Incident: The company released the 2024 third quarter report. In the first three quarters of 2024, it achieved total operating income of 16.906 billion yuan, a year-on-year increase of 6.07%; realized net profit due to mother -0.532 billion yuan, a year-on-year decrease of 445.02%; and realized net profit deducted from non-mother of -0.54 billion yuan, a year-on-year decrease of 412.89%. 3Q2024 achieved total operating income of 5.9 billion yuan, a year-on-year increase of 7.20%; realized net profit attributable to mother of -0.585 billion yuan, a year-on-year decrease of 915.63%; realized net profit without deduction of -0.567 billion yuan, a year-on-year decrease of 940.45%.

Gross margin has declined, and the management expense ratio and R&D expense ratio have increased: 3Q2024's gross profit margin was 14.37%, -0.14pct; 3Q2024 sales expense ratio was 1.28%, -0.11pct; management expense ratio was 10.09%, +2.29pct; R&D expense ratio was 2.28%, +0.23pct year over year.

Targeted projects continue to be implemented, and global integration continues to advance: since 2024, many high-quality orders for the company's passenger car seat business have accelerated, and passenger car seat customers have covered overseas luxury car companies, leading domestic car builders, traditional high-end domestic joint ventures, and leading domestic autonomous vehicle companies. The air outlet business grew rapidly, achieving sales of 0.166 billion yuan in the first half of 2024 (about 95 million yuan in the same period last year); in-hand orders for passenger car hidden doorknobs and car refrigerators continued to accumulate. Among them, the car refrigerator business achieved sales of about 22 million yuan in the first half of 2024, and began contributing revenue for the first time. The construction of the new production base continues to advance. The Hefei base (Phase I) and the Changzhou base have been completed and put into operation as scheduled, and the Ningbo base, Changchun base, Tianjin base, Beijing base, Fuzhou base, Yiwu base, and Wuhu base have been laid out and put into construction as planned. Since 2024, the normalization of domestic and foreign navigation has brought the Group's domestic and foreign employee exchanges back to normal, and Grammer's integration has entered the fast track.

Investment advice: We expect the company to achieve net profit of 0.132, 1.097, and 1.334 billion yuan in 2024-2026, corresponding to the 2024-2026 PE of 127.97/15.39/12.66 times, respectively, to maintain the “gain” rating.

Risk warning: New product sales fall short of expectations; industry competition increases risk; risk of global integration falling short of expectations.