FIRST TRACTOR(SH:601038) Minsheng Securities·2024-10-30 09:50Investment Rating - The report maintains a "Recommended" rating for the company [2][4]. Core Views - The company's revenue for Q1-Q3 2024 reached 10.736 billion yuan, a year-on-year increase of 4.78%, with a net profit attributable to shareholders of 1.101 billion yuan, up 1.45% year-on-year [1]. - In Q3 2024, the company reported revenue of 2.930 billion yuan, a decrease of 2.45% year-on-year, while the net profit attributable to shareholders was 196 million yuan, an increase of 40.93% year-on-year [1]. - The overall industry demand remains weak, but the company's market share in large tractors is increasing, driven by the aging population and the demand for high-standard farmland construction [2]. - The company continues to optimize its expense ratio, with a combined expense ratio decrease of 0.39 percentage points for Q1-Q3 2023 [2]. - Short-term export disruptions are noted, but the company has significant long-term growth potential, especially in markets along the Belt and Road Initiative [2]. - Other income benefited from VAT deductions, with an increase of 93 million yuan year-on-year [2]. Summary by Sections Financial Performance - For Q1-Q3 2024, the company achieved a gross margin of 16.37% and a net margin of 10.39% [1]. - The company forecasts net profits of 1.036 billion yuan for 2024, 1.438 billion yuan for 2025, and 1.700 billion yuan for 2026, with corresponding valuations of 17x, 12x, and 10x [2][3]. Industry Insights - The tractor production in China for Q3 2024 was 99,200 units, down 11.6% year-on-year, with large tractors showing a positive growth trend [2]. - The company is focusing on expanding its market presence in Central Asia and the Caucasus to offset declines in the Russian market [2]. Expense Management - The company has successfully reduced its sales, management, and R&D expense ratios, indicating a commitment to cost control [2].