Incident: The company achieved revenue of 35.84 billion yuan in 2023, +5.1% year-on-year; realized net profit of 2.45 billion yuan; realized net profit deducted from non-mother of 4.82 billion yuan. The company achieved revenue of 26.56 billion yuan in 24Q1, +421.8% year-on-year; realized net profit of 220 million yuan, an increase of 850 million yuan over the previous year; realized net profit without deduction of 110 million yuan, an increase of 1.04 billion yuan over the previous year.
Comment:
With 23Q4 & 24Q1 deliveries, the scale effect is beginning to show. 23Q4 achieved sales of 84,000 new energy vehicles, +90.4% year over year; achieved revenue of 19.16 billion yuan, +74.5% year over year; realized net profit to mother of 160 million yuan, a year-on-year loss reduction of 1.10 billion yuan. The company achieved revenue of 35.84 billion yuan in 2023, +5.1% year-on-year; realized net profit to mother - 2.45 billion yuan, a year-on-year loss reduction of 1.38 billion yuan.
The 24Q1 company further increased its sales volume, achieving sales of 95,000 new energy vehicles, +374.8%; achieving revenue of 26.56 billion yuan, +421.7% year over year; and achieving net profit of 220 million yuan, an increase of 850 million yuan over the previous year, turning a loss into a profit. We believe that the company turned losses into profit in 24Q1 mainly due to the increase in scale effect due to the increase in delivery volume. 24Q1 company's gross profit margin was 21.5%, +12.6pct year over year, and +8.0 pct month-on-month.
Delivery of the new M9 + M5 model officially began at the end of February. I am optimistic that Q2 delivery will continue to increase. According to the official account of Hongmeng Zhixing's official account, the Smart Choice M7, which the company cooperated with Huawei, delivered a total of 134,000 units from April 30, with a cumulative total of 180,000 units in the past half year; the Genjie M9 delivered 13,391 new cars in April, with a cumulative total of more than 70,000 units; and the Quanjie New M5 sold a total of 4,031 units in 24 hours. QQ M9 began nationwide delivery on February 26. Q2 is M9's first full delivery quarter, and we believe that the continuous increase in delivery volume is expected to further enhance performance.
During the “May 1st” holiday period, Hongmeng Zhixing's Wanjie M5, Wanjie M7, Wanjie M9, and Zhijie S7 together surpassed 11,000 units. We believe that with the further launch of the high-end model M9 and the launch of the new M5 model, the company's profitability is expected to increase as the scale effect increases.
The company plans to purchase 100% of Longsheng New Energy's shares through the issuance of shares, which is expected to further increase the size of the company's assets. The company announced a plan to issue shares to purchase assets. The company plans to purchase 100% of Longsheng New Energy's shares held by Chongqing Industrial Parent Fund, Liangjiang Investment, and Liangjiang Industrial Development by issuing shares. Longsheng New Energy's main assets are gigafactories, which are used to produce automotive products such as the Qinjie M9. The profit model is to provide productive leasing services to the company. The company's owners' equity in 2022 and 2023 was 1.15 billion yuan and 2.98 billion yuan respectively. We believe that the completion of this acquisition is expected to further increase the company's asset size, reduce the company's balance ratio, optimize the capital structure, improve and optimize the management efficiency of the gigafactory, and enhance the company's new productivity.
Profit forecast: The scale effect of the acceleration in sales growth of the new M7 was evident. Delivery of the M9 began at the end of February. It is expected that Q2's net profit will continue to rise high, and we will continue to be optimistic about Huawei's industrial chain expansion opportunities. We expect the company to achieve revenue of 1445/1744/203.1 billion yuan in 2024-2026, and achieve net profit of 41/62/8.8 billion yuan.
Risk factors: risk of new model launches falling short of expectations, risk of price wars, high-end new energy medium and large