Incident: In the first three quarters of 2024, revenue was 46.409 billion yuan, up 8.89% year on year; net profit to mother was 3.498 billion yuan, up 16.93% year on year; net profit after deducting non-return to mother was 3.359 billion yuan, up 12.64% year on year.

Looking at the single quarter, 24Q3's revenue was 17.422 billion yuan, up 17.96% year on year and 33.28% month on month; net profit to mother was 1.576 billion yuan, up 44.87% year on year, up 87.23% month on month; net profit after deducting non-return to mother was 1.449 billion yuan, up 27.26% year on year, up 65.26% month on month.

Focus on improving quality and efficiency, and gross margin is increasing steadily. In terms of profitability, gross margin for the first three quarters of 24 was 25.41%, up 2.54 pcts year on year, net margin was 9.94%, up 0.57 pcts year on year. Looking at the single quarter, 24Q3 gross margin was 25.51%, up 1.55 pcts year on year, down 2.76 pcts month on month, net margin was 11.92%, up 1.97 pcts year on year, and 3 pcts month on month.

In terms of cost rates, the cost rate for the first three quarters of 24 was 12.78%, up 1.47 pcts year on year; as the scale of business increased, finance/management/R&D/sales expenses were 13.25/1.767/0.896/1.943 billion yuan respectively, up 50%/24%/9%/15% year on year, and the finance/management/R&D/sales expense ratios were 2.85%/3.81%/1.93%/4.19%, respectively, up 0.78 pct/year on year, up 0.46 pcts/down 0.01pct/increase 0.23pct.

Establish joint ventures to expand the scale of the photovoltaic industry. In September 2024, the holding subsidiary Zhejiang Taizhou Renewable Energy plans to jointly invest in the establishment of Suzhou Hengjunxu New Energy Technology Co., Ltd. The joint venture mainly focuses on investment in household distributed photovoltaic power generation infrastructure projects recommended by Zhengtai Aneng, which will help Zhengtaian to deepen cooperation with potential customers, expand the scale of the photovoltaic industry, improve asset turnover efficiency, and help the household photovoltaic business develop in an orderly manner.

Investment advice: We expect the company's 2024-2026 revenue to be 65.604, 73.488, and 82.438 billion yuan, respectively, with corresponding growth rates of 14.6%, 12.0%, and 12.2% respectively; net profit to mother is 4.41, 5.095, and 5.806 billion yuan, respectively, corresponding growth rates of 19.6%, 15.5%, and 13.9%, respectively, based on the closing price of November 1, corresponding to the 2024-2026 PE will be 11X, 10X, and 8X. Maintain a “Recommended” rating.

Risk warning: risk of raw material price fluctuations; risk of exchange rate changes; risk of asset impairment.