On the evening of April 29, the company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved net profit of 35.842 billion yuan, -2.45 billion, and 4.817 billion yuan, respectively, +5.09%, +36.07%, and -12.12% year on year; gross sales margin 10.39%, -0.93 pct year on year; net sales margin -11.6%, +3.71 pct year on year. The annual results are in line with expectations. The first quarter of 2024 achieved revenue, net profit to mother, net profit after deducting net profit of 26.561 billion, 220 million, and 114 million, respectively; +421.76%, +135.12%, and +112.38% year on year; gross sales margin 21.51%, +12.63pct year on year; net sales margin 0.33%, +17.81 pct year on year. The company turned a loss into profit in the first quarter, and the profit inflection point has reached.
Sales have exploded, and profitability continues to increase. In 2023, the company sold 159,900 new energy vehicles, up 11.75% year on year. Among them, sales of new energy vehicles in the fourth quarter were 82,700 units, +88.39% year on year and +253.08% month on month. Both revenue and sales reached record highs. In the fourth quarter of 2023, the company achieved revenue, net profit attributable to mother, net profit of 19.162 billion, -156 million, and -1,802 billion yuan respectively; +74.49%, +86.55%, -25.88%, month-on-month, +239.27%, +83.58%, and -59.47% month-on-month; gross profit margin of 13.54%, -0.99pct, +5.96pct month-on-month; increase in net profit margin of -3.68%, +11.24pct year-on-month, and +19.54pct month-on-month. Thanks to increased sales volume, the company's profitability increased.
The profit inflection point has been reached, and losses were reversed in the first quarter. Since 2016, the company has continued to invest in smart electric vehicle research and development on a large scale for eight consecutive years. In the first quarter of 2024, the company achieved first-quarter operating profit, and achieved sales of 94,800 new energy vehicles in the first quarter, +374.77% year-on-year, and +14.66% month-on-month. New energy vehicle sales in a single quarter reached a record high. In the first quarter of 2024, the company's ASP was 232,800 yuan, +91.59% year over year and +41.41% month over month. Bicycle profit was 0.19 million yuan, +112.93% year over month, and +243.87% month over month. The continued increase in profit and ASP in the first quarter was due to M9's new car sales volume and market recovery. The company's sales expense ratio, management cost rate, R&D expense ratio, and financial expense ratio were 12.82%, 1.7%, 3.59%, and 0%, respectively. The year-on-year decline was -2.27pct, -5.77pct, -3.2pct, and -0.19pct, respectively. The reduction in various cost rates was mainly due to the company paying close attention to technological innovation cost contributions to achieve accurate and efficient full-chain management; the cost rate for the period was 18.11%, -11.43pct year on year. The company's R&D expenses increased dramatically in the first quarter. Under the condition of +3.49 month-on-month, the operating cost ratio for the first quarter was -8% month-on-month compared to the fourth quarter of 2023, promoting continuous cost optimization. The company generated a net cash flow of 1,187 billion yuan from operating activities in the first quarter, an increase of 3.355 billion yuan over the same period last year, mainly due to increased sales volume of new energy vehicles and increased sales repayments.
Technological innovation, comprehensive breakthroughs in core technology. In 2023, the company invested 4.438 billion yuan in R&D, accounting for 12.38% of revenue, an increase of 42.90% over the previous year. According to statistics from China Automobile Information Technology, in the 2023 automobile invention patent disclosure list, the number of patents issued by the company was 1,244, an increase of 407.76% over the previous year, ranking first among independent automakers in terms of growth rate. In terms of platform development, the company independently built a modular intelligent Rubik's Cube platform, which is suitable for all series and full-size models. It is the first platform in the industry that can be compatible with these three power forms. In terms of power technology, the company independently develops a super range extension system, which has the three core highlights of “intelligent, efficient, and insensitive”. The company's products won the 2023 “Heart of China” Top Ten New Energy Power Systems and the 2nd World's Top Ten Hybrid Systems Awards.
Hard-core products, innovative upgrading of smart driving standards. The company's cooperation with Huawei continues to deepen. In 2023, the AITO Challenge M5 smart driving version, the new M7 and M9 were launched one after another, and quickly occupied the market. The sales volume and revenue of new energy vehicles reached record highs throughout the year. The QJ M5 ranked first in the mainstream plug-in hybrid market for J.D. Power's 2023 NEV quality research. According to the official statement of Wanjie Auto, since January 31, 2024, the QQ M5 and the new M7 smart driving version have been upgraded to the premium OTA version one after another. The newly launched Q M9 is also equipped with the Huawei ADS2.0 wireless NCA (Intelligent Driving Pilot Assist), which can achieve advanced intelligent driving in urban areas without relying on high-precision maps throughout the country. The newly upgraded version of the NCA intelligent driving pilot assistance will no longer rely on high-precision maps, and can be used on highways, overpasses, expressways, and urban areas all over the country. Furthermore, in December 2023, Cyrus announced that it has obtained L3 autonomous driving test licenses in Chongqing and Shenzhen at the same time. According to reports, the current license was obtained as early as November, with a total of 11. The model used was the AITO Quanjie M9. Of these, 5 were Chongqing license plates and 6 were Shenzhen license plates.
In 2024, the company's newly released M5 raised the average manual takeover mileage to 270 km+, raised the success rate of urban elevated entry/exit to 99.2%, and added remote parking and park valet parking on top of visible parking. Advanced smart driving continues to evolve.
Investment advice: The company turned a loss into a profit in the first quarter, exceeding expectations. Currently, sales of the company's new M7 and 9 are strong. Given the high volume of M9 orders and excellent market reputation, I am optimistic that its sales will continue to rise. There are plenty of orders for the new M5, and delivery will begin on May 15, which is expected to reverse the lackluster sales of the old M5. Since the company has now passed the profit inflection point, and the profit level of M9 bikes is high, and subsequent companies are more flexible, we have revised the profit forecast for 2024 and 2025 to 33.98 billion yuan, 7.697 billion yuan (originally -1.16 billion yuan, 3.621 billion yuan), and the profit forecast for 2026 to 13.282 billion yuan, corresponding to 40.5, 17.9, and 10.4 XPE for three years, respectively, and continue to be highly recommended!
Risk warning: 1) Downstream demand falls short of expectations; 2) The deteriorating competitive landscape exceeds expectations.