1Q24 results were higher than our expectations
The company announced 1Q24 results: revenue of 7.975 billion yuan, +5.96% year over year and -17.44% month on month. Net profit attributable to mother was 482 million yuan, +163.95% year over year, and +3.48% month on month. Non-net profit of 421 million yuan was deducted from the mother, an increase of 411 million yuan over the previous year. 1Q24 The parent company has good cost control and improved profitability, and the company's overall profitability has exceeded our expectations.
Development trends
The pickup truck business grew rapidly, driving a steady increase in vehicle sales and revenue. 1Q24 achieved 74,322 vehicle sales, +3.43% year over year. Among them, there were 17,179 light buses/trucks/SUVs, 13,725 units/24,703 vehicles, or -1.87%/-18.13%/-1.66% year-on-year. 1Q24 pickup truck sales increased 50.12% year over year to 18,715 units. We believe this was mainly due to improved sales of high-margin models such as the Ranger and Boulevard series, which also led to an optimization of the pickup truck product structure and a sharp rise in volume and price. Looking ahead, we believe that as 2Q24 Jiangling Ford Bronco (Liema) sales gradually materialize, it is expected to drive a high increase in the company's SUV sales and improve the new car cycle; further promotion of export business will also provide strong support for performance.
The profit level is improving, and lean management is perfect. On the profit side, 1Q24 gross margin was -1.1pp/ -3.1ppt to 12.3%. We think it was mainly due to adjustments in product sales structure and subsidiary drag down; 1Q24 net profit margin was +3.6pp/+1.2ppt to 6.05%, which was greatly affected by changes in minority shareholders' equity. We expect it mainly to come from Jiangling Ford Automotive Technology (Shanghai) Co., Ltd. (Jiangling Motors holds 51% of shares, Ford holds 49% of shares). The company's net loss in 2023 was 840 million yuan. Currently, let's take a look at 1Q24's large loss The increase, but due to the strengthening of Jiangling Motor's own profitability and cost management capabilities, some of the profit drag was offset.
The new product cycle is compounded by the acceleration of exports, and the intelligent transformation of electrification is building a growth engine. In terms of models, the Ford Ranger, which was launched in December 2023, helped JMC's pickup truck market share rank second in the industry in 2023; Bronco will launch 5 versions with a total of 7 models, which will be officially launched at the end of April. On the export side, with the upgrading of cooperation with Ford Motor Company, overseas sales of SUVs increased rapidly in 2023, and we expect overseas business to continue to contribute to the increase in the future. Looking at the medium to long term, new electric platform SUV product projects, new platform electric light buses and light trucks, and electric export products are currently in the research and development stage, and the company announced that they are all expected to be put into operation in 2025. We believe that the company's current new vehicle cycle is improving, and the export business is developing well. The combined electrification and intelligent upgrades are also injecting momentum into the company's long-term growth.
Profit forecasting and valuation
Considering the impact of the parent company's fee control optimization and the distribution of benefits among minority shareholders, we raised 2024/2025 net profit by 17.3%/9.1% to 2,034 billion yuan/2,397 billion yuan. The current stock price corresponds to 12.5/10.6 times P/E for 2024/2025. Maintaining an outperforming industry rating, taking into account the impact of profit forecast adjustments and uncertainty in the profit structure caused by subsidiary losses on the valuation level, we raised our target price of A shares by 9.1% to 37.1 yuan, corresponding to 15.7/13.3 times P/E for 2024/2025, with 26.1% upside compared to the current stock price.
risks
The new models fell short of expectations, and market competition intensified.