Incidents:
On March 29, SAIC Motor Group released its 2023 annual report. The company achieved operating income of 744.7 billion yuan in 2023, an increase of 0.09% over the previous year, realized net profit of 141 billion yuan, a year-on-year decrease of 12%, and realized net profit without return to mother of 10 billion yuan, an increase of 12% over the previous year.
Vehicle gross margin improved, after deducting a year-on-year increase in non-profit
In 2023, the company achieved operating income of 744.7 billion yuan, a year-on-year increase of 0.09%, achieved net profit of 141 billion yuan, a year-on-year decrease of 12%, and realized net profit without deduction of 10 billion yuan, an increase of 12% over the previous year.
In 2023, the company's gross margin was 10.19%, +0.58pct year on year, of which the gross margin of the vehicle was 5.79%, +1.25pct year on year. The increase in the gross margin of the vehicle led to an increase in the company's profitability. In 2023, the company's sales/management/ R&D expenses ratio was 4.01%/3.25%/2.47%, respectively, -0.04/-0.19/+0.04pct. The cost ratio improved; the company's net sales margin was 2.76%, down 0.4 pct year on year. The decline in net interest rate was mainly due to the company's 7.952 billion yuan depreciation in 2023.
Revenue increased quarterly, and the joint venture showed outstanding independent performance under pressure
In 2023, the company's revenue for Q1-Q4 was 1459/1806/1968/221.4 billion yuan respectively, and the corresponding single-quarter vehicle sales volume was 89/118/131/1.64 million units, respectively. Sales volume led to a quarterly increase in revenue. In 2023, the company's investment income in joint ventures and joint ventures was 10.7 billion yuan, down 1% year on year. It was mainly affected by increased competition in the industry and the profitability declined. In 2023, independent sales volume was 2.78 million units, accounting for more than 55%, up 2.5 pct. Among them, SAIC's passenger car sales volume was 990,000 units, +16% year over year, and Zhiji Auto sold 40,000 units, +703% year over year, gradually supporting the company's sales volume.
New energy and exports are impressive, and 2024 operations are worth looking forward to
In 2023, the company achieved sales of 1.12 million new energy vehicles, YOY +5%, and achieved export sales of 1.21 million units, and YOY +19%. The company continues to invest in research and development in the direction of electrification and intelligence. The 900V silicon carbide platform has already been launched in the Zhiji LS6, and the Zhiji L6, which is to be launched, will be equipped with industry-leading semi-solid state batteries and a central collaborative motion control platform (VMC). The SAIC ZeroshuGalaxy full-stack 3.0 smart car solution is expected to be implemented step by step in 2024. The company's sales target for 2024 is 5.45 million vehicles, and the comprehensive promotion of electrification and intelligence is expected to help increase the company's sales volume.
Profit Forecasts, Valuations, and Ratings
Based on the company's actual sales performance, we expect the company's 2024-2026 revenue to be 7447/7784/822.8 billion yuan, respectively, with year-on-year growth rates of 2.55%/4.52%/5.7%, net profit to mother of 157/172/18.5 billion yuan respectively, 11%/10%/8% year-on-year growth, EPS 1.35/1.49/1.6 yuan/share, and CAGR-3 10%, respectively. In view of the company accelerating the transformation of new energy sources, continuing to lay out overseas markets, and improving the quality of joint ventures, the company was given 15 times PE in 2024, corresponding to a target price of 20.3 yuan, with a “buy” rating based on comparable company valuations.
Risk warning: Risk of declining terminal demand; risk of sales of new energy models falling short of expectations; risk of overseas sales falling short of expectations.