Event: The company released its 2024 three-quarter report. 24Q1-Q3 achieved revenue of 0.612 billion yuan, +19.60% year over year, realized net profit attributable to mother of -0.003 billion yuan, -113.06% year over year, and realized net profit without deduction of -0.006 billion yuan, or -154.34% year on year. On a quarterly basis, 24Q3 achieved revenue of 0.222 billion yuan, -14.16%/-6.25%; realized net profit to mother of -0.004 billion yuan, -120.04%/-150.01% of the same period; and realized net profit without return to mother of -0.005 billion yuan, -155.26%/-168.34% year-on-month. 24Q3's gross sales margin was 30.82%, +8.70/+0.82pct, net sales margin -2.04%, and -10.17/-5.49pct month-on-month. The decline in the company's net profit was mainly due to the amortization of large share payments and management expenses, sales expenses, and a relatively large increase in R&D expenses during 24Q1-Q3.

Charging piles have launched high-power liquid cooling products to meet downstream fast charging needs. According to the company announcement, Lvneng Huichuang charging stack products include 800KW/1000KW DC charging stacks, and the latest 800kW split liquid-cooled DC charger. The company's liquid-cooled charging stack products are composed of a liquid-cooled charging host and a liquid-cooled overcharging terminal. It supports flexible configuration of liquid-cooled overcharging terminals and ordinary charging terminals. It supports up to 800A liquid-cooled overcharging and smoothly adapts to V2G upgrades. With the rapid increase in NEV ownership, the charging pile business is expected to maintain a relatively rapid growth rate.

The merger and acquisition of China Innovation Airlines to expand its heavy-duty industrial drone business is expected to open up a second level of growth for the company. The company acquired 57% of China Innovation Airlines's shares and completed the registration of commercial and commercial changes on July 19, 2024. China Innovation Airlines has leading domestic unmanned helicopter flight control technology. The self-developed tandem dual-rotor unmanned helicopter has the characteristics of large payload, long flight time, and high reliability, and is widely used in emergency rescue, emergency communications, forest fire protection, material delivery, power hoisting, logistics support, etc. The size of the industrial drone market is expected to usher in a stage of rapid growth, opening up a second level of growth for the company.

Investment advice: The company's charging pile and drone business is two-wheel drive. We expect the company to achieve a net profit of 0.039/0.11/0.182 billion yuan in 2024-2026, +126.4/ +179.2%/+65.1% year over year, corresponding EPS of 0.06/0.16/0.26 yuan, maintaining a “buy” rating.

Risk warning: Demand for charging piles falls short of expectations; drone market expansion falls short of expectations; industry competition intensifies.