Incident: The company recently released its 2024 three-quarter report, achieving operating income of 13.581 billion yuan, or -13.85%; achieving net profit of 0.926 billion yuan, or -43.89%; achieving deduction of 0.885 billion yuan, or -45.88%; in the third quarter of 2024, achieving operating income of 4.014 billion yuan, same -27.23%, and -24.73%, achieving net profit to mother of 0.288 billion yuan, same as -34.35 billion yuan %, ring +0.66%, achieving deduction of 0.286 billion yuan without return to mother, same as -25.84%, ring +8.14%.

The resilience of diversified businesses is prominent, and the PV business has strong profitability. In the first three quarters of 2024, the company's PV business revenue was about 8 billion yuan, the shipment volume was about 11.5 GW, and shipments increased by about 67% year on year; the company concentrated on the European PV market and was ahead of the industry in terms of profit. The revenue from the magnetic materials business was about 3.33 billion yuan, and 0.174 million tons were shipped. Shipments increased by about 20% year-on-year, and gross margin remained at 25.0%. The lithium battery business revenue was 1.819 billion yuan, and the shipment volume was 4.1 units. Shipments increased by about 70% year-on-year, making efficient use of 7 GWh of production capacity.

Prices and profits for photovoltaic products are expected to bottom out, and production capacity in Indonesia is expected to help the company recover its PV business. As most companies in all sectors continue to lose cash flow and the competitive pattern of the industry continues to be optimized, we believe that the bottom range between PV product pricing and profit has reached, and the company is expected to continue to maintain leading profit levels through high-quality overseas brand channels. The company collaborated with customers to develop multiple overseas markets. The company's 3GW Indonesian production capacity was successfully put into operation in the third quarter of 2024, and the company is expected to radiate into the US market through Indonesian production capacity. As the US conducts a double anti-investigation into the four Southeast Asian countries and gradually publicizes the preliminary findings, the scarcity of overseas battery production capacity outside the four Southeast Asian countries is highlighted, and the company's production capacity in Indonesia is expected to maintain a good level of profit.

Focusing on small power to gain market share and extend the development of energy storage, 2024 lithium battery business shipments are expected to maintain high growth. The company made efficient use of 7 GWh of production capacity in the lithium battery sector. Among them, the 18650 production line was full of production and sales, and the 21700 production line maintained a high operating rate. The company maintains patience in the lithium battery strategy, focuses on small power, and aims for small power market share while extending the development of energy storage. The company is cultivating products related to balcony energy storage, household storage, industrial and commercial energy storage, and cooperating with third parties to participate in the expansion of the large storage market.

Magnetic materials develop multi-material systems with horizontal layout and extend devices vertically. The company actively promotes the construction of production capacity, brands, channels, etc. Magnetic products mainly include pre-burnables, permanent magnet ferrite, soft magnetic ferrite, plastic magnets, magnetic powder cores, amorphous nanocrystals, etc. At the same time, in the device direction, the company has products such as vibrating devices, hard alloys, inductors, and EMC filter devices.

Investment advice: The company's diversified business is steady and far-reaching. In terms of photovoltaic business, as industry product prices and profits stabilize, and the company's production in Indonesia is combined, the company is expected to fully benefit from the rapid growth of the industry.

We expect the company's revenue for 2024-2026 to be 20.985 billion yuan, 25.116 billion yuan, and 30.352 billion yuan respectively; net profit to mother will be 1.451 billion yuan, 1.899 billion yuan, and 2.401 billion yuan respectively, corresponding to EPS of 0.89 yuan, 1.17 yuan, and 1.48 yuan, respectively, maintaining the “buy” rating.

Risk warning: raw material price fluctuation risk, downstream demand risk, increased market competition risk, policy risk.