TDG Holdings’ 3Q24 revenue/attributable net profit (NP) were RMB993/45.35mn (+10.29/-50.84% yoy, +37.15/+31.35% qoq). For 9M24, revenue/attributable NP/recurring NP were RMB2,561/124/101mn (-11.34/-55.50/-49.85% yoy). We attribute yoy earnings declines primarily to a weak business climate across the PV industry. TDG Holdings has kicked off share buybacks intended for employee stock ownership plan (ESOP) or equity incentives, and its main business has been actively optimizing capacity and products to enhance market competitiveness. Maintain BUY.
9M24 profit fell yoy, possibly due to weak PV business climate
In 1H24, special equipment and customized product manufacturing accounted for c. 25.68% of total revenue (-15.04pp yoy). According to the company’s 3Q24 report, the 9M24 sales revenue from PV crystal growing orders in the smart equipment sector fell yoy due to industry-wide overcapacity, thus resulting in a notable yoy decline in the company’s profit. For 9M24, sales GPM dipped 1.56pp yoy to 20.72% while overall expense ratio rose 1.26pp yoy to 17.31%. In addition, other gains for 9M24 fell RMB33mn yoy. On 30 July 2024, the Politburo meeting asked the PV industry to enhance self-regulation and to prevent destructive competition. We expect the company’s earnings to pick up gradually amid a recovery in the PV and electronics industries.
Initiating share buybacks for ESOP/equity incentives
On 25 January 2024, the board approved a share buyback proposal through centralized bidding transactions with repurchase value at RMB100-200mn. As of end-September 2024, the company had cumulatively repurchased 15.31mn shares, representing 1.242% of the total share capital, with prices ranging from RMB5.58/share to RMB7.13/share and total payments at RMB94.24mn (excluding transaction fees). In addition, the company has postponed completion dates for the large-sized RF piezoelectric wafer project and the smart equipment for efficient crystal growth & precision processing project to December 2026, aimed at further upgrading automatic & intelligent processes/product R&D/customer acquisition, thus preparing it better for import substitution and market competition.
Target price of RMB8.38
Given the notable yoy increase in TDG Holdings’ overall expense ratio in 9M24, we raise estimates for its sales, administrative, and R&D expenses during 2024-2026, and project attributable NP for 2024/2025/2026 at RMB213/301/365mn (-34.50/+41.20/+21.34% yoy, previous: RMB286/339/406mn), with EPS at RMB0.17/0.24/0.30. We value the stock at 34.4x 2025E PE (in line with its peers’ average on Wind consensus). Our target price is RMB8.38 (previous: RMB 7.14).
Risks: weaker downstream demand than we expect; intensified competition weighing on selling prices of materials and special equipment.

　　天通股份发布三季报：Q3实现营收9.93亿元（yoy+10.29%，qoq+37.15%），归母净利4535.06万元（yoy-50.84%，qoq+31.35%）。2024年Q1-Q3实现营收25.61亿元（yoy-11.34%），归母净利1.24亿元（yoy-55.50%），扣非净利1.01亿元（yoy-49.85%），业绩同比下降主因光伏行业弱景气。公司已经开启回购用于员工持股计划或股权激励，主营业务也在积极优化产能和产品以提升市场竞争力，维持“买入”评级。
　　公司24Q1-3盈利同比下降或主因光伏行业弱景气
　　24H1专用设备及定制品制作在营收中的占比约25.68%（同比下降15.04pct）；据三季报，Q1-3智能装备产业光伏长晶订单受行业产能过剩影响导致销售收入同比下降，进而导致公司利润同比大幅下降。24Q1-3期间销售毛利率为20.72%，同比下降1.56pct；期间费用率17.31%，同比上升1.26pct。此外，24Q1-3其他收益同比减少0.33亿元。2024年7月30日，中共中央政治局会议针对光伏行业，要求强化行业自律，防止“内卷式”恶性竞争。我们认为随着光伏及电子行业复苏，公司业绩或将逐步改善。
　　开启回购用于员工持股计划或股权激励，募投项目延期进行优化
　　2024年1月25日，董事会审议通过了《关于以集中竞价交易方式回购公司股份的议案》，回购金额为1-2亿元；截至2024年9月月底，已累计回购股份1,531.462万股，占公司总股本1.242%，购买最高价为7.13元/股、最低价为5.58元/股，已支付总金额为94,242,576.25元（不含交易费用）。此外，公司大尺寸射频压电晶圆项目和新型高效晶体生长及精密加工智能装备项目的建设完成时间均递延至2026年12月，延期原因主要是对工艺流程（自动化、智能化）、产品研发、客户开拓进一步完善升级，更好地实现进口替代和参与市场竞争。
　　给予目标价8.38元
　　鉴于公司24Q1-3期间费用率同比提升较多，我们上调24-26年公司销售、管理及研发费用，最终测算公司24-26年归母净利为2.13亿元、3.01亿元和3.65亿元（前值2.86亿元、3.39亿元和4.06亿元），同比增速分别为-34.50%、+41.20%、21.34%，对应EPS为0.17、0.24、0.30元。可比公司25年平均PE估值34.4X，给出公司25年34.4XPE估值，测算目标价8.38元。
　　风险提示：行业下游需求不及预期，行业竞争加剧导致材料和专用设备售价承压。

