The company released its three-quarter report for 2024, with revenue of 2.781 billion yuan, up 0.06% year on year; net profit to mother was 0.082 billion yuan, up 162.37% year on year.

The gross margin increased significantly. In the third quarter of 2024, the company's gross margin was 17.76%, up 6.14 percentage points from the same period last year; the net profit margin was 5.18%, up 4.05 percentage points from the same period last year. Compared with last year, the company's three expense rates have remained stable, and the company's profitability has steadily increased.

The company is located in an industry that is growing at a high rate. In the Hongmeng industry, on October 22, Huawei officially released the native Hongmeng operating system Harmony Next, and plans to gradually expand to multi-terminal devices such as mobile phones, smart screens, and car machines in the future. OpenAI introduced a search function, further implemented GPT application scenarios, and is expected to lead the further prosperity of the AI industry chain.

Empower AI end side products. The company launched the E series general-purpose edge AI BOX (visual AI, generative AI), an edge computing product based on the NVIDIA Jetson Orin module. The maximum configuration is equipped with a 12-core A78 architecture, with 2048 CUDA cores and 64 Tensor cores. Its applications cover various fields from smart transportation, industrial IoT, smart security, smart environmental protection, and smart retail.

Investment advice: After AIPC and Hongmeng, the company continues to deploy AI product lines and is optimistic about the future development of the company's innovative business. The company's EPS is expected to be 0.60\ 1.01\ 1.47 in 2024-2026, respectively, maintaining a “buy” rating.

Risk warning: downstream market demand falls short of expectations; business promotion in the industrial sector falls short of expectations; industry competition intensifies.