Description of the event

The company released its 2024 three-quarter report. 24Q1-3 revenue was 46.4 billion yuan, up 9% year on year; net profit attributable to it after deducting the impact of central control was 3.46 billion yuan, up 12% year on year. Among them, 24Q3 revenue was 17.4 billion yuan, an increase of 18% over the previous year; net profit was 1.49 billion yuan after deducting the influence of central control, an increase of 24% over the previous year.

Incident comments

The company's 24Q1-3 profit growth after deducting central control is further accelerated compared to 24H1. We believe it mainly comes from the combined growth acceleration of the company's low voltage and photovoltaic businesses, which verifies the growth momentum of the company's two major businesses.

In terms of low-voltage electrical appliances, the company, as an industry leader, is expected to maintain stability on the revenue side against the backdrop of weak industry sentiment, which shows that the company's management level is highly resilient to industry risks.

We expect the gross margin of the company's low-voltage appliance business to increase year-on-year in the first three quarters, mainly benefiting from the company's price increase strategy and internal cost reduction measures. Driven by this, we expect the net profit of the company's Q1-3 low-voltage electrical appliance business to increase year-on-year, and the net interest rate to be quickly repaired.

In terms of photovoltaics, Zhengtai Energy's household business is an important part of the company's photovoltaic business. We expect the company to maintain an increase in the grid-connected and sales volume of household photovoltaics in Q3, and expect to maintain the number one position in the industry.

At the same time, we expect that the company's household photovoltaics has now resumed a relatively rapid pace of development and grid connection and sales transfer, and is expected to maintain rapid growth throughout the year.

In terms of expenses, the company's expense rate for the first three quarters reached 12.78%, up 1.47 pct year on year. Among them, the cost rate for the first three quarters reached 12.52%, up 0.39 pct year on year, mainly because the management fee ratio increased 0.28 pct year on year, the financial expense ratio increased 0.38 pct year on year, the sales expense ratio increased 0.03 pct year on year, and the R&D cost rate decreased 0.3 pct year on year.

In summary, the company's low-pressure business continues to usher in profit recovery and elasticity, and household use continues to grow. The company's net profit is estimated to reach 4.4 billion yuan in '24, corresponding to 11 times the valuation. Maintain a “buy” rating.

Risk warning

1. The risk of macroeconomic fluctuations;

2. The risk that power grids in the household photovoltaic industry will fall short of expectations.