Incidents:

The company released its report for the third quarter of 2024:

In the first three quarters of 2024, the company achieved revenue of 1.06 billion yuan, +21.88% year on year; net profit to mother was 0.134 billion yuan, -13.53% year over year.

Among them, in Q3, the company achieved revenue of 0.402 billion yuan, +14.45% year-on-year; net profit to mother was 0.044 billion yuan, or -30.26% year-on-year. Q3 revenue reached a record high in a single quarter, and profit declined year over year.

Revenue reached a new high, and profits were under pressure

On a quarterly basis, Q1, Q2, and Q3 revenue were +21.15%, +30.90%, and +14.45%, respectively. Revenue in a single quarter maintained double-digit growth, and Q2's revenue scale exceeded 0.4 billion yuan for the first time since the company went public. Q3 reached a new high, mainly due to the company's focus on major customer strategies and active expansion of new customer groups; net profit to mother was +74.04%, -27.22%, and -30.26% year-on-year. The profit side was under pressure, mainly due to changes in the company's business structure, customer structure, etc., and exchange losses. Also, impacts such as a decline in production capacity at Vietnamese factories.

Profit levels declined year-on-year, and R&D expenditure increased

The company's overall gross profit margin and net margin for the first three quarters of 2024 were 23.45% and 12.63%, respectively, -4.21pct and -5.17pct, respectively. Among them, the company's gross profit margin and net interest rate for the Q3 quarter were 21.08% and 10.84%, respectively, and -7.47pct and -6.95pct, respectively. The profit level declined, mainly due to changes in the company's business and customer structure. The cost rate for the Q3 single quarter was +0.27pct to 8.57% year on year, and the overall cost rate for the period was well controlled. Among them, the company insisted on R&D technology innovation to promote high-quality development. Q3 R&D expenses in a single quarter reached 0.023 billion yuan, +17.63% year over year; the R&D cost rate was 5.71%, +0.15 pct year on year.

Investment advice:

We are optimistic about the broad market space of the smart controller industry. The company uses R&D and innovation to promote high-quality development. The company's net profit for 2024-2026 is 0.19/0.234/0.284 billion yuan, respectively, -8.81%/+23.35%/+21.17%, respectively. The corresponding PE is 19/16/13 times, respectively, to maintain a “buy” rating.

Risk warning:

Downstream customer demand falls short of expectations, risk of raw material price fluctuations, risk of energy storage and inverter products falling short of expectations, risk of significant exchange rate changes.