HUAXI Securities·2024-10-22 10:03Investment Rating - The report maintains an "Accumulate" rating for the company with a target price based on a market capitalization of 151.68 billion [1][3]. Core Views - The company's revenue for Q1-Q3 2024 reached 90.04 billion, a year-on-year increase of 0.7%, while the net profit attributable to shareholders was 7.91 billion, up 0.8% year-on-year. However, the net profit excluding non-recurring items decreased by 2.9% to 6.90 billion [1]. - In Q3 2024, the company reported revenue of 27.56 billion, a decrease of 3.9% year-on-year, and a net profit of 2.17 billion, down 8.2% year-on-year [1]. - The domestic operator business faced pressure due to a decline in capital expenditures, while the international market continued to grow at double-digit rates [1]. - The company is focusing on "connection + computing power" and has made significant advancements in both connectivity and computing power sectors, including leading positions in 5G base station shipments and fixed network product market share [1]. - The gross margin for Q1-Q3 2024 was 40.4%, a decrease of 3.2 percentage points year-on-year, while the net margin remained stable at 8.7% [1][2]. Summary by Sections Financial Performance - For Q1-Q3 2024, the company achieved a revenue of 90.04 billion, with a net profit of 7.91 billion, and a net profit excluding non-recurring items of 6.90 billion [1]. - In Q3 2024, the revenue was 27.56 billion, with a net profit of 2.17 billion and a net profit excluding non-recurring items of 1.93 billion [1]. - The gross margin for Q1-Q3 2024 was 40.4%, and the net margin was 8.7% [1]. Business Segments - The operator business is under pressure due to a decline in capital expenditures, while the international market is experiencing double-digit growth [1]. - The company is enhancing its connectivity and computing power capabilities, with significant advancements in 5G and AI server technologies [1]. - The consumer and government enterprise businesses are also growing rapidly [1]. Research and Development - The company is increasing its R&D investments, focusing on 5G, optical networks, and intelligent computing [1]. - The R&D expense ratio reached 20.7% for Q1-Q3 2024, reflecting the company's commitment to innovation [1][2]. Cash Flow and Asset Management - The operating cash flow for Q3 2024 was 8.05 billion, with a revenue cash ratio of 1.06 [2]. - Inventory decreased by 10.0% year-on-year to 40.63 billion, primarily due to reduced shipments [2].