24Q1 revenue grew steadily, and sales are expected to continue to rise. Maintaining a “buy” rating, the 24Q1 company achieved revenue of 37 billion yuan, +7% year over year; net profit to mother of 1.2 billion yuan, -83% year over year.
We are optimistic about the 24-year launch cycle for new cars such as Deep Blue G318 and Qiyuan E07, and the transformation of intelligent expectations is smooth. The company's revenue for 24-26 is estimated to be 1983/2171/236.5 billion yuan, net profit to mother of 81/109/117 billion yuan, and EPS of 0.82/1.10/1.18 yuan, respectively. Using segmented valuation, the traditional business was given 20 times PE in 24 years, with a valuation of 162 billion yuan. The “Deep Blue+ Avita” business was given 1.8 times PS in 24 years, with a valuation of 69 billion yuan. The overall target market value was 231 billion yuan. The target price remained unchanged at 23.29 yuan, and the “buy” rating was maintained.
24Q1's own-brand new energy sales increased year-on-year. Actively following price reduction promotions, 24Q1 sold 690,000 vehicles, +14% over the same period last year. Of these, 440,000 autonomous passenger cars were sold, +10% over the same period last year. In 24Q1, autonomous new energy sold 130,000 vehicles, +52% year-on-year. Qiyuan/Deep Blue/Avita delivered 3.2/4.0/15,000 vehicles. Our own brands sold 110,000 vehicles overseas, +80% compared to the same period last year. The 24Q1 company's gross profit margin was 14%, compared to -4 pct, mainly due to increased competition in the 24Q1 market. The company was aggressive in its pricing strategy, and the Qiyuan series and the Gravity series responded quickly to price reductions. On the cost side, 24Q1 sales expenses/ management expenses/ R&D expenses were 20.5/12.9/1.54 billion yuan respectively, +28%/+24%/13% year over year. The cost rate for the period was 12.5%, +1.5pct compared to the previous year. The pressure on the cost side was mainly due to the merger of Deep Blue Cars.
A number of models appeared at the Beijing Auto Show, combined with a trade-in policy. The company's sales volume is expected to quickly boost the company's landing at the Beijing Auto Show with many new products such as Qiyuan and Deep Blue. The Qiyuan E07 is positioned as a medium to large crossover SUV, comparable to the “Chinese version of Cybertruck”. Equipped with a CTV battery, 800V high voltage fast charging, and advanced smart driving, it is expected to be launched in 24H2; the Deep Blue G318 is positioned as a medium to large off-road SUV, equipped with the Force Intelligent Super Range Extender System, which is expected to be launched in June this year. On April 26, 7 departments including the Ministry of Commerce and the Ministry of Finance jointly issued the “Automobile Trade-In Subsidies Implementation Rules” to clarify the automobile trade-in policy. The company responded positively to national policies and introduced exclusive discounts, superimposed policies, and comprehensive subsidies of up to 57,000 yuan for car buyers from April 27 to May 9. Among them, the comprehensive subsidy for the Qiyuan brand was as high as 30,000 yuan; after the subsidy, the price of Qiyuan A05 and Q05 was as low as 689/84,500 yuan; the comprehensive subsidy for the Deep Blue brand could reach 40,000 yuan (including financial interest and insurance subsidies). We believe that the company's sales volume is expected to increase as a result of policy incentives.
The company signed a “Memorandum of Investment Cooperation” with Huawei last year. It is planned to sign the transaction document within 6 months. In November 23, the company and Huawei signed a “Memorandum of Investment Cooperation”. Huawei plans to establish a new company engaged in automotive intelligent systems and component solutions. Changan Automobile plans to invest in the target company and carry out strategic cooperation. The company and related parties plan to obtain no more than 40% of the target company's shares. The two sides plan to sign the final transaction document within 6 months after signing the MOU. As the six-month period gradually approaches, we are optimistic about the company's future transformation to intelligent electrification.
Risk warning: Consumer demand falls short of expectations, supply chain shortages, and the company's new energy transformation progress falls short of expectations.