STI(SZ:300416) HTSC·2025-10-28 03:43Investment Rating - The report maintains a "Buy" rating for the company, with a target price of RMB 18.87, down from the previous target of RMB 20.10 [4][7]. Core Insights - The company reported Q3 revenue of RMB 541 million, a year-over-year increase of 10.6%, but a quarter-over-quarter decrease of 3.6%. The net profit attributable to the parent company was RMB 39.55 million, down 9.4% year-over-year and down 48.2% quarter-over-quarter, primarily due to higher-than-expected credit impairment losses [4][5]. - The company expects that prior investments will drive revenue growth in the future, despite a decline in gross margin due to increased costs and credit impairment losses affecting net profit margin [6][4]. - The report forecasts a compound annual growth rate (CAGR) of 19.15% for net profit from 2025 to 2027, with projected net profits of RMB 2.52 billion, RMB 3.20 billion, and RMB 3.88 billion for the respective years [7][19]. Financial Projections - Revenue projections for the company are as follows: RMB 2,026 million for 2024, RMB 2,251 million for 2025 (up 11.13%), RMB 2,595 million for 2026 (up 15.30%), and RMB 2,977 million for 2027 (up 14.71%) [3][19]. - The net profit attributable to the parent company is projected to be RMB 229.41 million for 2024, RMB 251.63 million for 2025 (up 9.69%), RMB 320.37 million for 2026 (up 27.32%), and RMB 388.03 million for 2027 (up 21.12%) [3][19]. - The report indicates a decrease in gross margin to 38.68% in Q3, down 3.40 percentage points year-over-year, primarily due to declines in the gross margin of testing equipment and integrated circuit testing [5][6]. Cash Flow and Capital Expenditure - The company reported a 25% year-over-year decline in operating cash flow for Q1-Q3 2025, primarily due to an increase in accounts receivable, which stood at RMB 1.448 billion, up 14% year-over-year [6]. - Capital expenditures for Q1-Q3 2025 were RMB 228 million, a decrease of 25% compared to the previous period, indicating a reduction in equipment purchases [6].