The company's net profit after deducting non-return to mother in 2024Q3 was 1 billion yuan, +11% year-on-year and +25% month-on-month. In the first three quarters of 2024, the company achieved revenue of 34.049 billion yuan, -4% year-on-year; realized net profit of 3.189 billion yuan, or -7% year-on-year; achieved net profit of 2.5 billion yuan after deduction of non-return to mother, +16% year-on-year. In 2024Q3, the company achieved revenue of 12.39 billion yuan, -1% year-on-year, and basically flat; realized net profit of 1.051 billion yuan, -17% YoY and -2% month-on-month; realized net profit of 1.001 billion yuan without return to mother, +11% YoY and +25% month-on-month.

The company's battery sales continue to grow, and the energy storage business is growing at a remarkable rate. The company's total shipment volume of dynamic storage batteries in the first three quarters of 2024 was 56.44 GWh, +55% over the same period last year. The company shipped 22.0 GWh of power storage batteries in 2024Q3, +50% YoY and +5% month-on-month; of these, energy storage batteries shipped 14.8 GWh, +95% YoY, +6% month-on-month, and power battery shipments were 7.2 GWH, +1% YoY and +1% month-on-month. Looking ahead, the company's flagship energy storage products will continue to be recognized by customers at home and abroad, and sales are expected to maintain rapid growth. In the field of power batteries, the company actively collaborates with customers such as Xiaopeng, Guangzhou Automobile, and BMW to occupy a greater share of the customer's new models.

We expect the company's dynamic storage battery shipments to reach around 80 GWh in 2024, or about +47% over the same period last year.

The profitability of the company's dynamic storage batteries improved month-on-month in the third quarter. We estimate that in 2024Q3, the company's non-net profit per unit deducted from energy storage batteries was about 0.02 yuan/Wh, an increase of about 0.01 yuan/Wh over the previous month; profitability was steady, moderate and positive, or benefited from factors such as continued full production of energy storage batteries, an increase in the share of high-quality orders, and a reduction in the price of lithium carbonate. Looking ahead, the company's energy storage battery production capacity utilization rate continues to be high, and the proportion of high-quality customers may be rising steadily. Power batteries improve operating rates as customers release new models, and the profitability of dynamic storage batteries is expected to stabilize, moderate and improve.

The company's consumer battery business performance is stable, and production of small cylindrical batteries is abundant. The company's two national manufacturing champions, lithium thionyl chloride batteries and battery capacitors (SPC), continue to lead the market. The monthly production and sales volume of consumer small cylindrical batteries exceeded 0.1 billion. The Chengdu plant is now in operation, and the construction of the Malaysian plant is progressing smoothly, which will further effectively meet customer needs and increase product market share.

The company's globalization strategy is advancing at an accelerated pace. Since 2024, the company has successively reached in-depth cooperation with customers such as Aksa, Powin, AESI, Zero Run Technology, and a European group. In terms of production capacity, the company's Malaysian base has been successfully built, part of its production capacity will be put into operation one after another in 2025, and the European base is progressing steadily. In terms of the form of cooperation, the company launched a CLS global cooperative business model with cooperative R&D, technical licensing, and service support for overseas markets, and landed at ACT. Meanwhile, several CLS projects are in the negotiation phase.

Risk warning: Electric vehicle sales fell short of expectations; production progress fell short of expectations; raw material prices increased beyond expectations.

Investment advice: Lower profit forecasts and maintain superior market ratings. Considering the impact of the company's equity incentive fees and other earnings fluctuations on profit, we adjusted our profit forecast. We expect the company to achieve net profit of 4.18/5.415/7.019 billion yuan in 2024-2026 (the original forecast was 4.706/5.967/7.023 billion yuan), +3%/+30% YoY, EPS 2.04/2.65/3.43 yuan, and the current stock price corresponding to dynamic PE is 24/19/14 times.