Event: on February 10, LS7, the second flagship model of Zhiji, a high-end electric brand under SAIC, was officially launched, with a large-scale pure electric luxury SUV priced at 30.98-459800 yuan, which together with the flagship car L7 contributed to the upward sales of the brand.

Zhiji LS7 positioning in large-scale pure electric luxury SUV, the comprehensive strength is strong. In terms of ① size and space, the length, width and height of LS7 are 5049/2002/1731mm and wheelbase 3060mm respectively, which has obvious spatial advantages. ② power performance, LS7 optional 100/90/77kWh battery pack, provides rear-drive / four-wheel drive two power configurations, 100/90kW rear-drive WLTC life 660/602KM, all-wheel drive / rear-drive 100km acceleration to 4.5x6.5s. ③ chassis configuration, the use of all-aluminum chassis, air suspension, calipers, CDC shock absorbers are international Tier1 products, in addition to the world-renowned chassis training team Williams team to help bring better handling. In terms of intelligent configuration of ④, it uses Orin X smart driving chip and Qualcomm Inc 8155 intelligent module chip to provide optional dual lidar. At the same time, high-speed NOA has been launched in key cities one after another, and urban NOA based on high-precision map is scheduled to be tested before the end of the year. In terms of the price of ⑤, the price of 90kWh version is 3498 million yuan, the price of 100kWh version is 3798 million yuan, and the price of high-performance four-wheel drive version is 459800 yuan. In addition, in order to meet the urban commuting scene, the 77kWh version is also launched, the price is down to 309800 yuan, the overall price is very cost-effective.

Compared with competitive products, LS7 has great advantages in configuration and outstanding performance-to-price ratio, so it is optimistic that LS7 will help Zhiji achieve its sales target of 45000 in 2023. LS7 products are XPeng Inc. G9, ideal L7, NIO Inc. ES7, polar krypton 001; in terms of size, compared with XPeng Inc. G9, NIO Inc. ES7, polar krypton 001, each has its own advantages; intelligent configuration is in the first echelon; LS7 has the advantage of maneuverability, thanks to higher hardware configuration and professional team training, LS7 and the same better handling polar krypton 001 belong to the first echelon In addition, half a steering wheel, large-size smart screen, 106-degree windshield glass, and zero-gravity floating seats through electric rails and foldable passenger seats have obvious differences. Compared with Zhiji's first model, the L7 Magi LS7, both in terms of product completion and product positioning, we do see that the vehicle configuration is very rich, the pricing is very sincere, and the test driving experience is in the first echelon.

As of February 10, the blind booking order of LS7 has exceeded 12000 vehicles. Combined with product power and pricing, we expect the steady-state monthly sales of products to exceed 3,000 units and have the strength to challenge 4,000 to 5,000 units. 2023 is a key year for Zhiji, and the brand has set an annual sales target of 45000. After that, Zhiji will launch the second SUV,24 of Model Y, which will launch the second car this year. At the same time, Zhiji is also speeding up the channel construction to help achieve the sales target.

For SAIC, looking forward to 2023, the company enters the new product cycle of intelligent electric products, and pays attention to the product focus, which is expected to usher in the repair of sales, revenue and profits. ① independent brand: new generation hybrid platform eRX5, Roewe EP39, MGMULAN, colorful fruit, clear sky and other new energy products will continue to bring new increments and boost overseas sales. Feifan, Zhiji will deliver the new model Feifan F7 in 23 years, Zhiji LS7,LS5 will be on the market. Shangtong Wuling enriches the matrix of electric vehicles, moving forward from A00 to A0 and A-class cars, and launching cost-effective hybrid models. At the same time, the car will focus on products in 23 years, gather marketing resources, and give full play to the advantages of the seven technology bases. ② joint venture brand: accelerate the electric transformation, driven by the ID series, SAIC Volkswagen aims to double its new energy sales in 23 years. SAIC GM will launch three new Audenon electric cars this year. At the same time, the joint venture brand strives to optimize the product structure, with the increase in the proportion of middle and high-end models with high gross margin, superimposing the scale effect brought by the recovery of sales volume, and the net profit of bicycles exists upstream recovery space, which brings about the recovery of group investment income.

Maintain earnings forecasts and increase ratings. Independent brands, new energy vehicles, overseas business "troika" keep pace with each other, helping the company to stabilize and pick up. Considering the recovery of expected profits under the undervaluation of the company, the potential target of the "valuation system with Chinese characteristics" and high dividend yield, the margin of corporate safety is highlighted. Maintain the 2022-2024 operating income of 7772, 8736, and net profit of 178.6, 200.1 and 24.41 billion yuan, corresponding to the PE of 10-8-7, and maintain the overweight rating.

Core risk: the overall automobile consumption is depressed, the joint venture profit recovery is not as expected, and the profit inflection point of independent brand has not reached.