Hongfa(600885) 民生证券·2024-11-01 13:30Investment Rating - The report maintains a "Recommend" rating for Hongfa Corporation (600885 SH) [4][6] Core Views - Hongfa Corporation's Q3 2024 performance met expectations with strong profitability [2] - The company achieved revenue of 10 869 billion yuan in the first three quarters of 2024 a YoY increase of 9 97% and net profit attributable to the parent company of 1 269 billion yuan a YoY increase of 15 07% [2] - In Q3 2024 the company achieved revenue of 3 638 billion yuan a YoY increase of 12 19% and net profit attributable to the parent company of 425 million yuan a YoY increase of 14 55% [2] - The company's gross profit margin for the first three quarters of 2024 was 35 17% a slight decrease of 0 41pct YoY while the net profit margin increased by 0 87pct to 15 42% [3] - The company's R&D investment in the first three quarters of 2024 was 357 million yuan a YoY increase of 20% with an R&D expense ratio of 4 92% [3] - The company's "75+" strategy has shown significant results with breakthroughs in new product categories such as film capacitors connectors current sensors and fuses [4] - The report forecasts revenue of 14 708 billion yuan 16 833 billion yuan and 19 229 billion yuan for 2024 2025 and 2026 respectively with YoY growth rates of 13 8% 14 4% and 14 2% [4] - The report forecasts net profit attributable to the parent company of 1 586 billion yuan 1 821 billion yuan and 2 122 billion yuan for 2024 2025 and 2026 respectively with YoY growth rates of 13 9% 14 8% and 16 6% [4] Financial Performance Summary - The company's gross profit margin for 2024E is expected to be 35 25% slightly lower than 36 89% in 2023A [8] - The net profit margin is expected to remain stable at around 10 8% from 2024E to 2026E [8] - The ROE is forecasted to be 16 77% 16 92% and 17 27% for 2024E 2025E and 2026E respectively [8] - The company's PE ratio is expected to decrease from 20x in 2024E to 15x in 2026E [4][8] - The PB ratio is forecasted to decline from 3 4x in 2024E to 2 6x in 2026E [4][8] Business Development - The company's low-voltage switchgear business remained stable in H1 2024 despite challenges in the domestic building power distribution market by exploring new growth areas in new energy industrial and grid applications [4] - New product categories such as film capacitors connectors current sensors and fuses have shown significant progress with fuses already obtaining certification [4]