Incident: On October 25, 2024, the company released its report for the third quarter of 2024. 3Q2024 achieved operating income of 1.363 billion yuan, a year-on-year increase of 10.44%, achieved net profit of 0.129 billion yuan, a year-on-year decrease of 16.19%, and realized net profit without deduction of 0.123 billion yuan, a year-on-year decrease of 17.48%.
The gross margin of 3Q24 was under pressure year on year, and the sales and management expense ratio increased: 3Q2024 company's gross profit margin was 16.82%, -2.75pct; 3Q24 sales expense ratio was 1.14%, +0.26pct year; management expense ratio 5.33%, +0.57pct year on year; R&D expense ratio 3.82%, -0.46pct year on year; financial cost ratio was 0.90%, -0.20pct year on year.
SAP helps project management and continues to innovate and develop: In 2024, the Group's SAP system completed the HAN upgrade, SAP completed the independent launch of the new base, continued to improve the interface with three-dimensional library systems, WMS and other systems, and developed data analysis systems, further solidifying the foundation for the sustainable development of the company's business. The company will optimize internal control processes through SAP system upgrades, digitalization, etc., start with details, fully implement balanced production plans, and coordinate employee remuneration. At the same time, the company will strengthen interaction and cooperation between the R&D center in Munich, Germany, and train technicians into comprehensive project talents through design and project integration to effectively reduce project R&D costs; at the same time, keep up with industry innovation trends, use smart cockpits as a new starting point, accelerate the development and application of integrated modules, increase new product development efforts, comprehensively meet the requirements of environmental protection, lightweight, intelligence and safety, and lead the new trend of integrated modules in the industry.
Investment advice: We expect the company to achieve net profit of 0.597/0.75/0.868 billion yuan in 2024-2026, corresponding PE of 9.74/7.75/6.70 times, maintaining the “increase” rating.
Risk warning: risk of increased market competition; risk of declining sales for core customers; risk of overseas market expansion falling short of expectations.