Description of the event
The company released its 2024 quarterly report. 2024Q1 achieved revenue of 37.02 billion yuan, +7.1% year over month, -14.1% month on month, and net profit to mother of 1.16 billion yuan, -83.4% year on year and -19.9% month on month.
Incident comments
Sales in the first quarter were off to a good start, new energy and overseas sales continued to be released, and revenue grew steadily. 2024Q1 achieved revenue of 37.02 billion yuan, +7.1% year over month, and total sales volume of 692,000 units during the same period, +13.9% year over year, of which the consolidated report sales volume was 485,000 units, +18.2% year over year. The transformation of new energy is progressing smoothly. The cumulative sales volume of 2024Q1 autonomous new energy was 129,000 units, +52.4% year on year, corresponding to autonomous new energy accounting for 21.9%, +5.6 pct year on year; exports continued to grow at a high rate, reaching 109,000 units in 2024Q1, an increase of 80.1% year on year.
Terminal discounts have increased their impact on profits, and independent new energy sources have rapidly reduced losses, and joint ventures have performed steadily. Net profit of 2024Q1 was 1.16 billion yuan, -83.4% year-on-year, -19.9% month-on-month, net profit of 110 million yuan after deducting non-return net profit of 110 million yuan, -91.8% year-on-year, and -34.1% month-on-month.
The gross profit margin was 14.4%, -4.1pct year-on-year, and -5.1pct month-on-month. The cost rate for the period was 12.5%, +1.5pct year over year, and +3.7pct month-on-month. Among them, sales/management/R&D expenses were +0.9pct/ +0.5pct/ +0.2pct, respectively, +0.3pct/+2.4pct/+0.8pct month-on-month, respectively. Profit pressure is mainly due to: 1) In order to cope with industry price competition, 2024Q1 has increased the investment of promotional resources. 2) The company is still in the new energy transformation and investment period. 3) Cost reduction was less affected by the pace of implementation in Q1. New energy brands continue to expand and are expected to reduce losses quickly. 2024Q1 Deep Blue delivered 40,000 units and Avita 15,000 units. Joint venture performance was steady. 2024Q1 Changan Ford and Changan Mazda sold 75,000 vehicles together, +27.6% year-on-year, with joint venture investment revenue of 150 million yuan (-60 million yuan for the same period last year).
The company has strong ability to create explosive models, self-transformation, and electric intelligence to help start a new stage. Changan Automobile has strong brand positioning and technology research and development capabilities. In the new wave of new energy, the company's multiple brands are actively deploying intelligent electric transformation to accelerate the creation of popular products. Deep Blue is positioned as a young, high-tech new energy brand, with multiple technology routes for extended range, pure electricity, and hydrogen electricity to boost the mainstream new energy market; Changan Qiyuan series focuses on mainstream households to meet the new energy transformation needs of main brands; and Avita positions the high-end pure electricity market to support the brand's upward trend. Looking forward to the future, the company has successfully launched a mid-price hybrid race track with the Deep Blue S7, and new Dark Blue, Qiyuan, and Avita cars continue to be rolled out, and the electrification transformation is gradually showing results; with the deep empowerment of Huawei, the intelligent racetrack is expected to catch up faster.
In the short term, the company's strong new car cycle is driving sales to continue to improve. The company is still in a new energy transition period, and the gradual realization of sales volume is currently the focus. The Deep Blue S7 has created a hit. The new G318 is a hardcore off-road track and will be launched in the second quarter; the Avita E15 and E16 will be launched in the second half of the year; and the Qiyuan CD701 and C798 continue to improve the Qiyuan model matrix. As the launch of new cars will strongly drive an increase in sales, the increased scale effect is expected to further enhance profitability. Net profit due to mother in 2024-2026 is estimated to be 90.72, 124.67, and 16.222 billion yuan. The corresponding PE is 16X, 11X, and 9X, respectively, maintaining a “buy” rating.
Risk warning
1. Market demand performance is lower than expected;
2. Increased competition in the industry weakens corporate profits.