MTC(SZ:002429) Huachuang Securities·2025-11-07 08:30Investment Rating - The investment rating for the company is downgraded to "Recommended" with a target price of 7.00 CNY [2][7]. Core Views - The company's short-term performance is under pressure, but there is an expectation for gradual recovery in profitability [7]. - The revenue for Q3 2025 was 5.41 billion CNY, a year-on-year decrease of 18.5%, while the net profit attributable to the parent company was 340 million CNY, down 26.6% year-on-year [7]. - The decline in revenue is attributed to ongoing global trade disputes impacting the television ODM business and a high base effect from the previous year [7]. - The company has increased its production capacity in Vietnam to 11 million units annually, which is expected to enhance supply during peak seasons [7]. - The gross margin for Q3 2025 was 14.4%, showing a slight year-on-year increase of 0.01 percentage points, supported by a higher proportion of revenue from emerging businesses [7]. - The overall expense ratio has increased, leading to a decline in profitability, with the net profit margin for Q3 2025 at 6.3%, down 0.7 percentage points year-on-year [7]. - The company is expected to recover its profitability as overseas production efficiency improves and trade disputes ease [7]. Financial Summary - Total revenue projections for 2024A, 2025E, 2026E, and 2027E are 20,326 million CNY, 18,793 million CNY, 21,332 million CNY, and 23,466 million CNY respectively, with a year-on-year growth rate of -7.5% in 2025E [3][8]. - Net profit attributable to the parent company is forecasted to be 1,602 million CNY in 2024A, 1,322 million CNY in 2025E, 1,622 million CNY in 2026E, and 2,082 million CNY in 2027E, reflecting a year-on-year decline of 17.5% in 2025E [3][8]. - Earnings per share (EPS) are projected to be 0.35 CNY for 2024A, 0.29 CNY for 2025E, 0.36 CNY for 2026E, and 0.46 CNY for 2027E [3][8]. - The price-to-earnings (P/E) ratio is expected to be 21 for 2025E, decreasing to 13 by 2027E [3][8].