Event: The company publishes its 2023 annual report. The company achieved a total annual revenue of 16.75 billion yuan, an increase of 35.2% over the previous year, a record high. The gross margin for the whole year was 0.5%, which was corrected.
Production and operation efficiency continued to improve, and gross margin and operating cash flow were positive throughout the year: in 2023, the company's gross margin level was 0.5%, which was corrected. This was mainly due to the increase in sales prices and the continuous promotion of cost reduction and efficiency brought about by product structure optimization. Furthermore, the company's operating cash flow level continues to be optimized, and the net cash generated from operating activities for the full year of 2023 was 1,082 billion yuan, which was corrected. On the one hand, it benefited from the government's subsidies for new energy vehicles, and on the other hand, it was also driven by the company's improved gross margin and improved cash management level. It is expected that in the future, the company's gross margin and cash flow level will be further improved along with improved cost control and operational efficiency.
The number of deliveries reached a new high, and the overseas business is expected to create a second growth curve: the company sold 144,200 vehicles for the full year of 2023, an increase of 29.7% over the previous year, a record high, with a compound sales growth rate of 243.4% in the past five years. The company takes “global self-development+vertical integration” as the strategic guide, adheres to intelligent and electrification technology innovation, and successfully built the industry's first four-domain integrated central electronic and electrical architecture. In November 2023, Zero Run and Stellantis Group completed the transaction. The two sides will form a Zero Run International joint venture to advance the company's globalization process using an asset-light model. In 2024, they will launch Zero Run brand new energy vehicles on several continents around the world.
In the future, Zero Run will continue to rely on the Chinese market and continue to expand new business growth points.
Investment advice: We expect the company to achieve net profit attributable to mother in 2024-2026 - 24.42/24.67/3.321 billion yuan, corresponding to PE in 2025 and 2026, which is 12.41/9.22 times, respectively, and maintain the “increase” rating.
Risk warning: Product sales fall short of expectations, risk of macroeconomic fluctuations, overseas progress falls short of expectations.