Incident: On October 30, 2024, the company released its 2024 three-quarter report. In the first three quarters of 2024, revenue was 2.306 billion yuan, down 30.81% year on year; net profit to mother was 0.282 billion yuan, down 30.88% year on year; net profit after deducting non-return to mother was 0.258 billion yuan, down 31.66% year on year. Looking at a single quarter, 24Q3's revenue was 0.95 billion yuan, down 25.31% year on year and 6.36% month on month; net profit to mother was 0.108 billion yuan, down 20.09% year on year and 10.55% month on month; net profit after deducting non-return to mother was 0.097 billion yuan, down 23.91% year on year and 16.25% month on month.

The business structure continues to be optimized, and gross margin has improved: in terms of profitability, the company achieved remarkable results in transforming the offshore business. The company's gross margin was 27.19% in the first three quarters of 24, an increase of 2.99 pcts over the previous year; the net interest rate was 12.23%, which was basically the same as the previous year. Looking at a single quarter, 24Q3 gross margin was 25.22%, up 0.64pcts year on year; net margin was 11.38%, up 0.74 pcts year on year. As of 24Q3, the company's overseas and domestic offshore business accounted for more than 60% of revenue, an increase of 10 pcts over the previous year, making it the leading business in the wind power sector.

Several overseas offshore projects were delivered: During the reporting period, Scotland's MorayWest offshore wind farm sea-tower project and France's Noy-Llesd'Yeu et Noirmoutier offshore wind farm single pile project were delivered; two single-pile products for the Danish Thor offshore wind farm project were released, and the first batch of product trial production for the German NSC offshore wind farm project was completed. Meanwhile, in the third quarter of this year, the company's newly signed large-scale single-pile project to be provided for an offshore wind power project in the Baltic Sea region in 2025 has begun construction and will be delivered and completed in 2025.

Investment advice: We expect the company's 2024-2026 revenue to be 3.7, 6, and 7.71 billion yuan, respectively, with growth rates of -15%/62%/28%; net profit to mother of 0.44, 0.81, and 1.16 billion yuan, respectively, with a growth rate of 3%/85%/44%, corresponding to 24-26 PE of 34x/19x/13x. Considering the demand in the wind power industry, the company is expected to deepen its “double seas” strategy and capacity expansion, increase global market share, have outstanding growth, and maintain a “recommended” rating.

Risk warning: Risk of industry demand falling short of expectations, risk of large fluctuations in raw material prices.