The company announced Q3 results: 24Q3 revenue 6.887 billion yuan, +6.82%/-4.83% YoY; net profit to mother 0.787 billion yuan, +2.95%/-9.15% YoY. The company's revenue for the first three quarters was 20.563 billion yuan, +8.36% year over year; net profit to mother was 2.3 billion yuan, +6.59% year over year. The company's auto zero business is stable, and Q4 refrigeration is expected to be repaired, maintaining the “gain” rating.

Demand for home appliances was weak in Q3. The auto zero business is expected to grow steadily in Q4 and revenue decline month-on-month in Q3, mainly due to weakening off-season demand in the home appliance industry. According to Industry Online, the efficiency of domestic household air conditioners in 24Q3 was 0.04 billion units, -34% compared to the previous month. The Auto Zero business partially reduced the pressure on the refrigeration business. In 24Q3, domestic NEV sales were 3.38 million vehicles, +18% month-on-month; Auto Zero customer Tesla delivered 0.46 million vehicles globally, +4% month-on-month. The company leads the world in market share for air conditioning/automotive electronic expansion valves, integrated thermal management components for new energy vehicles, etc., and has a stable business base. Looking ahead to 24Q4, under the dual benefits of the trade-in policy and the “Double 11" promotion, the domestic consumer market for home appliances and automobiles is showing a steady growth trend. We expect the company's 24Q4 refrigeration business to gradually recover and the auto zero business to grow steadily.

Gross margin improved month-on-month, and the release of overseas production capacity is expected to drive profit improvement 24Q3. The company achieved a gross profit margin of 28.16%, or -2.6/+0.3 pct month-on-month. The month-on-month improvement may be due to improvements in product structure and increased production quality and efficiency. On the cost side, the 24Q3 company's sales/management/R&D/finance expenses rates were 2.2%/7.6%/5.2%/0.7%, respectively, -0.1/+1.2/-0.6pct year-on-year, and -0.1/+0.9/1.1 pct. Affected by the month-on-month increase in management expenses and exchange losses, the company's net profit margin was -0.4/-0.5pct to 11.4% month-on-month. Looking backwards, profits are expected to rise steadily as the company improves its global manufacturing layout and production capacity investment at its plants in Vietnam, Mexico, and Thailand.

Multi-business collaborative development, card slot humanoid robot circuit

1) Refrigeration: Expanding the customer layout in new regions to reduce costs and increase efficiency in activities such as self-research, lean production, and digital transformation of key manufacturing equipment; 2) Gas-zero: Remarkable achievements in intelligent, standardized, and modular design promotion of integrated components, and continuous improvement in product structure; 3) Humanoid robot: At Tesla's “WE ROBOT” press conference on October 11, the Optimus Gen2 robot was unveiled, and the field can achieve difficult movements such as dancing and bartending, and the degree of coordination and freedom have improved markedly. The company actively lays out the bionic robot mechatronic actuator business. As the company's new base is put into operation, the industry trend is becoming more and more bright.

Profit forecasting and valuation

We expect the company's 24-26 revenue to be 28.3/33.9/37.4 billion yuan, net profit to mother of 3.3/4/4.6 billion yuan, and EPS 0.90/1.08/1.22 yuan, respectively. Select T customer's automobile and energy storage industry chain comparable companies, Xinquan Co., Ltd. and Tuopu Group, and switch the 25-year valuation. Wind agreed to expect an average PE value of 18 times in '25. Considering the rapid development of the company's energy storage/robotics business, we gave the company 23 times PE in 25 years, with a target price of 24.84 yuan (previous value 24.51 yuan) to maintain the “gain” rating.

Risk warning: industry competition intensifies; international trade and exchange rate fluctuations; NEV sales fall short of expectations, etc.