The Q1 performance was under pressure due to the wave of price cuts. The company released its 2024 quarterly report, achieving revenue of 37.023 billion yuan, +7.14% year over year; net profit to mother was 1,158 billion yuan, -83.39% year over year, mainly affected by intense current market competition and the company's increased promotion efforts; the period cost ratio was 12.5%, +1.5% year over year, which is expected to be related to the company's increased investment in new product development and marketing resources.
In view of the current wave of price cuts and other effects, the company's Q1 performance is still under pressure. We lowered our 2024-2026 performance forecast. We expect net profit to be 80.0 (-12.4) /102.4 (-18.1) /122.4 (-18.7) billion yuan for 2024-2026, corresponding EPS of 0.8 (-0.1) /1.0 (-0.2) /1.2 (-0.2) yuan. The current stock price corresponds to PE 18.2/14.3/11.9 times. We are optimistic about the company's new energy transformation, cooperation with Huawei, and overseas business Develop and maintain a “buy” rating.
Q1 Overseas business continued to expand, and increased promotion efforts led to a year-on-month decline in gross margin. The company sold 437,000 autonomous passenger cars in Q1, +10.4%/+4.5% year-on-month. Among them, the overseas business performed well, but sales volume in Q1 was 109,000 units, +80.1%/+74.2% YoY; accounting for 18.5% of the total sales volume of independent brands, +6.8pct/+7.1pct YoY. However, due to intense competition in Q1 terminals, the company's Qiyuan, Gravity and other brands increased their concessions, which led to a year-on-month decline of 4.2 pct/5.1 pct to 14.4% in Q1 gross margin, respectively. However, the company will continue to vigorously promote cost reduction on the production side, and profitability is expected to improve.
“New energy+intelligence+going overseas” has blossomed, and major models have been launched one after another, demonstrating strong strength in the field of electrification. The company will strictly implement the assessment requirements of the State Assets Administration Commission on sales volume, technology, etc. of central enterprises' new energy business, and continue to build product strength. In the field of intelligence, the Qiyuan E07, the company's first “digital intelligence new car” with the SDA central ring network architecture, was successfully unveiled at the Beijing Auto Show, and the new smart car solution company to be established in cooperation with Huawei is progressing in an orderly manner and is expected to be deeply empowered by leading intelligent companies. At the same time, the company is actively promoting the “Haina Baichuan” program. Currently, it is gradually penetrating into the Southeast Asian, European and American markets, and is actively promoting overseas localized supply. The first phase of the Thai plant's annual production capacity of 100,000 vehicles is expected to be put into operation in early 2025, and it is expected to promote production capacity construction in Europe, America and other regions in the future. In addition, the company will release 8 new energy products in 2024. Among them, the young and intelligent hardcore SUV Deep Blue G318 has received a lot of attention. The Avita E15/E16 is expected to be launched in 2024Q3/Q4, and the Avita 11/12 Extended Range 2024H2 is also expected to be released. The new car cycle begins to expand the company's growth space.
Risk warning: NEV sales and cooperation with Huawei fall short of expectations, sharp rise in raw material prices, etc.