Incidents:

Recently, the company released its three-quarter report for 2024. In Q1-Q3, the company achieved operating income of 1.266 billion yuan, -10.12%; net profit to mother 0.246 billion yuan, or -40.88% year-on-year; net profit after deducting non-return to mother 0.232 billion yuan, or -39.06% year-on-year;

The gross profit margin of sales was 48.09%, +3.77pcts; the net profit margin was 19.37%, -9.96pcts; the net cash flow from operating activities was about 0.073 billion yuan, an increase of 0.095 billion yuan over the same period last year, an increase of 0.095 billion yuan over the same period last year.

In Q3 2014, the company achieved operating income of 0.358 billion yuan, +4.36% year over month; net profit to mother 0.058 billion yuan, -13.4% year on year, -51.81% month on month; net profit without return to mother 0.047 billion yuan, -2.78% year on year and -60.17% month on month;

Gross profit margin 49.54%, +0.43 pcts year on month, +2.92 pcts month on month; net profit margin 16.01%, -3.27 pcts year on year, -5.06 pcts month on month.

ANALYSIS:

1. Reasons for the decline in net profit attributable to mother: Mainly due to increased investment in R&D, personnel, marketing and management related to Q1-3 in '24 compared to Q1-3 in '23.

2. The reason for the improvement in net cash flow from operating activities in Q1-3 in '24 is mainly due to a decrease in cash expenses related to the company's procurement business compared to the same period last year.

3. In Q1-3 and 24Q3, the company's R&D expenses increased rapidly, mainly due to the company's increased R&D investment, and the increase in the number and remuneration of R&D personnel compared to the same period last year.

Investment advice:

1. Industry level:

1) After a round of inventory digestion in Europe, Germany, Austria and others continue to relax their balcony photovoltaic installation policies, the industry is expected to maintain a high growth rate in 24 years;

2) The US market is expected to usher in a concentrated release of demand after interest rate cuts.

2. Company level: Hemai accounts for a relatively high revenue share in Europe and North America, and is expected to fully benefit.

We adjusted the company's 24-25 revenue forecast from 7.85/12.76 billion yuan to 2.15/2.69 billion yuan, and adjusted net profit to mother from 2/3.04 billion yuan to 0.39/0.46 billion yuan, and added a 26-year forecast. The 26-year revenue is expected to reach 3.22 billion yuan and net profit to mother is 0.54 billion yuan; the current market value corresponds to the 24-26 PE valuation by 42/36/31 times, respectively, and adjusted to” “Gain” rating.

Risk warning: New product sales fall short of expectations, inventory management risks, accounts receivable management risks, industry competition exacerbates risks.