The scale effect led to an increase in gross margin: the company achieved operating income of 1.13 billion yuan in the first three quarters of 2024, an increase of 91.5% over the previous year, and achieved net profit to mother of -0.35 billion yuan, an increase of 69% over the previous year. In 2024Q3, the company achieved operating income of 0.41 billion yuan, a year-on-year increase of 54.7%; net profit to mother -0.08 billion yuan, a year-on-year increase of 77.4%. The volume of the partner's various automotive products led to revenue growth in the ADAS business. The scale effect was remarkable. Q3's ADAS product revenue reached 0.33 billion yuan, an increase of 87.1% over the previous year; shipments of 0.131 million units were added, +150% year over year. The company's gross margin of ADAS increased to 14.1% in Q3, and the overall gross margin reached 17.5% in Q3.
Designated by important overseas car companies: The company's MX new products have successfully obtained targeted cooperation from 7 automakers in the L2+ field, including many new models from automaker customers such as many independent car brands, Japanese automakers, and well-known Sino-Japanese joint ventures. The company's new products are expected to be released rapidly in 25-27, and MX products will account for 3-4 percent of total shipments.
The product quickly penetrates the 0.15 million-0.2 million market: the installation of lidar in smart cars in the RMB 15 to 0.2 million yuan class is accelerating. For example, BYD's 2025 Seal and 2025 Han, the second-generation AION V and AIONRT launched by GAC Aian, Geely Galaxy, and ZEEKR are all equipped with Sagiteng Juchuang lidars, which quickly penetrate the smart car market in the RMB 15 to 0.2 million yuan range.
High-end smart driving and robotics businesses are growing rapidly: The company's L4 level autonomous driving business has received SOP fixed-point cooperation from a number of industry-leading L4+ autonomous driving companies. In terms of robotics, the company has cooperated with a number of important industrial, commercial, and consumer customers using the E-lidar platform to complete the joint development of new products in different vertical fields. The products are expected to be delivered within the next 18 months.
The target price is HK$31.77, giving a buying rating: We forecast that the company's revenue for 2024-2026 will be $1.645 billion/ $3.2 billion/ 4.559 billion yuan, respectively; net profit to mother will be -0.36 billion yuan, -0.07 billion yuan, and $128 million, respectively. According to industry valuations, the target price given to the company for the next 12 months is 31.77 yuan, corresponding to a 25-year market sales rate of 4.1. The target price remains unchanged. There is room for an increase of 53.11% compared to the current price, and the purchase rating is maintained.
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