid robots in the future. Therefore, the localization and customization of screw equipment is an inevitable trend. In addition to the screw, the rotary actuator of a humanoid robot requires a speed reducer, and the core equipment for making the reducer is also a lathe and grinder.

The company's core technical capabilities are strong, and products are advancing towards high-end and diversification. Zhejiang Heideman has achieved the autonomy of the three core components of the spindle, turret, and tailstock, and has strong core technical capabilities. In terms of sales, the company's high-end CNC lathes have a big advantage, and the distribution ratio has expanded in recent years, and the brand influence has gradually increased. It is expected that the future will benefit from the industrialization of humanoid robots.

Investment advice: We expect net profit to be 0.032, 0.066, 0.088 billion yuan in 2024-2026, and the current stock price corresponding to the company's PE is 89/44/33X. Heidman is a leading domestic lathe machine. Its products are advancing towards high-end and diversification. At the same time, it is expected to benefit from the wave of industrialization brought about by humanoid robots and maintain a “buy” rating.

Risk warning: risk of downstream demand fluctuation, risk of increased market competition, risk of new business development.