Introduction to this report:

The company's profitability was slightly pressured by rising material costs in 2024, compounded by fluctuations in individual customer demand. The overseas layout continues to advance, and we look forward to the release of global orders.

Key points of investment:

Maintaining an increase in holdings rating, the target price was lowered to 26.2 yuan. Considering the intense competition in downstream prices combined with fluctuations in raw material prices, adjust the company's EPS for 2024-2026 to 0.99 (-0.17) /1.31 (-0.3) /1.58 (-0.56) yuan, refer to comparable company valuations, give 20 times PE in 2025, lower the target price to 26.2 yuan (originally 31.07 yuan), and maintain an increase in holdings rating.

Raw materials disrupted third-quarter results, and new energy customers continued to expand. The company announced its 2024 three-quarter report. From January to September, it achieved revenue of 1.75 billion yuan, an increase of 22.2%, and net profit to mother of 0.13 billion yuan, an increase of 9.8%. After deducting net profit of non-return to mother of 0.11 billion yuan, an increase of 10.7%. The company's 3Q24 revenue was 0.61 billion yuan, up 17.1%, down 5.2%; net profit to mother was 0.04 billion yuan, down 4.5%; 8.6%; net profit not attributable to mother was 0.04 billion yuan; net profit not attributable to mother was 0.04 billion yuan, down 5.1% and 9.4%. Individual customer shipping demand fluctuated in the third quarter, revenue declined slightly month-on-month, and rising material costs disrupted performance in the short term.

The gross margin was under slight pressure, and the cost ratio was declining steadily. The company's 3Q24 gross profit margin was 23.5%, down 0.96pct, 1.88pct, net profit margin 7.1%, 1.49pct, and 0.63pct.

Fluctuations in material prices compounded the project's climbing slope, disrupting gross profit margins in the short term, and putting some pressure on them. The cost rate declined steadily. The company's 3Q24 sales, management, R&D, and finance expenses ratio was 1.41%, 7.96%, 4.35%, 1.51%, year-on-year changes -0.49pct, -0.59pct, -0.47pct, +0.34pct, month-on-month change +0.05pct, +0.07pct, +0.27pct, and -1.53pct.

Continue to deploy globalization and expand international customers to open up room for growth. The company lays out production capacity in Mexico and Thailand, and continues to enhance comprehensive and in-depth cooperation with world-renowned large multinational auto parts suppliers and new energy OEMs on a global scale to increase customer stickiness.

Overseas production capacity investment, continuous expansion of international customers, acceleration of globalization, and opening up new growth space.

Risk warning: The expansion of new customers falls short of expectations, and the progress of overseas factories falls short of expectations.