Core views

The company achieved revenue of 1.843 billion yuan in 24Q3, +19.8% year on year; net profit to mother was 1.0 billion yuan, -35.2% year over year, +24.9% month on month; the bottom up in the company's performance further confirmed that factors such as revenue structure and high shipping costs combined with exchange rates put pressure on Q3 profits, and Q4 equity incentive costs are expected to decrease significantly. Businesses such as ADAS are growing rapidly, and airborne shipments are expected to increase dramatically in 24Q4 and '25. Airsuspension accelerated the acquisition of new project targets. A total of 6 projects exceeded 2.55 billion yuan, and achieved a breakthrough in European projects for the first time. Optimistic about profit elasticity under revenue volume in 2025.

occurrences

The company achieved revenue of 1.843 billion yuan in Q3, +19.8% year on year; net profit to mother 0.1 billion yuan, -35.2% year on year, +24.9% month on month; after deducting non-net profit of 0.091 billion yuan, -30.6% year on year, +71.2% month on month. The negative year-on-year increase in profit was mainly due to equity incentive costs of about 0.12 billion in '24 and higher investment returns in '23.

Brief review

Businesses such as ADAS are growing rapidly, and airborne shipments are expected to increase dramatically in 24Q4 and '25.

By business, Q3's TPMS business revenue was 0.636 billion, or +24% (growth rate upward); idle revenue was 0.2 billion, +5.2% compared to the same period. The growth rate bottomed out mainly due to the low number of models supported by Ideal, Tension and Smart World. Looking forward to Q4, with the increase in models such as the Tensei Z9 and the Intelligent R7, air suspension shipments are expected to increase dramatically, and incremental projects such as Ideal Pure Electric will further contribute to flexibility in '25. In addition, the Q3 sensor business was 0.161 billion, +17.5% year over year; metal tubes and valves grew steadily; and revenue from other businesses such as ADAS was 0.265 billion, +87% year over year.

Factors such as revenue structure, high shipping costs, and exchange rates put pressure on Q3 profits, and Q4 equity incentive costs are expected to decrease significantly.

24Q3's gross profit margin was 24.6%, -3.54 pcts year over year, -0.48 pcts; Q3 gross margin was pressured by multiple factors such as revenue structure, freight and exchange rate: 1) ADAS and other businesses grew rapidly, and the share of high-margin businesses declined slightly; 2) North America & Europe were high shipping rates, but the decline began in late August; 3) RMB appreciation affected US business profits. As sea freight rates declined in Q4, the overall exchange rate stabilized, and gross margin is also expected to recover. At the same time, Q4 expects equity incentive costs to be only 13 million, which is a significant reduction compared to 0.107 billion in the previous three quarters.

Airsuspension accelerated the acquisition of new project targets. A total of 6 projects exceeded 2.55 billion yuan, and achieved a breakthrough in European projects for the first time.

Recently, the company has continued to receive new project targets:

1) On September 3, it was announced that it was designated by a well-known European OEM as a component supplier for the front and rear air springs of its suspension system, with a total amount exceeding 2.0.4 billion yuan. It is expected to be mass-produced in 2027, achieving the first time that a domestic passenger car air spring supplier in China has broken through a European project; 2) It was designated by a leading joint venture car company on the same day, with a total amount of 0.17 billion yuan, and mass production began in December '25; 3) It was designated by a domestic independent brand OEM on September 6. The total amount of sensors, etc. exceeded RMB 0.5 billion, and mass production of H2 began in '25.

4) On October 23, it was designated as ADAS, the leading independent brand, with a total amount of 0.29 billion yuan and mass production of 25H2; 5) On October 29, it received an empty suspension point for a new leading force, with a total amount of 0.9 billion yuan, mass production in January '26; 6) Received an idle spot for its own brand on October 30, with a total amount of 0.45 billion yuan, and mass production began in June '25.

The company has received numerous orders from independent brands, new forces, and leading joint ventures, etc., establishing the image of an idle strategic supplier and long-term growth capacity.

Investment suggestions: The company's sensors and suspension have growth potential. The Q4 and 25 results are expected to bottom up (peak demand season plus improvement of external factors such as RMB appreciation/falling shipping costs). Profit elasticity in 25 years comes from a drop in cost rate pressure under revenue volume, rising revenue side idle growth rate and continued high sensor growth, significant reduction in one-time cost confirmation of cost-side equity incentives, reduced financial expenses and R&D cost rates. The company's net profit for 24-26 is estimated to be about 0.4, 0.61, and 0.74 billion yuan, respectively, corresponding to PE of about 21.3, 14.2, and 11.6 times, respectively, giving it a “buy” rating.

Risk warning: Industry sentiment falls short of expectations, industry competition deteriorates, raw material prices fluctuate sharply, new customer expansion and production capacity investment fall short of expectations.