Key points of investment
Key points of the announcement: The company disclosed the 2024 quarterly report. The company's Q1 achieved revenue of 37.023 billion yuan, +7.1%/-14.1% of the same period, net profit to mother of 1,158 million yuan, -83.4%/-19.9% year-on-month, net profit after deducting 112 million yuan, -91.8%/-33.7% year-on-month, respectively. The Q1 performance was lower than our expectations, mainly due to the company releasing more business policies in response to the fiercely competitive downstream market, and increased discounts.
The company actively responded to industry competition, and the market share of Deep Blue/Qiyuan/Avita and Gravity oil trucks increased simultaneously. The company's Q1 achieved sales of 589,000 units of its own brands, +13.6%/+7.3% year-on-month, including 437,000 passenger car sales, +10.4%/+4.5%, and Deep Blue/Avita Q1 3.9/11,000 units respectively, +154.4%/+93.8% year-on-year, and -17.3%/+72.8% month-on-month, respectively. The four Yuanqi models achieved sales of 283,000 units, which was basically flat from month to month. In Q1, the average price of bicycles converted to independent brands (excluding Avita) was 641,000 yuan, -4.9%/-19.4%. The average price decline was mainly due to the launch of a series of Honor models by Q1 BYD and friends. Under the competitive trend of the industry's price-for-volume competition, the company followed a series of annual revisions such as the “True Fragrance Edition” Qiyuan to improve product cost performance and market competitiveness, and ensure a steady increase in sales volume and share; Q1's new energy and export sales reached 129/109,000 units respectively, accounting for 21.5%,/The year-on-year increase was significant. Q1 Due to the increase in corporate discounts, gross margin fell 4.1/5.1 pct to 14.4% year-on-month, respectively, mainly for brands such as Qiyuan/Gravity. From an expense ratio perspective, the Q1 company's sales management and research cost rates were 5.54%/3.47%/4.17%, respectively, +0.9/+0.5/+0.2pct compared to the previous year, and +0.3/2.4/0.8pct month-on-month, mainly due to the continuous increase in the size of the company's sales/management/R&D team and the increase in employee remuneration. In terms of independent business performance, the company's Q1 net profit after deducting the investment income of joint ventures was -037 million yuan, which was significantly lower than the same period last year (1,544/2,569 million yuan respectively). While the company's terminal discounts increased a lot, the Q1 supply chain cost reduction failed to be implemented, resulting in large profit fluctuations.
Looking forward to the future: The new car cycle is strong, and the share is growing steadily. Looking ahead to 2024, Deep Blue+Avita+ Qiyuan will launch nearly 10 new cars, and the cycle is strong; with simultaneous efforts at home and abroad, the 2024 sales target is still high. Deep Blue's new off-road G318/Qiyuan CD701/Avita 15 and 16 electric vehicles will be launched and delivered one after another, covering the mainstream market price range of 100,000 to 300,000 yuan, and the new car cycle is strong. The intelligent dimension was further introduced into Huawei's empowerment. Avita/Deep Blue followed suit, and the Huawei Ascend Smart Driving and Hongmeng cockpit enhanced the company's intelligent experience and enhanced product competitiveness. From a global perspective, Haina Baichuan plans to strengthen the introduction of overseas products and channel layout, enjoy the dividends of the export industry under its own brands, optimize the profit structure, and open up space for medium- to long-term development.
Profit forecast and investment rating: Considering the further intensification of competition in the passenger car industry, we lowered the company's profit forecast for 2024-2026 from 93/116 billion yuan to 84/111/12.7 billion yuan respectively, corresponding EPS to 0.85/1.11/1.28 yuan, corresponding PE valuation 19/15/13 times, maintaining Changan Automobile's “buy” rating.
Risk warning: Domestic passenger car market price war exceeds expectations; global geopolitical risk.