WEDGE(SZ:000534) Minsheng Securities·2024-10-31 12:24Investment Rating - The report maintains a "Recommended" rating for the company [4]. Core Views - The company reported a year-on-year increase in net profit attributable to shareholders of 16% in Q3 2024, with a total revenue of 777 million yuan for the first three quarters, reflecting a 6.9% year-on-year growth [2][5]. - The company is advancing its production base construction and has significantly increased its R&D investment, with R&D expenses rising by 99% to 112 million yuan [2][5]. - The company has shown robust growth in both revenue and profitability, with a gross margin increase of 2.9 percentage points to 76.9% for the first three quarters of 2024 [2][5]. Financial Performance - For Q3 2024, the company achieved a revenue of 275 million yuan, up 9.2% year-on-year, and a net profit of 41 million yuan, up 15.5% year-on-year [2]. - The gross margin for Q3 2024 improved by 6.3 percentage points to 76.9%, while the net margin slightly decreased by 0.7 percentage points to 14.1% [2]. - The company’s net cash flow from operating activities turned positive at 51 million yuan for the first three quarters, compared to a negative 20 million yuan in the same period last year [2]. Growth Prospects - The company has experienced a compound annual growth rate (CAGR) of 21.1% in revenue from 2020 to 2023, with net profit growing at a CAGR of 32.02% during the same period [2]. - The pharmaceutical manufacturing segment has shown a CAGR of 10.7% from 2020 to 2023, while the high-temperature alloy segment has seen a remarkable CAGR of 93.56% [2]. - The company is positioned as a leader in the pharmaceutical micro-ecological live bacteria sector and is a core supplier in the high-temperature alloy and products field, benefiting from the growth in domestic commercial aircraft engine and gas turbine industries [2][5]. Future Projections - The company is expected to achieve net profits of 210 million yuan, 290 million yuan, and 360 million yuan for the years 2024, 2025, and 2026, respectively, with corresponding price-to-earnings (PE) ratios of 28x, 21x, and 16x [2][5].