The results for the first quarter of 2023 and 2024 are in line with expectations: the company's revenue in 2023 was +23.1% year-on-year to $44.94 billion, net profit to mother turned a profit of 150 million yuan (loss of 1.58 billion yuan in the same period last year), and net loss after deduction to mother reached 1.72 billion yuan (loss of 2.79 billion yuan in the same period last year). Among them, 4Q23's operating income was +23.1% YoY/-4.6% month-on-month to RMB 11.02 billion, net loss to mother reached RMB 0.3 billion (loss in the same period of the previous year to RMB 8.0 billion), and net loss to mother after deduction reached RMB 1.19 billion (loss of 1.30 billion yuan for the same period last year). 1Q24's operating income was +4.6% YoY/+2.2% month-on-month to RMB 11.27 billion, net profit to mother reached 110 million yuan (profit for the same period of the previous year to 150 million yuan), and net loss after deducting net loss to mother was 0.1 billion yuan (loss for the same period last year to RMB 100 million).
The 1Q24 gross profit margin and expense ratio improved significantly: 1) 4Q23's gross margin was -0.3 pcts/month-on-month -0.1 pcts to 10.8%, and 1Q24's gross margin was -0.1 pcts month-on-month, and +0.6 pcts month-on-month to 11.4%. 2) In 4Q23, the company's sales/management/ R&D expense rates were 5.9%/4.7%/3.8% (year-on-year +0.4pcts/-0.3pcts/-1.5pcts), and 1Q24 company sales/management/ R&D expenses were 3.9%/3.6%/3.1% (+0.8pcts/+0.3pcts/-0.4pcts), respectively. 3) Asset impairment losses: 4Q23 and 1Q24 asset impairment losses amounted to 970 million yuan and 0.2 billion yuan, respectively. In 4Q23, there were large-scale depreciation calculations. We believe that the company's recent overall performance is in line with expectations. The main reasons for the reduction in net profit loss after deduction are: a) good control of operating and management expenses; b) improved export+commercial vehicle business prosperity, which has led to an increase in gross margin.
In the early days, a partnership was established with Huawei to actively seize opportunities for new energy transformation: 1Q24's passenger car sales volume was -27.3% YoY/-56.1% YoY to 39,000 units, commercial vehicle sales +13.9% YoY +8.2% to 68,000 units, and overseas sales volume +24.7% YoY +34.6% YoY to 58,000 units. While focusing on passenger business, the company is actively expanding cooperation with Huawei, and the two sides have laid a good foundation for cooperation. 1) Autonomy aspect:
The company has maintained steady development in the light commercial vehicle business. Among them, buses have maintained good performance through overseas business, and its Ankai Bus has become the most owned bus brand in Saudi Arabia. 2) Cooperation aspect: As one of the car companies that established a cooperative relationship with Huawei in the early stages, the company already has sufficient experience in cooperating with Huawei and has made relevant preparations.
On 2024/3, the details of the company's cooperation with Huawei revealed that the new model's medium and large MPVs will be produced through the JAC X6 platform, with an estimated annual production capacity of 35,000 vehicles. The company relies on local state-owned assets and has a regional resource advantage. It is expected that it will fully enjoy local government resource preferences and achieve high-end electrification brand transformation through Huawei's intelligent empowerment.
We should pay attention to new developments in the cooperation between the company and Huawei: we think we should pay attention to the market performance of the company's commercial vehicles+ export business and the Huawei-themed market catalyzed by smart selection of new models; we should pay attention to the development of new models in cooperation with Huawei in the medium to long term. We maintained the company's 2024-2025E net profit forecast to 37/550 million yuan, and added the 2026E net profit forecast to 1.01 billion yuan. We recommend that you pay attention.
Risk warning: Competition in the automobile industry intensifies, the recovery situation in the commercial vehicle industry falls short of expectations, the progress of cooperation falls short of expectations, and export sales fall short of expectations.