WOLONG ELECTRIC(SH:600580) Huafu Securities·2024-11-03 09:00Investment Rating - The report maintains a "Buy" rating for the company with a target price of 22.32 CNY [1][11]. Core Views - The company achieved a revenue of 12.19 billion CNY in the first three quarters, reflecting a year-on-year increase of 1.06%, while the net profit attributable to shareholders decreased by 30.92% to 640 million CNY [2]. - The report highlights the stabilization and recovery of performance due to the improvement in impairment expectations, particularly after the company ceased to exert significant influence over Hongxiang Co., leading to a change in accounting treatment for its equity stake [2]. - The company is advancing in various business segments, including renewable energy and consumer electronics, benefiting from government policies and market trends [2]. - The low-altitude economy is identified as a key growth driver, with the company positioned as a leader in the eVTOL market, collaborating with major aviation research institutions [2]. Financial Summary - The company reported a gross margin of 25.46% and a net margin of 5.56% for the first three quarters, with a slight decline in both metrics compared to the previous year [2]. - Revenue and profit forecasts for 2024-2026 are projected at 8.9 billion CNY, 11.7 billion CNY, and 13.7 billion CNY respectively, with a target price based on a 25x PE ratio for 2025 [2][3]. - The financial data indicates a revenue growth rate of 8% for 2024, with a significant expected increase in net profit of 69% [3][6]. Business Segments - The industrial motor and drive segment is expanding into renewable energy sectors, while the consumer electronics segment is benefiting from government incentives for energy-efficient appliances [2]. - The report notes a positive trend in the production and export of major household appliances, indicating a robust market for the company's products [2]. Valuation Metrics - The report provides a valuation overview, indicating a projected EPS of 0.68 CNY for 2024, with a P/E ratio of 23.7 [3][6]. - The company's asset-liability ratio stands at 56.77%, reflecting a stable financial position [1][6].