2Q24 attributable NP reached RMB0.03bn, maintain BUY
TDG Holdings’ revenue/attributable net profit (NP) were RMB1.57/0.08bn (-21.1/-57.8% yoy) for 1H24, and RMB0.72/0.03bn (-33.1/-65.5% yoy, -14.3/-22.1% qoq). In view of the intensified competition in the electronic material and special equipment sectors, we trim our assumptions for its main products’ GPM during 2024-2026, and estimate 2024/2025/2026 attributable NP at RMB286/339/406mn (previous: RMB399/457/531mn). We value the stock at 31x 2024E PE, in line with its peers’ average on Wind consensus, for our target price of RMB7.14 (previous: RMB9.63). Maintain BUY.
GPM rose qoq in 2Q24, increase in expense ratio dragged down NPM
For 2Q24, TDG Holdings’ overall GPM/NPM were 21.13/5.19% (-0.73/-4.16pp yoy, +1.03/-0.09pp qoq). Overall expense ratio for 2Q24 was 20.06% (+4.82pp yoy, +3.15pp qoq), with sales/administrative/R&D/financial expense ratios of +3.90/+8.17/+8.50/-0.51% (+0.43/+1.87/+1.36/+1.17pp yoy, +0.69/+0.07/+1.60/ +0.79pp qoq).
Proactively expanding product lineup targeting emerging fields
During the reporting period, TDG Holdings continued to develop new magnetic material products, specifically targeting new energy vehicles, PV and energy storage, charging piles, 5G communications, and data centers, as well as high-end consumer electronics sectors. For sapphire crystal growth technology, the company focused on the processing of large-size 6-inch and 8-inch substrates, conducting in-depth R&D on key technologies to expand its market share in the mini/micro-LED substrate market. The company has mastered key technologies for the preparation of large-size piezoelectric crystals and is actively tapping into the fields of electro-optic modulators and filters. The company is dedicated to the R&D and manufacturing of special equipment for crystal materials, with broad applications in PV, sapphire, piezoelectric crystals, and the emerging semiconductor industry.
Emphasizing talent system development and incentives
TDG Holdings continues to promote workforce structure optimization strategy, improving average labor efficiency per capita through optimizing management and work processes, as well as cross-departmental collaboration mechanisms. The company has developed a professional team that is well-versed in industry applications and proficient in cutting-edge technologies, while it also implements a systematic training and incentive mechanism to construct talent echelon. In addition, the company has ramped up its efforts to attract high-end talent, particularly top process experts and industry leaders. As of 20 August 2024, the company had cumulatively repurchased 12.35mn shares intended for the employee stock ownership plan or equity incentives through centralized bidding transactions, accounting for 1.001% of the total share capital, with purchase prices ranging from RMB5.58 to RMB7.13 per share.
Risks: weaker downstream demand than we expect; intensified competition weighing on sales prices of materials and special equipment.

　　24Q2公司实现归母净利0.3亿元，维持“买入”评级
　　24H1公司实现营收15.7亿元（yoy-21.1%），归母净利0.8亿元（yoy-57.8%）；其中Q2实现营收7.2亿元（yoy-33.1%、qoq-14.3%），归母净利0.3亿元（yoy-65.5%、qoq-22.1%）。考虑到电子和专用设备竞争加剧，我们下修24-26年公司主要产品毛利率，预计24-26年公司实现归母净利2.86/3.39/4.06亿元（前值：3.99/4.57/5.31亿元），可比公司24年Wind一致预期PE31.0X，给予公司PE（24E）31.0X，测算目标价7.14元（前值：9.63元），维持买入评级。
　　24Q2公司毛利率环比回升，但费率增加拖累净利率
　　24Q2公司综合毛利率/净利率分别为21.13%/5.19%，（yoy-0.73pct/-4.16pct，qoq+1.03pct/-0.09pct）。费用方面，公司24Q2合计期间费用率20.06%，yoy+4.82pct,qoq+3.15pct,其中公司销售/管理/研发/财务费用率分别为3.90%/8.17%/8.50%/-0.51%，yoy+0.43pct/+1.87pct/+1.36pct/+1.17pct,qoq+0.69pct/+0.07pct/+1.60pct/0.79pct。
　　公司围绕新能源和通信等新兴领域积极布局
　　报告期内，公司磁性材料重点围绕新能源汽车、光伏及储能、充电桩、5G通信及数据中心、高端消费电子等应用持续推进新产品开发工作。在蓝宝石晶体生长技术方面，公司重点在大尺寸6寸和8寸衬底加工领域，针对关键技术进行了深入研究和开发，以期逐步扩大公司在mini/micro-LED衬底市场的份额。公司已经掌握了大尺寸压电晶体制备的关键核心技术，积极布局电光调制器和滤波器领域。公司专注于晶体材料专用设备的研发与制造，广泛应用于光伏、蓝宝石、压电晶体以及新兴的半导体行业。
　　公司注重人才体系搭建和激励
　　公司持续推进员工结构优化战略，通过优化管理流程、工作流程以及跨部门协作机制等多种形式，实现人均劳动效率的提升。公司培养了一支深谙行业应用，又精通前沿工艺技术的专业团队，在人才梯队建设上，公司实施了系统化的培养与激励机制。同时，公司进一步加大了对高端人才的引进力度，特别是聚焦行业内的顶尖工艺专家与领军人物。截至2024年8月20日，公司通过集中竞价交易方式已累计回购股份1,235.012万股，占公司总股本的比例为1.001%，购买价为5.58元/股-7.13元/股，用于员工持股计划或股权激励。
　　风险提示：行业下游需求不及预期，行业竞争加剧导致材料和专用设备售价承压。