Grace(SH:603256) Tianfeng Securities·2024-10-30 12:01Investment Rating - The report maintains a "Buy" rating for the company, with a target price indicating a potential upside of over 20% within the next six months [6]. Core Insights - The company reported a significant year-on-year increase in gross margin, driven by strong demand in downstream consumer electronics and AI server markets [1][2]. - In Q3, the company achieved a net profit attributable to shareholders of 0.07 million yuan, marking a turnaround from losses in the previous year [1]. - The overall gross margin for the first three quarters was 16.45%, an increase of 8.74 percentage points year-on-year, with Q3 gross margin reaching 18.99% [3]. Financial Performance Summary - For the first three quarters, the company generated revenue of 619 million yuan, a year-on-year increase of 24.55% [1]. - The company’s electronic fabric sales volume increased by 16.2% year-on-year, reaching 150 million meters, primarily due to capacity releases earlier in the year [2]. - The average selling price of electronic fabric rose by 1.9% year-on-year to 3.72 yuan/meter [2]. - The company’s operating cash flow improved significantly, with a net cash flow from operating activities of 89 million yuan, an increase of 165 million yuan year-on-year [3]. Future Outlook - The company is expected to benefit from the high demand in the consumer electronics sector, particularly with the anticipated release of new Android products in Q4 [2]. - Forecasts for net profit attributable to shareholders for 2024-2026 are projected at 0.25 million, 0.8 million, and 1.2 million yuan respectively [4]. - The company is positioned to gradually achieve domestic substitution in high-end electronic fabric manufacturing, leveraging its leading capabilities [4].