After being deeply involved in vehicle manufacturing for more than 20 years, Cyrus two-wheel drive has grown into a leading domestic new energy OEM. The company has been involved in the automobile business since 2003. Today, it has accumulated more than 20 years of vehicle manufacturing experience, and obtained the country's 8th new energy production license in 2017, starting the new energy transformation earlier. At present, the company has formed a passenger car product matrix of Celis (including Quanjie) + Dongfeng Xiaokang (including Blue Electric and Scenery). Among them, Wanjie positions itself as a global luxury new energy brand, and the level of intelligence is in the leading position in the industry; Cyrus, Blue Electric, and Scenery position economical overseas brands and continue to explore the global market. Since 2005, the company's vehicles have been exported to more than 70 countries and regions around the world. In 2023, the export volume of the Celis brand increased dramatically to 0.77,000 vehicles, driving the average export price growth of the company. Foreign revenue increased 23.5% year-on-year to $3,913 billion. The company built a complete product layout through a dual brand strategy and grew into a leading first-class new energy OEM.

Facelift and refurbishment lead the market segment in sales and become a leading new force in the luxury car market. The first product, the M5, was first released in 2022, and later released the QQ M7. However, due to increased market competition and the technical maturity of the first product, sales volume fell to a short-term slump. Relying on the industry-leading level of intelligence, it quickly became a phenomenal model, with orders exceeding 170,000 units in 7 months. In December, the company released its flagship luxury new product, the M9, which was once again a success. In April of this year, the company launched the new M5 again, using the company's leading intelligent technology. It will definitely break through 4000 units. During the period of low sales, the company always clearly questioned the luxury brand positioning, relied on technology and market accumulation to achieve success in new products, and became a leading new force in the luxury car market, helping the company reverse its difficult performance situation. Benefiting from the high value of luxury products and the scale effect brought about by rapid sales growth, Q1 achieved revenue of 26.561 billion yuan in 2024, +421.72% year-on-year, gross margin increased 7.97 pcts month-on-month to 21.51% in Q4 of 2023, achieved net profit of 220 million yuan, and successfully reversed losses. Currently, the Quanjie series products have achieved a significant competitive advantage in the market. The product performance completely surpassed that of foreign luxury brands. The M7 sales volume in the first quarter was second only to Model Y in the medium and large SUV market, clearly ahead of other hybrid products. The M9 ranked as the top luxury SUV sales champion of more than 400,000 for two consecutive weeks. The brand reputation is expanding rapidly, which is expected to drive the company's performance and prosperity to continue to improve.

Huawei is empowering the world to move towards the future of smart electronics. The company and Huawei use the most closely cooperative smart selection model, and the product application of Huawei's intelligent technology is the widest range. The power of Huawei technology has brought excellent product competitiveness to the relevant brands. In terms of intelligent driving, Huawei City ADS has now taken the lead in popularizing all cities in the country. The technology has been gradually improved through many iterations. On April 24, Huawei released a new smart car solution - Huawei Qiankun, bringing ADS 3.0 based on an end-to-end architecture to promote the further evolution of intelligent driving technology. In terms of smart cabins, Huawei has built a “1+8+N” intelligent ecosystem centered on mobile phones based on the complete layout of smart terminals. In addition, the Qiankun brand drives the collaborative evolution of smart cockpits to all scene devices; power systems On the other hand, the power system of the Quanjie series of hybrid products integrates Huawei's electric drive system with the company's power range extension system, leading the industry in technical strength. In addition, the Quanjie M9 also pioneered the use of the latest Huawei technology, such as the Xuanwu body, integrated die-casting, and Touring chassis, which consolidated the technical strength of the product in all aspects, helped the Qunjie series lead the market with technology, and increase sales steadily. The differentiated competitiveness of products empowered by Huawei's technology will continue to drive sales of the Questionnaire series to maintain a high growth trend. It is estimated that 400,000 units will be sold in 2024.

Investment advice: The company's revenue for 2024-2026 is estimated to be 129.214 billion yuan, 160.566 billion yuan, and 214.310 billion yuan, respectively, +260.51%, +24.26%, and +33.47% year-on-year respectively. Net profit to mother is 2,567 billion yuan, 5.70 billion yuan, and 9.715 billion yuan respectively, corresponding EPS of 1.70 yuan, 3.78 yuan, and 6.43 yuan respectively. After comprehensively considering absolute valuation and relative valuation methods, the company was given a target price range of 111.25-120.96 yuan, corresponding to a market capitalization range of 1679.64-182,624 billion yuan. It was covered for the first time, and a “recommended” rating was given.

Risk warning: the risk that NEV sales will fall short of expectations; the risk of increased market competition; the risk that intelligent technology research and development will fall short of expectations.