Net profit attributable to mother for the first 3 quarters of 24 years ago was +1.6 times year-on-year, and Q3 was weighed by consumer electronics recovery falling short of expectations.

Revenue for the first 3 quarters of 24 years was 13.268 billion yuan, +1.0 times year on year, net profit of 0.557 billion yuan year on year, +1.6 times year on year, after deducting 0.497 billion yuan of non-net profit, +1.6 times year on year; gross profit margin of 21.54%, year on year +18.92 pct, net interest rate 4.23%, +17.65 pct year on year, net profit margin of 3.74%, year-on-year +17.38pct.

24Q3 quarterly revenue of 4.229 billion yuan, -7.8% month-on-month, net profit to mother -0.037 billion yuan, month-on-month loss, net profit -0.042 billion yuan, month-on-month loss; net interest rate to mother -0.87%, -5.43pct month-on-month, minus non-net interest rate -0.99%, 4.83pct month-on-month; mainly due to downstream customer inventory removal slow and low price acceptance. Q3 quarterly gross margin declined Sincerely. If the Q3 quarter is excluded, the net profit returned to mother was 0.078 billion yuan, the net profit for the Q3 quarter was 0.078 billion yuan, -63.0% month-on-month, and 0.073 billion yuan after deducting non-net profit, or -58.7% month-on-month.

Q3 Embedded storage may be under pressure, and SSDs are expected to benefit from enterprise-grade storage volumes to continue growing revenue.

1) The largest business is embedded storage, with revenue of 4.423 billion yuan in 23 years, accounting for 44% and a gross profit margin of 3.11%.

The 24Q3 quarter is expected to fall short of expectations due to downstream consumer electronics recovery, putting pressure on the embedded storage business.

2) The second largest business is solid-state drives, with revenue of 2.802 billion yuan in '23, accounting for 28%, and a gross profit margin of 5.46%.

The 24Q3 quarter is expected to benefit from high-volume shipments of enterprise-grade eSSD products to drive growth in performance.

Enterprise-grade eSDs achieve mass shipments, and 24Q3 enterprise-level storage revenue is expected to maintain rapid growth.

24H1's eSD achieved high-volume shipments and continued to develop multiple large cloud service provider customers.

24H1 enterprise storage business revenue was 0.291 billion yuan, an increase of more than 20 times over the previous year. As of 24Q3, the company's mid-to-high-end businesses, such as enterprise and industrial storage, have developed as scheduled, and are expected to maintain rapid growth in the Q3 quarter.

24Q3 The company's overseas business revenue continued to grow, benefiting from the international and domestic dual-cycle supply chain layout.

23H2 completed the holding acquisition of Brazil's Zilia and Yuancheng Suzhou, laying a solid foundation for the company to build a resilient international and domestic dual-cycle supply chain system. Among them, 24H1 Brazil's Zilia achieved revenue of 0.991 billion yuan and net profit of 0.028 billion yuan. 24H1 Lexar's global sales reached 1.63 billion yuan, +70.6% year over year.

The 24H1 Lexar solid-state drive has the highest market share in Poland and Singapore, and its global influence continues to rise. As of 24Q3, the company's revenue from overseas businesses such as Lexar's business and Brazil's Zilia continued to grow.

Global AIGC Wave+ “Digital China”, the leading storage space is vast and maintains a “gain” rating.

With the promotion of the global AIGC wave and the release of the “Digital China” top-level plan, the storage market has gained new momentum for growth. As a domestic storage module leader, the company is actively promoting the domestic and international two-wheel layout of the storage industry chain, with broad room for growth. The company's net profit from 2024 to 2026 is estimated to be 0.747/1.288/1.929 billion yuan, respectively, corresponding to the 24/25/26 PE of 52/30/20 times, maintaining the “increase” rating.

Risk warning: macroeconomic fluctuations; wafer price fluctuations; international trade frictions; R&D falls short of expectations, etc.