Core views:

The company released its 24Q3 quarterly report, and the profit margin performance was impressive. The company achieved revenue of 8.592 billion yuan in 24Q1-Q3, +10.60%; realized net profit of 1.016 billion yuan, +27.86% year on year; net profit without return to mother achieved 0.985 billion yuan, +27.75% year on year; gross profit margin of 23.19%, -0.14pct year on year: net profit margin 11.80%, year on year +1.43 pct year on year. Among them, 24Q3 achieved revenue of 3.146 billion yuan, +10.35%; net profit to mother achieved 0.368 billion yuan, +28.70% year over year; net profit without return to mother achieved 0.357 billion yuan, +29.66% year over year; 24Q3 gross profit margin 23.42%, -0.40pct month on month; net profit margin 11.68%, +0.17pct month on month. The company's revenue is growing steadily, and its profitability is outstanding.

The company's R&D investment is stable, and the cost rate is manageable during the period. The 24Q1-Q3 company's sales expense ratio was 0.37%, -0.04 pct year on year; management expense ratio was 2.63%, -0.24pct year on year: the period cost rate was 3.59%, -0.39 pct year on year. Among them, 24Q3 had a sales expense ratio of 0.34%, -0.04pct; management expense ratio 2.40%, -0.38pct month-on-month; period cost ratio 3.35%, -0.37pct month-on-month; company 24Q1-Q3 R&D cost rate 5.26%, -0.33pct year over year; 24Q3 R&D cost rate 5.05%, month-on-month. The company's overall expenses are well controlled.

The results of cost reduction and efficiency are remarkable. Overseas market growth is worth looking forward to, and the robot business is about to be shipped.

The company has a clear strategy, and while reducing prices in the industry, it always strictly controls costs and shows core competitiveness. The company has previously set up overseas production bases in Germany, Sweden and Hungary to further meet the production capacity support needs of overseas customers. The robotics business mainly focuses on core components such as harmonic speed reducers, and is expected to gradually expand in the future.

Profit forecasting and investment advice. The company's revenue for 24-26 is estimated to be 13.56, 16.89, and 19.58 billion yuan, respectively, and net profit to mother is 1.41, 1.74, and 2.1 billion yuan, respectively. Referring to comparable companies, the company was given 20 times PE in 2025, with a corresponding reasonable value of 128.18 yuan/share, maintaining a “buy” rating.

Risk warning. NEV sales fell short of expectations; midstream prices fell beyond expectations; core customer share declined beyond expectations, etc.