Event: On October 31, 2024, the company released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 49.946 billion yuan, +7.61% year over year; realized net profit to mother of 7.6 billion yuan, +5.21% year over year; realized deducted non-net profit of 7.38 billion yuan, +4.31% year over year.

24Q3 achieved revenue of 18.926 billion yuan, +6.37% year over month; realized net profit of 2.64 billion yuan, -7.96% year on month, -7.76% month on month; realized deducted non-net profit of 2.498 billion yuan, -10.57% year on year and -10.76% month on month.

Delays in receipt and changes in the delivery structure affected 24Q3 profits. There is a lag between receipt and delivery of the 24Q3 energy storage system. At the same time, the pace of confirmation of new energy investment and development business projects has been delayed, affecting the company's revenue and profit. 24Q3's gross sales margin was 29.52%, which remained stable from month to month. The net sales margin was 14.16%, down 1.81 pct from month to month. The company's profitability declined steadily and slightly, mainly due to the influence of the inverter and energy storage system delivery structure, the share of revenue in the relatively low-profit domestic market increased, while the price of energy storage systems declined due to increased competition in the energy storage market. Looking ahead to 24Q4, we expect the company's profit to improve as orders from overseas markets begin and the pace of delivery accelerates.

Revenue is expected to accelerate in 24Q4, and cash flow is expected to continue to improve. At the end of 24Q3, the company's inventory was 32.151 billion yuan, an increase of 4.014 billion yuan over the previous month. We expect mainly an increase in new energy power plant development projects to be built, as well as an increase in preparation and overseas inventory to meet the delivery needs of overseas energy storage orders. Looking forward to 24Q4. As the end of the year approaches, order acceptance is expected to accelerate, contributing to the company's profits. 24Q3 The net cash flow from the company's operating activities was 3.408 billion yuan, up 55.24% month on month. Looking ahead to 24Q4, towards the end of the year, we expect the company's repayments to increase and cash flow to continue to improve.

It is proposed to issue GDR overseas to help the global layout. On October 30, 2024, the company issued an announcement announcing that the application for issuing additional domestic basic A-shares in overseas certificates of deposit was accepted by the Shenzhen Stock Exchange. It will add 35 GWh of energy storage products and 50 GW inverter equipment production capacity per year. Among them, it will build 15 GWh energy storage products and 50 GW inverter equipment production capacity overseas. This expansion of overseas production capacity is expected to further strengthen the company's global layout and enhance the company's core competitiveness.

Investment advice: We expect the company's 2024-2026 revenue to be 81.803, 98.54, and 119.186 billion yuan, respectively, with corresponding growth rates of 13.2%, 20.5%, and 21.0% respectively; net profit to mother will be 10.9, 13.082, and 15.969 billion yuan respectively, corresponding growth rates of 15.5%, 20.0%, and 22.1%, respectively, based on the closing price of November 1, corresponding to the 2024-2026 PE is 17X, 14X, and 11X. The company is The leading optical storage company, with steady profitability, maintains a “recommended” rating.

Risk warning: downstream demand falls short of expectations, market competition intensifies, etc.