Event: On October 29, Colick released its report for the third quarter of 2024. 1) In the first three quarters of 2024, the company achieved revenue of 3.287 billion yuan, a year-on-year decrease of 4.94%; realized net profit of 0.152 billion yuan, an increase of 11.86% year-on-year; and realized net profit of 0.146 billion yuan after deduction, an increase of 25.31% year-on-year. 2) In the third quarter of 2024, the company achieved revenue of 1.159 billion yuan, a year-on-year increase of 2.64%; realized net profit of 49.17 million yuan, a year-on-year decrease of 30.34%; realized net profit of 46.69 million yuan after deduction, a year-on-year decrease of 21.44%.

Q3 Revenue grew steadily, and profitability was under pressure in the short term. The company achieved steady revenue growth in the third quarter, and the year-on-year decline in net profit was mainly affected by cost-side factors. Specifically, the company's Q3 gross margin was about 13.14%, up 0.03pct year on year, down 0.03pct month-on-month, with little change. The Q3 sales expense rate/management expense rate/R&D cost rate/financial expense ratio were 1.21%/3.55%/3.17%/0.38%, respectively, up 0.12pct/0.72pct/0.44pct/0.26pct from the same period last year. The year-on-year increase in the Q3 net profit margin was the main reason for the year-on-year decline in Q3 net profit margin. The company's Q3 net margin was about 4.36%, down 2.31pct year on year and 0.09pct month-on-month.

The layout of magnetic components is deepening, and switching power supplies are growing rapidly. 1) In terms of magnetic components, the company lays out emerging fields such as new energy vehicle electronics, photovoltaic energy storage, charging piles, and industrial power supplies in advance through pre-research, and actively develops high-value-added product lines such as transformers to guarantee long-term profit growth. In the field of automotive electronics, the company has developed MEB platform second-generation 6.6KW & 11KW series products to effectively reduce product volume, increase reliability, and improve efficiency. In the field of charging piles, the company has successfully developed 40KW/60KW high-power magnetic component products.

In optical storage products, the company has successfully developed a new three-phase differential mode inductor. 2) In terms of the switching power supply business, the company is steadily advancing in products such as industrial-grade PD power supplies and PD+DC/DC fast charging solutions, high-power adapters for projectors and commercial displays, high-power smart chargers, and high-power high-performance industrial power platforms. The switching power supply business achieved a 33.29% year-on-year increase in the first half of 2024.

Investment suggestion: Considering the increasing competitive pressure in the industry where the company's photovoltaic energy storage business is located, we adjusted the company's 2024 to 2026 operating income forecast to 4.678 billion yuan/5.213 billion/ 5.961 billion yuan, and adjusted the company's net profit forecast to 0.181 billion/ 0.275 billion/ 0.373 billion yuan, calculated at the closing price on November 4, corresponding to PE in 2024 to 2026 It is 33.35x/21.90x/16.15x, maintaining a “buy” rating.

Risk warning: Market competition increases risk; raw material price fluctuation risk; exchange rate fluctuation risk.