The company disclosed that in the first three quarters of 2024, the company achieved revenue, net profit, and deducted non-net profit of 2.312, 0.253, and 0.263 billion yuan, respectively, with a year-on-year decrease of 11.61%, 36.91%, and 17.74%. Among them, Q3 achieved revenue in a single quarter, adding net profit, and deducting non-net profit of 0.93, 0.099, and 0.1 billion yuan, a year-on-year decrease of 13.42%, 50.43%, and 33.11%.

Business analysis for the first three quarters of 2024. In the first three quarters of 2024, the company achieved revenue of 2.312 billion yuan, a year-on-year decrease of 11.61%, and a comprehensive gross profit margin of 37.48%, an increase of 3.11 pcts year-on-year. Among them, Q3 achieved revenue of 0.93 billion yuan in a single quarter, with year-on-month growth of -13.42% and 11.63%. Net profit was 0.099 billion yuan, a year-on-month decrease of 50.43% and 0.9%; after deducting non-net profit of 0.1 billion yuan, the year-on-month increase was -33.11% and 8.18%. The comprehensive gross profit margin was 35.88%, up 0.01 and 0.89pct year over month.

The new energy business is operating steadily, and grid-based energy storage has begun to be implemented. During 2024Q3, the company completed several grid-connected photovoltaic and wind power projects, and operated steadily. In the context of the increase in the share of new energy generation, power grids have risks such as low inertia, weak support, and high oscillation. In order to solve this problem, a grid-based energy storage technology that can participate in or take the lead in constructing the AC side output voltage and actively control the voltage and frequency of the power system has come into being. As a pioneer in network construction technology, many of the company's products already have network construction functions. Also, in June, Longyuan Electric Power Group won the pre-bid for the 480MW project of Longyuan Electric Power Group Shared Energy Storage Technology (Beijing) Co., Ltd.'s grid-supported (grid-structured) energy storage converter and pressurization integrated cabin project with a total price of 0.15 billion yuan.

The gross margin of the engineering transmission business improved month-on-month, and new breakthroughs were achieved in overseas travel. In the first three quarters of 2024, engineering transmission business revenue was 0.316 billion yuan, a year-on-year decrease of 6.34%; the gross profit margin was 41.30%, a year-on-year decrease of 3.61 pcts.

Among them, in the Q3 quarter, transmission business revenue was 0.114 billion yuan, a year-on-month decrease of 8.52% and 19.31%; the gross profit margin was 44.59%, an increase of 2.34 and 5.46 pcts year-on-month. The company's products can be used in metallurgy, petroleum and petrochemical, mining machinery, marine equipment, textiles, chemicals and various other industrial applications. In September 2024, the 1450mm hot rolling project of Indonesia Ocean Special Steel Co., Ltd., where the company provided the whole line transmission frequency conversion system, was successfully tested and successfully put into operation. This is the first metallurgical hot rolling complete line export project for domestic inverters. In the future, with the expansion of overseas markets, it is expected to bring new growth to the company's engineering transmission business.

Investment advice: The company's net profit for 2024-2025 is expected to be 0.381, 0.521 billion yuan, corresponding to PE21X and 16X, maintaining a “highly recommended” rating.

Risk warning: New energy installations fall short of expectations, overseas expansion of engineering transmission falls short of expectations, industry competition intensifies, etc.