In the first three quarters of 2024, revenue increased 24.95% year over year, and net profit to mother increased 31.71% year over year.

The company achieved revenue of 3.673 billion yuan in the first three quarters of 2024, up 24.95% year on year; net profit to mother 0.48 billion yuan, up 31.71% year on year; net profit after deducting non-return to mother 0.468 billion yuan, up 35.97% year on year. Looking at a single quarter, in the third quarter of 2024, the company achieved revenue of 1.304 billion yuan, an increase of 33.23% year on year; net profit to mother was 0.181 billion yuan, an increase of 59.78% year on year. The company's revenue grew rapidly in the third quarter, mainly due to a recovery in the boom in the injection molding machine industry and an increase in the company's share, which led to a positive trend in the company's business trend.

The performance on the profitability side was impressive, mainly due to an increase in gross margin and an increase in net interest due to lower pressure on the cost side.

The company's gross margin/net margin for the first three quarters of 2024 was 34.10%/13.43%, respectively, with a year-on-year change of +0.97/+0.66pct. Looking at a single quarter, the company's gross margin/net margin for the third quarter was 35.01%/14.36%, with a year-on-year change of +0.87/+2.56pct. The improvement in gross margin was mainly due to the scale effect brought about by the faster revenue growth rate and the decline in raw material prices. On the cost side, the sales/management/R&D/finance expense ratios for the first three quarters of 2024 were 9.24%/5.46%/4.50%/1.38%, respectively, with a year-on-year change of +0.19/ -0.45/-0.99/ -0.25pct. The total cost ratio for the period decreased by 1.49 pct year on year, reflecting the company's better cost control capabilities.

The domestic downstream boom has rebounded, and the effects of improving overseas market layout and internationalization have been remarkable. In the first three quarters of 2024, national policies promoted equipment updates in the industrial sector. The automobile industry, which accounts for the largest downstream share of the company, developed rapidly, the 3C industry remained stable, and the home appliances and daily necessities industry picked up quarter by quarter. Overseas market companies adhere to a global strategy. Currently, they have more than 40 overseas distributors, covering 70+ countries and regions. The overseas export business of injection molding machines is developing rapidly, and the growth rate is superior to the overall level of the industry. International market sales network, production capacity construction, and comprehensive brand promotion layout, using the “HPM” brand to explore the North American and European markets. Production capacity has already been put into use in the US and India, and the Mexican plant is used for product sales, maintenance and storage services, and is expected to be put into use in 2025 or 2026.

Investment advice: The company is a leading supplier of molding equipment in China. Injection molding machines benefit from industry prosperity, increased share and export incentives, and die-casting machines benefit from strengthened competitiveness of high-end LEAP series and breakthroughs in magnesium alloy injection products. Overall, it is expected to maintain steady growth. In view of the company's good performance in the third quarter, we slightly raised our 2024 profit forecast. We expect net profit to be 0.622/0.749/0.857 billion yuan (previous value 0.609/0.787/0.924 billion yuan) for 2024-2026, corresponding to PE18/15/13 times, maintaining the “superior to the market” rating.

Risk warning: Demand for injection molding machines has declined sharply; integrated die-casting business falls short of expectations; industry competition has intensified.