Incident: On October 25, 2024, the company released its report for the third quarter of 2024. The company achieved operating income of 15.823 billion yuan in the first three quarters of 2024, a year-on-year decrease of 19.14%, and realized net profit to mother of 0.843 billion yuan, a year-on-year decrease of 63.00%. Among them, the third quarter achieved operating income of 5.124 billion yuan, a year-on-year decrease of 15.98%; realized net profit to mother of 0.28 billion yuan, a year-on-year decrease of 26.50%.

Gross margin declined and cost control was good: the company's gross margin for the first three quarters of 2024 was 15.77%, -3.03pct year on year. In terms of cost ratio, the company's sales expense ratio for the first three quarters of 2024 was 2.68%, -0.04pct year on year; management expense ratio was 4.24%, -0.48pct year on year; R&D expense ratio was 1.77%, +0.41 pct year on year.

The “Starlink Plan” was fully implemented, and the special vehicle loading business achieved a break-even balance: by business: Starlink Lighthouse Pioneer Group fully implemented the “Starlink Plan”, reshaped the business model and organizational form of semi-trailer production and sales according to new productivity standards, iterated business organization, upgraded the scope of use of the digital system, and completed the upgrade and put into use of the Zhumadian and Yangzhou LTP Center Starlink production lines. From July to September 2024, Starlink Lighthouse Pioneer Group's sales bucked the trend and increased 20.14%, revenue increased 21.18% year-on-year, and gross margin increased month-on-month. Qiangguan Business Group launched the “Qiangguan Xiongqi Plan” to begin structural reforms for tanker production organizations by adopting the tools and methods of the “Starlink Plan”. The North American business resumed the operation and delivery of container frame trucks, and continued to promote the iterative upgrading of the governance structure. In the “2024 Global Semi-Trailer OEM Ranking List” published by “Global Trailer”, the North American business Vanguard Global ranked 11th in the world with a production of nearly 0.0235 million vehicles, ranking 6th in the North American market. European and other businesses continue to improve the LoM manufacturing plant layout, optimize product delivery cycles, and actively explore new markets. The Australian business continues to grow. The special vehicle loading business continues to implement the “Midway Plan”, restructure the production system, deepen the layout of new energy sources, and introduce new products. In the first three quarters of 2024, special vehicle loading sales increased sharply by 38.64% year on year, and revenue increased 25.09% year on year, achieving break-even.

Investment advice: We expect the company to achieve net profit of 1.08/1.205/1.359 billion yuan in 2024-2026. The corresponding PE was 18.52/16.61/14.73 times, respectively, maintaining the “gain” rating.

Risk warning: risk of fluctuations in raw material prices; increased risk of industry competition; risk of overseas market expansion.