Conclusions and recommendations:
The company released its 2024 quarterly report, achieving operating income of 42.86 billion yuan, YOY +47.6%, and recorded net profit of 3.23 billion yuan and YOY +1752% (net profit after deduction of 2.02 billion yuan, turning a loss into a profit), equivalent to an EPS of 0.38 yuan. The company's performance exceeded expectations.
The company is actively expanding overseas markets, and overseas sales are expected to increase steadily; the company is continuing to accelerate electrification and intelligent transformation, and is building a new marketing system to enhance the overall competitiveness of products. We expect the company's net profit for 2024/2025/2026 to be 112/138/16.6 billion yuan, YOY +60% /+23/ +21%, respectively; EPS will be 1.31/1.62/1.95, respectively. The current stock price corresponds to the 2024/2025/2026 P/E will be 19/15/13 times, the corresponding P/E for H shares will be 7.7/6.3/5.2 times, the dividend rate for Hong Kong stocks is 2.97%, and the dividend rate for A shares is 1.2%. We recommend a “buy”.
The company's Q1 performance exceeded expectations and its profitability improved markedly: the company released its 2024 quarterly report, achieving operating income of 42.86 billion yuan, YOY +47.6%, recording net profit of 3.23 billion yuan, YOY +1752% (net profit after deducting 2.02 billion yuan, turning a loss into a profit), equivalent to EPS of 0.38 yuan. The company's performance exceeded expectations and reached a record high for the same period.
Thanks to the acceleration of overseas travel and the steady growth of tank brands, Q1's cumulative sales volume increased 25% year over year.
Q1 The increase in the company's automobile sales volume and average price increase led to a sharp year-on-year increase of 47.6% in revenue. Q1 The company's gross margin improved markedly, with a year-on-year increase of 4 percentage points and a month-on-month increase of 1.6 percentage points. On the one hand, it was due to reduced spare parts costs, and on the other hand, it benefited from high-margin products and increased overseas sales. The company recorded additional revenue of 1,114 billion yuan in Q1, an increase of 960 million yuan over the previous year. VAT credits and foreign factory investment tax rebates all contributed, and the benefits obtained from this preferential tax policy will continue for the next few years. In terms of expenses, benefiting from the scale effect, the Q1 management expense ratio decreased by 1.31 pcts year on year, the sales expense ratio decreased by 1.03 pcts; the financial expenses ratio increased by 0.18 pcts year on year.
Q1 Overseas sales increased dramatically, and the export growth rate is expected to exceed 50% this year: Q1 has sold 275,000 cars, YOY +25.1%. By region, Q1 exported 93,000 vehicles, YOY +78.5%, sold 183,000 vehicles domestically, and YOY +8.6%. Q1 exports contributed more than 70% of the increase. The company expects export sales to reach 400,000 to 500,000 vehicles this year, an increase of 27%-58% over the previous year. The company's top three export destinations in 2023 were Russia, Australia, and South Africa, which sold 138,000, 36,400, and 19,900 vehicles, respectively. The Russian market is still an important growth point for the company's exports this year. According to public reports, Haval's sales volume in Russia in January-March was 37,600 vehicles, up 135% from the previous year.
In the global market, the market share of Japanese and German cars is still leading, but in recent years, the cost performance ratio of domestic brands has been recognized by the market in fierce competition in the domestic market, and the company has also used cost-effective models such as the Haval JOLION as an entry point in overseas markets to gradually establish local awareness of the brand. Since 2023, the company's globalization has entered a new stage, invested more resources to build a sales network, and accelerated product introduction. By the end of 2023, the company's overseas channel providers had increased to 1,000; in 2023, overseas sales increased significantly by 83% year-on-year. With the continuous improvement of the sales network and the increase in local market holdings, we believe that the company's overseas sales will continue to grow rapidly.
Profit expectations: We expect the company's net profit for 2024/2025/2026 to be 112/138/16.6 billion yuan, YOY +60% /+23/ +21%, respectively; EPS will be 1.31/1.62/1.95, respectively. The current stock price corresponds to the 2024/2025/2026 P/E for A-shares will be 19/15/13 times, the P/E for H shares will be 7.7/6.3/5.2 times, Hong Kong dividend rate 2.97%, and A-share dividend rate 1.2%, recommended “buy”.