Incident: The company achieved revenue of 5.166 billion yuan in the first three quarters of 2024, up 8.76% year on year; net profit to mother 0.91 billion, up 6.95% year on year; net profit after deducting 0.86 billion yuan, up 5.17% year on year; basic EPS was 0.45 yuan/share, up 7.14% year on year.

Comment: Revenue increased steadily year over year, and gross margin increased year on month. The company achieved revenue of 1.703 billion in 24Q3, up 10.63% year on year, down 10.82% month on month, gross margin increased 0.27 and 2.11 pcts to 34.65% month on month, respectively, and achieved gross profit of 0.59 billion yuan, up 11.49% year on year and down 5.05% month on month.

The cost rate increased. In 24Q3, sales, management, R&D, and finance expenses increased by 0.73, 1.34, -0.63, and 0.63 pct year on year. The cost ratio for the period was 14.04%, up 2.07 pcts year on year. Investment income increased markedly, reaching 0.036 billion in 24Q3, up 150.32% and 69.67%, respectively, from the same period last year, to record highs in a single quarter. Mainly benefiting from revenue growth, the company's 24Q3 operating profit, total profit, net profit to mother, and net profit without return to mother increased by 18.01%, 20.22%, 17.42%, 15.41%, and 10.85%, respectively, over the same period last year, with a steady increase in performance.

Energy storage for electric meters is progressing steadily, and it has blossomed a lot at home and abroad. Domestically, the company is in the first tier of the industry in the State Grid and South Grid recruitment rankings. Since this year, the total bid amount of the two networks has been about 0.8 billion. The Qidong Yongqing 80MW/160MWh energy storage power plant and the Hebei Pingquan Wind and Solar Energy Storage Integrated 45MW/180MWh energy storage project were connected to the grid in July and October, respectively. On the overseas side, the company is one of the largest domestic smart meter exporters. The subsidiary EGM has reached 0.806 billion in overseas orders, and the cumulative order amount with Saudi ECC has exceeded 1 billion. The energy storage PACK plant built in a joint venture with Saudi Arabia is expected to be put into operation this year, and large-scale batch delivery has been achieved in Indonesia, which is expected to further radiate the surrounding Southeast Asian market.

The scale of self-owned power plants has increased, and average electricity prices have varied. At the end of 24Q3, the company had 187 MW of installed wind power and 1155 MW of photovoltaic installations, respectively, an increase of 31 MW and 167 MW compared to the end of 24H1. In terms of geographical distribution, with the exception of Jiangsu adding 1 MW, the new installed capacity was located in Anhui. The cumulative installed capacity of Anhui surpassed Jiangsu. The two provinces accounted for 50.89%, 35.32%, respectively. In addition, Inner Mongolia, Liaoning, Hebei and Shandong accounted for 10.06%, 1.56%, and 0.37% respectively. In terms of photovoltaic electricity prices, it is estimated that due mainly to power plant transfers, the average feed-in tariff in Shandong 24Q1-3 is 0.99 yuan/kilowatt-hour, up 0.11 yuan/kilowatt-hour from the cumulative average feed-in price. The electricity price in Liaoning remains flat. Anhui, Jiangsu, Inner Mongolia, and Hebei will drop 0.18, 0.04, 0.03, and 0.02 yuan/kilowatt-hour respectively. The main reason for the increase in the average feed-in tariff in Anhui is expected to be the affordable Internet connection of newly built units.

Profit forecast: In 2024-2026, the company's revenue is expected to be 8.288/10.035/11.841 billion, and net profit to mother is 1.19/1.372/1.567 billion, corresponding to PE 12.57/10.90/9.55 times, maintaining a “buy” rating.

Risk warning: Various business developments fall short of expectations, and profit forecasts and valuation models fall short of expectations.