The performance was in line with expectations. Revenue for the first quarter was 37.021 billion yuan, up 0.6% year on year; net profit to mother was 1,263 billion yuan, down 11.9% year on year; net profit after deducting non-return to mother was 1,085 billion yuan, down 7.9% year on year. The company's overall revenue performance in the first quarter was steady, and the profit side is expected to be pressured by a combination of price reduction pressure in the industrial chain, declining production capacity in overseas factories, and exchange rate fluctuations.
Gross margin was temporarily under pressure in the first quarter, and expense ratios and cash flow improved. The gross profit margin for the first quarter was 12.5%, down 1.3 percentage points from the previous year. It is expected to be mainly affected by factors such as price cuts for downstream customers and the rise in new projects. The expense ratio for the first quarter period was 10.3%, down 0.4 percentage points year on year. Among them, the management fee ratio decreased 0.3 percentage points year over year, R&D expenses decreased 0.5 percentage points year over year, and financial expenses increased 0.4 percentage points year over year, mainly due to increased interest expenses and exchange losses. The net cash flow from operating activities in the first quarter of 2024 was 1,224 billion yuan, an increase of 116.7% over the previous year, mainly due to changes in the company's payment settlement cycle.
Non-industry customers and overseas markets continue to expand. The company's customer structure continues to be optimized. In 2023, customers from outside the industry (including exports) accounted for more than 50% of the revenue. The main non-industry customers include Tesla, BYD, Chery, FAW-Volkswagen, etc.; in 2023, it received more than 40% of the support amount for independent brands in China, and the new energy business exceeded 65%. The company is actively expanding overseas markets. Car seats and passive safety have entered global customer support systems such as Tesla, Volkswagen, GM, Audi, BMW, and Mercedes-Benz. Businesses such as lightweight cast aluminum, fuel tank systems, and automotive electronics have also entered the global market. SAIC Motor Group's overall sales volume was under pressure in the first quarter. SAIC-GM and SAIC passenger car sales declined significantly. It is expected that customers outside the industry and overseas markets will be an important contributor to the steady growth of the company's revenue.
Promote business integration and innovation, reduce costs and increase efficiency, and enhance overall competitiveness. According to the company announcement, in 2024, the company aims to achieve consolidated revenue of 1706 billion yuan and keep operating costs within 148.5 billion yuan. Based on the above operating income and operating costs, the company's annual gross margin is estimated to be about 13.0%. The company will continue to accelerate technological innovation and layout in business fields such as electric drives, intelligence, thermal management, etc., and strengthen the coordination and integration of various business segments in terms of architecture, chips, software, etc., to meet the multi-level needs of different customers in terms of components to systems, and enhance overall competitiveness. Facing a fierce competitive environment and continuous price reduction pressure, the company will continue to adjust the business structure and optimize the allocation of resources, improve the company's overall operating efficiency to boost profit levels.
EPS for 2024-2026 is estimated to be 2.30, 2.42, and 2.55 yuan, respectively. Referring to comparable company valuations, the 2024 PE average valuation is maintained 11 times, the target price is 25.3 yuan, and the purchase rating is maintained.
Risk warning
Lower demand in the passenger car industry affected profits than expected, and price cuts for major supporting vehicles affected profits.