occurrences

In the first three quarters of 2024, the company achieved total revenue of 34.921 billion yuan, an increase of 101.28% year on year; net profit to mother was 0.431 billion yuan, a decrease of 15.03% year on year.

Key investment points

Revenue growth is strong, and profits are under pressure in the short term. In the first three quarters of 2024, the company achieved total operating income of 34.921 billion yuan, an increase of 101.28% year on year; net profit to mother was 0.431 billion yuan, a decrease of 15.03% year on year, mainly due to a decline in gross margin and large investment in new business areas such as AIPC, automotive electronics, and XR; the comprehensive gross profit margin was 6.09%, down 5.6% year on year. The company will take a series of measures to absorb the impact of rising raw materials on gross profit. It is expected that Q4 gross margin will gradually improve.

The share of smartphones has been growing steadily, and automotive electronics have been targeted by many projects. Looking at a single quarter, the smartphone business achieved revenue of 9.844 billion yuan in Q3, a year-on-year increase of 96.57%, and a steady increase in market share; the tablet business achieved revenue of 0.884 billion yuan, an increase of 21.90% year-on-year, and the customer base continued to expand; and the AIoT product business achieved revenue of 1.551 billion yuan, an increase of 109.80% year-on-year, and the main projects continued to grow. In the field of automotive electronics, the company mainly focuses on smart cockpit domain products, including domain controllers, central control screens, armrest screens, wireless car chargers, etc., and has now obtained automotive electronics business projects from Xiaomi, including Celis and JAC, and OEMs such as NIO and Dongfeng; in the AI PC field, the company's first Qualcomm Snapdragon platform laptop project has been successfully mass-produced and shipped, and has launched the first Qualcomm Snapdragon platform AI Mini PC project to help expand AI applications in the commercial and consumer fields.

Investment advice:

We expect the company's 2024-2026 net profit of 0.59/1/1.18 billion yuan to maintain a “buy” rating.

Risk warning:

Market recovery falls short of expectations; risk of international trade friction and industrial chain transfer; industry competition pattern increases risk; risk of fluctuating raw material prices.