Description of the event

Costa released its 2024 three-quarter report. The first three quarters of 2024 achieved revenue of 2.912 billion yuan, a year-on-year decrease of 28.43%. Net profit to mother was 0.357 billion yuan, a year-on-year decrease of 48.41%. After deducting non-return net profit of 0.329 billion yuan, a year-on-year decrease of 51.36%. 2024Q3 achieved revenue of 1.02 billion yuan, a year-on-year decrease of 18.11%, and net profit to mother of 0.138 billion yuan, a year-on-year decrease of 27.86%, after deducting non-net profit of 0.122 billion yuan, a year-on-year decrease of 34.87%.

Incident comments

On the revenue side, the company's new energy business revenue is expected to drop significantly year-on-year in 2024Q3, mainly because major energy storage customers are still in the storage stage and have yet to pick up goods, but energy storage revenue is expected to recover month-on-month, mainly due to a slight improvement in European household storage demand, while incremental markets such as Southeast Asia, Africa, and Ukraine have begun to contribute revenue; PV business revenue increased slightly year-on-year, and charging pile business revenue remained flat month-on-month; the data center business remained steady, and revenue increased slightly year-on-year.

On the profit side, the overall gross margin for 24Q3 was 31.11%, and the expense ratio was 16.62%, which was basically the same; accounts receivable depreciated back 0.014 billion yuan during the quarter, and the final net interest rate increased by about 13.49% month-on-month.

Looking ahead, in terms of the new energy business, with downstream warehousing and industry restoration, major overseas customers are expected to start picking up goods in 2025. At the same time, the company will launch low-end products for the Asian, African, and Latin American markets. Overall energy storage shipments are expected to gradually resume, and the photovoltaic business is expected to continue to grow; in addition, charging piles will enter the Middle East market, complete European standard certification, accelerate the implementation of American standards, and the charging pile business is expected to achieve a high growth rate in 2025; the data center business is expected to grow at a high rate of about 10% year-on-year in 2025. We expect net profit of 0.48 or 0.6 billion yuan in 24 and 25, corresponding to PE of 24 or 19 times, and continue to recommend.

Risk warning

1. The progress of household storage delivery falls short of expectations;

2. Market competition risk.