Incident: The company released its 2023 annual report and achieved full-year revenue of 129.706 billion yuan, +17.62% year over year; net profit to mother of 4.429 billion yuan, -45.08% year over year; net profit after deducting non-return to mother of 3,573 billion yuan, or -52.31% year over year. Looking at Q4, the company achieved revenue of 31,524 million yuan, +6.36%/-13.09% YoY; net profit attributable to mother - 82 million yuan, net profit not attributable to mother - 451 million yuan.

Autonomous & new energy sources are growing strongly, and profits are declining due to pressure from joint ventures. In 2023, the company sold 2.5 million vehicles, +3% year-on-year. On the autonomous side, Aian achieved sales of 480,000 units, +77%; Trumpchi achieved sales of 410,000 units, +12%; in terms of joint ventures, GAC Toyota achieved sales of 950,000 units, -5% year over year, and GAC Honda achieved sales of 640,000 units, -14% year over year; new energy vehicles achieved annual sales of 550,000 units, +78%, or +9.2 pcts year over year. Affected by factors such as increased discount rates for joint venture brands, declining sales, and losses accrued from the Mitsubishi restructuring, the company's annual gross margin/net profit margin was 6.9%/2.9%, -0.1/-4.4 pcts year on year. The net investment income for the whole year was only 8.7 billion yuan, -40% year over year.

The autonomous & joint venture new vehicle cycle resonates, and the electric+high-end transformation is further accelerated. In terms of autonomy, around the AER3.0 pure electric platform+Julang hybrid modular architecture, Trumpchi will launch two A-class SUV+seven-seater MPV models in 2024; Aian will launch a variety of models, such as a five-seater SUV, A-class sedan, and a new large six-seater SUV from Haoper to continue improving the AION+Hyper brand matrix. In terms of joint ventures, GAC Toyota launched new models such as the 9th generation Camry to stabilize the fuel base; GAC Honda plans to launch the Jipai 2, Concept A class pure electric sedan to accelerate electrification transformation and upgrading.

The brand went overseas + Robotaxi to start a new growth cycle. 1) Brand overseas: In 2023, the company's own brand achieved overseas sales of 55,000 vehicles, covering 41 countries and regions around the world. The CKD plant in Malaysia is expected to achieve mass production of the first model within the year, and the SKD plant in Thailand is expected to achieve mass production in 3Q24, with a target annual production capacity of 50,000 vehicles. 2) Robotaxi: Andi Technology has been officially approved, and the first Robotaxi has completed the product definition. The first L4 models are expected to be mass-produced next year, achieving a closed loop of commercialization of “technology+intelligent manufacturing+operation”.

Investment suggestions: Accelerating the transformation of electric+high-end, going overseas+a new cycle of intelligent growth. We expect that in 2024-2026, the company's revenue will be 1541/173.186.2 billion yuan, respectively; net profit to mother will be 61/68/7.3 billion yuan, maintaining the “buy” rating.

Risk warning: Car companies' price war intensifies; brands falling short of expectations when going overseas; macroeconomic risks.