The net profit performance in Q3 was strong, and the net interest rate for the single quarter was raised to 3.4%. 2024Q3, the company's revenue was 1.47 billion yuan, +14.5% year-on-year and +11.0% month-on-month. Net profit to mother was 0.05 billion, +56.9% YoY and +106.4% YoY.

The company's profitability improved markedly. In Q3, the company's gross margin was 20.6%, -1.6 pct year on year, +1.6 pct month on month; net profit margin to mother increased to 3.4%, +0.9 pct year on year, and +1.6 pct month on month. At the same time, the company calculated 0.03 billion yuan of depreciation in the third quarter. We determined that the actual profitability of the consumer side was strong, mainly due to the impairment of production lines due to capacity relocation and weak profits in the large battery storage cell sector.

With the increase in scale, the cost rate continued to decline. We judge that the impact of production capacity migration in the second half of the year is nearing its end, and the company's cost ratio continues to decline in a single quarter: sales, management, and R&D expenses fell from 2.9%/6.4%/5.7% in 2024Q2 to 2.2%/5.5%/5.3% in 2024Q3, respectively. Q3 The financial expense ratio increased to 2.5%, +1.7 pct compared to the previous month. We judge that it is mainly due to the impact of exchange. The subsequent release of production capacity will drive revenue growth, and the overall cost rate is expected to decline.

The consumer electronics recovery is resilient, and global PCs and mobile phones have been growing for four consecutive quarters. According to Canalys data, 2024Q3 global PC shipments were about 0.066 billion units, +1.3% year over year, with notebook (including mobile workstations) shipments reaching 0.054 billion units, +2.8% year over year; 2024Q3 global smartphone shipments increased 5% year over year, mainly due to strong demand from emerging economies and the North American, Chinese and European markets in the early stages of the switching cycle. The company's battery products are widely used downstream. We judge that laptops, mobile phones, and smart wearables are expected to benefit from AI technology and usher in a steady increase in shipments. At the same time, the company's share continues to increase, and the growth prospects are broad.

Special loans helped, and repurchases showed determination for development. The company has signed a “Special Loan Contract for Listed Company Stock Buyback/Increase Business” with the Shenzhen Buji Branch of Bank of China Co., Ltd., with a loan amount of 0.14 billion yuan exclusively for share repurchases. At the same time, the company plans to repurchase 0.1-0.2 billion yuan of company shares, with a maximum price of no more than 59 yuan/share for equity incentive plans, employee stock ownership plans, or convertible corporate bonds. We believe that the company's active repurchase shows its determination for future development and promotes the reasonable return of the company's long-term value.

Investment advice: Adjust the company's profit forecast, adjust the net profit due to mother for 2024-2026 from 0.14/0.36/0.49 billion yuan to 0.15/0.34/0.45 billion yuan, respectively, and adjust the corresponding EPS to 1.86/4.09/5.49 yuan. We believe that the company consumes lithium batteries in downstream applications. Empowered by AI technology, it is expected to usher in a steady increase in shipments. At the same time, the company introduces new customers and increases the share of old customers, and the growth prospects are broad. Referring to comparable companies, the company was given 12-15 times PE in 2025, corresponding to a reasonable value range of 49.05-61.31 yuan, maintaining the company's “superior to the market” rating.

Risk warning: Consumer electronics demand has declined, consumer lithium battery price competition has intensified, and the expansion of new customers falls short of expectations