Incident: The company released its 2024 three-quarter report. The company's revenue for the first three quarters was 5.15 billion, down 3.6% year on year; net profit to mother was 0.36 billion yuan, up 1.0% year on year. The third quarter achieved revenue of 1.68 billion, a year-on-year decrease of 15.7% and a month-on-month decrease of 2.7%. Net profit returned to mother in the third quarter was 0.12 billion, down 10.7% year-on-year and 2.0% month-on-month.

In the logistics sector, companies voluntarily abandoned some new energy projects with low gross profit margins and poor payback, causing short-term pressure on performance.

The revenue structure changed, and gross margin increased significantly. The company's comprehensive gross margin for the first three quarters of 2024 was 23.2%, up 2.0 percentage points year on year; net profit margin was 7.0%, up 0.3 percentage points year on year, mainly due to changes in the company's revenue structure, increase in the share of forklift business, and the price of raw materials steel and lithium carbonate remained low. The company's gross profit margin for the third quarter of a single quarter was 26.3%, up 6.9 percentage points year on year and 4.3 percentage points month on month. The gross margin increased significantly.

Financial expense ratios have increased due to exchange rate fluctuations. The company's expense ratio for the first three quarters was 14.6%, up 1.3 percentage points year on year. Among them, sales/management/R&D/finance expense ratios were +0.8/+0.1/+0.2/+0.1 percentage points year on year, respectively; the sales, management, R&D, and finance expense ratios for the third quarter were +1.2/+0.9/+2.8 percentage points year on year, respectively. The increase in the financial expense ratio was mainly due to exchange rate fluctuations, and the rest of the cost rate increase was mainly due to a decline in revenue.

The electrification rate of large vehicles has increased significantly, and the results of the company's large vehicle strategy are beginning to show. The electrification rate of domestic forklifts increased significantly in 2024. According to data from the China Construction Machinery Industry Association, China's first-class, second-class forklift sales increased 19.0%/22.6%/25.6% year-on-year respectively in the first half of the year. The overall electrification rate of the industry reached 70.8%, an increase of 2.9 percentage points over the end of 2023. The electrification rate of large vehicles reached 32.0%, up 0.8 percentage points from the end of 2023. The company grasps the trend of electrification of forklifts, actively expands truck production capacity, continuously improves the R&D and marketing system for large truck products, ensures the sustainable development of truck strategies, and creates new growth points.

Profit forecasting and investment advice. The company's net profit for 2024-2026 is expected to be 0.49, 0.58, and 0.68 billion yuan respectively. The compound net profit growth rate for the next three years will be 14.2%, maintaining a “buy” rating.

Risk warning: Risk of overseas market expansion falling short of expectations, risk of macroeconomic fluctuations, risk of exchange rate fluctuations.