The company released the “Report for the Third Quarter of 2024”. In the first three quarters, it achieved revenue of 3.235 billion yuan, +4.76% year over year, and realized net profit of 0.604 billion yuan, +3.62% year over year. 24Q3 achieved revenue of 1.215 billion (Yoy +24.43%, Qoq -0.99%) and realized net profit of 0.255 billion yuan (Yoy +58.04%, Qoq +7.22%) in a single quarter.

24Q3 profit increased rapidly year over year, continued to improve month-on-month, and profitability continued to recover. The first three quarters achieved revenue of 3.235 billion, +4.76% YoY; realized net profit of 0.604 billion yuan, +3.62% YoY. 24Q3 achieved revenue of 1.215 billion (Yoy +24.43%, Qoq -0.99%) and net profit of 0.255 billion yuan (Yoy +58.04%, Qoq +7.22%) in a single quarter, mainly due to the increase in the company's revenue, the increase in government subsidies included in current profit and loss over the same period, and a decrease in current R&D expenses over the same period, which led to an increase in the company's current net profit over the same period. In terms of profitability: In the 24Q3 quarter, the company's gross sales margin was 37.21%, up 2.04 pct year on year and 2.87 pct month on month. On the cost side, 24Q3 incurred administrative expenses (0.067 billion, +44.42% YoY), sales expenses (0.008 billion, +22.26% YoY), and financial expenses (0.016 billion, +13.54% YoY). R&D expenses (0.053 billion, -32.46% year over year) were mainly due to a decrease in the company's R&D collection and external settlement volume during the reporting period compared to the same period. The cost rate for the three items was 7.49%, up 0.73 pct year on year and 2.76 pct month on month. The company's overall net sales margin was 24.71%, up 6.48pct year on year and 4.77pct month-on-month.

The balance sheet reflects the company's active preparation of goods and production to meet future increases in demand. In terms of balance sheets, accounts receivable at the end of the reporting period were 3.147 billion, +52.84%; advance payments were 0.091 billion, +106.82% at the end of the previous year; accounts payable were 1.485 billion, +24.69% compared to the end of the previous year; inventory was 3.631 billion, +8.65% compared to the end of the previous year; and contract liabilities were 0.191 billion, +34.51% compared to the end of the previous year. The company's prepayments, payables, and inventory are increasing in the same direction, reflecting the company's active preparation of goods and production to meet future increases in downstream demand.

Profit forecast: Due to certain uncertainty about downstream demand and delivery pace, the company's profit forecast is adjusted. The company's net profit for 2024/2025/2026 is expected to be 0.86/1.09/1.315 billion yuan, corresponding to PE valuation 38/30/25 times, maintaining a “highly recommended” rating.

Risk warning: Risk of market development falling short of expectations and price fluctuations of raw materials.