Incident: The company released its 2022 annual report and the 2023 Q1 quarterly report. The company achieved total revenue of 133,544 billion yuan in 2022, -15.71% over the same period last year, and net profit of -2,669 million yuan to the mother, a decrease of 4.278 billion yuan over the same period last year. The company achieved total operating revenue of 31,399 million yuan in 2023Q1, -10.65% compared to the previous year, and achieved net profit of 530 million yuan to the mother, or -20.52% year on year.
Q1 Gross margin improved significantly month-on-month, and the cost rate for the period increased 0.45pct year on year: the company achieved gross profit margin of 10.45% in 2023Q1, -0.27pct year-on-year, a sharp increase of 13.07pct over the previous month. We believe that the main reason for the sharp improvement in gross margin in Q1 is the gradual recovery in automobile consumption, and the company's new car sales business and maintenance service business are back on track. The 2023Q1 company's sales expenses ratio was 3.53%, the year-on-year rate was +0.10pct, the management expenses rate was 1.86%, the year-on-year +0.06pct, and the financial expenses ratio was 2.11%, and the year-on-year rate was +0.29pct.
Increase the proportion of advantageous brands and expand the NEV sales network: By sorting out some brand stores with low return on assets, the company plans site resources in advance to focus on developing high-end, luxury brands, high-quality joint venture brands, high-quality domestic and new energy brands. The company currently operates 779 outlets (including 732 4S stores), with 257 ultra-luxury and luxury brand outlets, an increase of 7 over 2021, an increase of 7 from 31.81% in early 2022 to 32.99%. In terms of sales and service of new energy vehicles, the company is actively expanding various internal and external resources and making every effort to obtain authorization from OEMs. In 2022, the company established authorized communication with brands such as Great Wall Euler, Cyrus (AITO), Xiaopeng, Rantu, Avita, Nana, and Lotus. Of these, 47 stores have been successfully applied for, and 20 are in the process of applying. The company's new energy vehicle sales increased 72.2% year over year in 2022.
Investment advice: We expect the company's net profit to the mother in 2023-2025 to be 2,524/34.04/4,5572 billion yuan respectively. The corresponding PE was 6.81/5.05/3.76 times, respectively. It was covered for the first time and gave an “increase in holdings” rating.
Risk warning: The recovery in automobile consumption fell short of expectations; competition in the automobile dealer industry intensified; the expansion of the NEV sales network fell short of expectations.