Key points of investment
Key points of the announcement: The company released its 2023 quarterly report. Q4 achieved revenue of 13.05 billion yuan, +153.9%/+53.0% year on month; total net loss due to mother in Q4 was 1,348 billion yuan, a decrease of 10.1/2.54 billion yuan, respectively. The full year of 2023 achieved revenue of 30.68 billion yuan, +14.2% year-on-year, with a net loss of 10.38 billion yuan to mother, an increase of 1.24 billion yuan over the previous year. The 23Q4 performance was impressive and exceeded our expectations.
The scale effect boosted gross margin and continued to lead the new era of AI smart driving: the company delivered a total of 60,158 units in 23Q4, +170.9%/+50.4% year over month, automobile sales revenue of 12.23 billion yuan, +162.4%/+55.9% year on month; the average bicycle price was 198,400 yuan, -5.5%/+3.9% year on month. Changes in product structure led to changes in the average price of bicycles. Q4 The company's overall gross profit margin was 6.2%, and the gross profit margin of the automobile sales business was 4.1%, -2.5/-1.6 pct year over year, and +8.9/+10.2 pct, respectively. The year-on-year decline was mainly due to concessionary sales in the context of increased competition in the industry, increasing the delivery scale and the share of sales of high-margin models such as the G6/G9. 23Q4's R&D/SG&A expenses were 1,308/1,937 billion yuan respectively. R&D expenses were basically flat from month to month. The corresponding cost ratio was 10%/15%, all of which declined sharply from month to month, and the scale effect reduced average cost amortization. In addition, changes in the fair value of the company's Q4 derivative liabilities generated non-cash income of 550 million yuan (involving public equity cooperation, Q3 was -970 million yuan). Excluding this factor and factors such as share-based remuneration expenses, Q4 net loss was 1.77 billion yuan, narrowing by 4.4/1.02 billion yuan, respectively, over the same period last year, and operations gradually improved. By the end of '23, the company had 500 sales stores, 1108 self-operated charging stations, and added 105/51 units each in a single quarter. The opening of stores accelerated markedly, laying the foundation for a 24-year sales explosion. By the end of '23, the company's cash and cash equivalents, restricted cash, short-term investments and time deposits were $45.7 billion, up month-on-month, and cash flow was still abundant.
Smart Driving continues to lead the way, and a new 100,000 to 150,000 yuan brand is about to be launched, which is expected to drive further sales growth. 2024Q1, the company delivered the new MPV model X9 to optimize the product structure; at the same time, a cooperation agreement was signed and implemented with Volkswagen to carry out further software technical cooperation and joint procurement. The 24Q1 company is expected to deliver 2.1 to 22,500 units, an increase of 15% to 23% over the previous year, and the revenue is expected to be 5.8-6.2 billion yuan, an increase of 44% to 54% over the previous year. In the future, the company will further enter the market segment of 100,000 to 150,000 yuan, launch a new brand, build the first AI smart driving car, and truly implement smart driving equality.
Profit forecast and investment rating: Considering that the pace of the company's new car launch in 2024 was lower than expected, but platform-based empowerment helped reduce cost investment, we lowered the company's revenue forecast for 2024-2025, from 713/138.1 billion yuan to 630/111.4 billion yuan, but raised the net profit forecast to mother, from -44/600 million yuan to -43/8 billion yuan, corresponding to the 2024-2025 EPS of -2.3/0.4 yuan, corresponding to the 2024-2025 PE valuation, maintaining a “buy” rating of 84 times.
Risk warning: The price war in the passenger car industry exceeded expectations; the introduction of industry stimulus policies fell short of expectations.