XUSHENG(603305) EBSCN·2024-10-31 12:29Investment Rating - The report maintains a "Buy" rating for the company [1][5]. Core Views - The company's performance in Q3 2024 was below expectations, with revenue declining by 8.4% year-on-year to 3.27 billion yuan, and net profit down 42.8% to 323 million yuan [1]. - The decline in performance is attributed to pressure on gross margins and increased interest expenses from convertible bonds [1]. - The company is expected to gradually recover its profitability by 2025, driven by customer diversification and accelerated capacity expansion [1]. Summary by Sections Financial Performance - Q3 2024 revenue was 1.13 billion yuan, down 7.4% year-on-year but up 11.4% quarter-on-quarter; net profit for the same period was 58 million yuan, down 66.0% year-on-year and down 45.9% quarter-on-quarter [1]. - Gross margin for the first three quarters of 2024 was 21.2%, a decrease of 3.9 percentage points year-on-year; Q3 2024 gross margin was 18.2%, down 7.1 percentage points year-on-year [1]. Customer Diversification - The company has successfully diversified its customer base, reducing the revenue contribution from major clients from 34.4% in 2022 to 27.9% in 2023 [1]. - New partnerships have been established with major players like CATL and ZF, and the company has secured projects with BMW in Germany [1]. Capacity Expansion - The company plans to raise 2.8 billion yuan through a convertible bond issuance to fund projects related to new energy vehicle powertrains and lightweight automotive components [1]. - The Mexican factory is expected to be completed by the end of 2024, pending clarity on overseas tariff policies [1]. Profitability Forecast - The net profit estimates for 2024, 2025, and 2026 have been revised down by 21%, 7%, and 1% to 430 million yuan, 620 million yuan, and 830 million yuan respectively [1]. - The long-term outlook remains positive due to the company's technological advantages in die-casting, forging, and extrusion processes [1].