The sales volume of the Zhiji LS6 exceeded 8,000 units in November, becoming a new potential model. The basic situation is as follows:
1) Sales volume: Listed on 2023/10/12, with 8,158 units in November, the highest sales volume in the segment; continued to maintain high sales volume in December, with weekly sales volume of 1,695 units from 12/4-12/10. As far as the market is concerned, the Zhiji LS6 is a minor hit model; for Zhiji, the LS6 is the product with the best sales performance so far.
2) Size: Oversized B-class pure electric SUV with a wheelbase of 2950mm, between Xiaopeng G6 (2890mm) and Xiaopeng G9 (2998mm).
3) Price: Priced at 22.99-291,900 yuan, the Zhiji brand's first model under 250,000 yuan; 4 versions (560 km rear-drive/680 km rear-drive/760 km rear-drive/702 km four-wheel drive), main sales are low.
4) Base market: Mainly for 200,000 to 250,000 yuan SUVs. Last year's sales volume in this market was 770,000 units/autonomous vehicles, accounting for 21%; and part of the 15-20 million yuan SUV market, with sales volume of 2.65 million units/ 45% last year.
5) Target group: families with no children or young children aged 25 to 35; judging from the first batch of locked order user data, users have two major characteristics: 1) luxury brand exchanges (48%), users focus on pure battery life and intelligent configuration as new energy vehicles; 2) additional household purchases (32%), focusing on space and comfort.
The high cost performance ratio is the main reason for the excellent sales performance of the Zhiji LS6. The following is its competitiveness:
1) Typical competitors: B-C class pure electric SUVs, including Xiaopeng G6 (20.99-2769 million yuan, monthly sales of 0.8-10,000 units), Model Y (26.64-3639 million yuan, 25,000-50,000 vehicles), etc., and some oil trucks.
2) More space: Zhiji LS6 space (wheelbase 2950mm) is significantly superior to Xiaopeng G6 (2890mm) and Model Y (2890mm), and its excellent cost performance ratio is its outstanding highlight.
3) Other highlights: overcharging (quasi-900V platform), intelligent configuration (standard lidar, Orin-X chip), driving control (100 acceleration, extreme speed), and appearance (women love).
The implementation of urban NOA in 2024 is expected to enhance the competitiveness of LS6. All Zhiji LS6 series come standard with advanced smart driving, free hardware, and 36,800 yuan/permanent software (listing benefits are free for a limited time, compared to Xiaopeng hardware of 16,000 to 20,000 yuan, software free). Zhiji has now basically achieved nationwide highway NOA coverage. It plans to launch urban NOA one after another before the Spring Festival in 2024, and cover 100 cities across the country by 2024 with commuting models. The implementation of NOA in the city is expected to improve the competitiveness of its products.
Zhiji LS6 is expected to become a key gripper for SAIC Motor Electric's intelligent power. Zhiji is a new power brand founded by SAIC Motor Group, Zhangjiang Hi-Tech, and Alibaba. The first model, the Zhiji L7, and the second model, the Zhiji L7, were released on 2022/4 and 2023/2. Both models were priced at over 300,000 yen. Due to high prices and low brand awareness, the total monthly sales of the Zhiji brand before the LS6 launch were only at the level of 0.1-20,000 units. LS6 has lowered the brand price range to the level of the public, hoping to boost brand sales and increase brand voice through high cost performance.
Currently, Zhiji LS6's monthly sales have exceeded 8,000, and it is beginning to have the potential to become a star model. Zhiji will launch a new L6 car in 2024. It is expected to be the same popular model, positioned at 200,000 to 250,000 yuan. Zhiji LS6 is expected to help the Zhiji brand accumulate business experience in smart electric products and become a key point in SAIC Motor's transformation.
Investment suggestion: The successful launch of Zhiji LS6 is expected to boost SAIC Motor's smart electric transformation and bring new highlights to SAIC Motor's business by combining the logic of going out to sea with an independent and optimistic outlook. Based on our expectations for the automobile industry in 2024, SAIC Motor expects sales volume of 452/427/4.13 million units in 2023-2025, total operating income of 7,337/7,553/776.5 billion yuan, net profit of 159/16/156 billion yuan, and PE 10/10/10 times. Combining the company's historical valuation level and future new energy and overseas development prospects, we gave the company 12 times PE in 2024, corresponding to a target price of 16.5 yuan/share, a target space of 23%, and adjusted it to a “recommended” rating.
Risk warning: New product sales volume falls short of expectations, industry sales volume declines, market competition intensifies, etc.