Incident Overview

The company released its 2024 three-quarter report, and achieved revenue of 3.439 billion yuan, +19.77% year over year; net profit to mother of 0.775 billion yuan, +8.43% year over year; net profit after deducting non-return to mother 0.752 billion yuan, +3.25% year over year. Gross profit margin 34.11%, year-on-year -4.58pct; net profit margin 22.54%, year-on-year -2.45pct.

24Q3: Achieved revenue of 1.322 billion yuan, +46.92% YoY, +16.26%; net profit to mother 0.293 billion yuan, +31.04% YoY, +9.93% month-on-month; net profit without return to mother 0.291 billion yuan, +32.85% YoY and +13.31% month-on-month. Gross profit margin 34.16%, year-on-year -4.35pct, month-on-month -0.76pct, net profit margin 22.13%, yoy-2.8pct, QoQ-1.33pct.

Revenue reached a record high in the third quarter, and gross margin declined

The first three quarters of 24 were affected by smooth expansion of downstream customers, and revenue reached a record high, while gross margin declined month-on-month due to increased competition in the industry and product structure. The company actively expanded middle and high-end customers in the fields of new energy vehicles, photovoltaics, energy storage, wind power, industrial control, rail transit, and home appliances. Through technology research and development, improving the level of equipment automation, optimizing supply chain management, and improving information system construction, profit margins are expected to gradually rise in the future.

Invest in a Hungarian subsidiary to improve overseas layout, and the thin film capacitor leader has strong technical capabilities

1) The company plans to invest no more than RMB 0.1 billion to establish a wholly-owned subsidiary in Hungary. The subsidiary in Hungary is an important layout based on overseas development strategies, which is conducive to promoting exchanges and cooperation between the company and overseas markets, enhancing the company's comprehensive strength, and enhancing the company's core competitiveness. 2) The company has a complete range of products to meet the needs of various industries such as industrial control, photovoltaics, energy storage, wind power, new energy vehicles, rail transit, smart grids, home appliances, lighting, etc. At the same time, the company realized independent R&D and production of metallized film materials for film capacitors, and established Farah's unique equipment and material supply chain system through cooperative development and continuous internal innovation, which can keep up with market demand and achieve iterative product upgrades and product originality development.

Investment advice

We expect net profit for 2024/2025/2026 to be 1.14 billion yuan/1.384 billion/ 1.638 billion yuan. Referring to the 2024/11/4 closing price, PE is 25.5/21/17.7 times, respectively, maintaining the “buy” rating.

Risk warning

Downstream demand falls short of expectations, prices of major raw materials fluctuate, industry competition intensifies, and the risk that information used in research reports is not updated in a timely manner