1Q24 Results Exceed Market Expectations
The company announced 1Q24 results: 1Q revenue of 6.55 billion yuan, non-GAAP loss of 1.41 billion yuan.
Continued improvement in gross margin and efficient cost control led to performance exceeding market expectations.
Development trends
Mass cooperation realizes gross profit, and sales and management expenses are controlled steadily. The company delivered 21,821 vehicles in 1Q, and ASP was 239,706 yuan. The gross margin of 1Q automobile sales was 5.5%, +1.4ppt month-on-month, mainly due to an increase in X9 sales share. In addition, P5 depreciation and procurement commitments had an impact of -3.2ppt month-on-month. The gross margin of services and other businesses was 53.9%, +15.7ppt compared to the previous month, mainly revenue recognition related to popular software and platform cooperation, and the company expects this to continue to be reflected. On the cost side, R&D expenses were 1.35 billion yuan, +3.3% month-on-month, mainly driven by the time point of development of new models; sales and management expenses were 1.39 billion yuan, -28.3% month-on-month, mainly driven by the reduction in commissions paid by dealers and advertising expenses. Due to the weakening of the scale effect month-on-month, the 1Q cost rate was 41.8%, +17ppt month-on-month. Non-GAAP losses of $1.41 billion narrowed month-on-month. Taken together, mass cooperation led to continuous improvement in gross profit and efficient cost control performance exceeding market expectations.
Intelligent driving continues to lead, and the world's first AI chauffeur service. Recently, the company held a press conference on “Starting the Era of AI Smart Driving” to fully promote the AI Tianji system, unveiled the first large-scale “end-to-end” autonomous driving model mass-produced in China, and launched the world's first AI chauffeur service. At the same time, vehicle functions have ushered in numerous upgrades in smart driving, parking, and voice assistants. Looking at the past, the company believes that the imperfect intelligent driving experience is a bottleneck in the development of the industry. After the big model is launched, the company is expected to see a clear improvement in consumer awareness. Specifically, in 3Q24, smart driving can be “driven all over the country, every road can be driven”, and in 2025, smart driving in urban areas is comparable to the high-speed smart driving experience, thus achieving better performance on the sales side with intelligent advantages.
The Mona brand is about to be launched, and plans are to increase investment in marketing talent. On the product side, the company plans to launch the Mona brand in June. We believe that the Mona brand has sales volume and strategic significance for the company. On the B-side, the company was the first car company to receive full support from the DiDi ecosystem. To C end, the 10-200,000 yuan car and SUV market space is large and the penetration rate of new energy is low. On the basis of reasonable pricing, autonomous driving is expected to enable differentiated advantages. We are optimistic about the subsequent sales performance of Mona brand models. The company plans to release a new model under the Xiaopeng brand in 4Q, and plans to achieve a significant year-on-year increase in monthly sales in 4Q24. The company plans to optimize vehicle life cycle management, respond more quickly to changes in the market environment, and continue to reduce technical costs. In terms of marketing, the company plans to increase the introduction of outstanding marketing talents to increase consumers' awareness of intelligent driving.
Profit forecasting and valuation
The current Hong Kong/US stock prices are all corresponding to 1.5x EV/revenue in 2024, maintaining an outperforming industry rating, and comprehensively considering price competition, software contributions and cost control. The 2024/25 revenue forecast was lowered by 19%/15% to 399/85.8 billion yuan, and the net profit due to 2024 was slightly raised to -7.2 billion yuan (previous value was -7.47 billion yuan), maintaining net profit to mother in 2025. The target price for Hong Kong/US stocks was reduced by 19%/20% to HK$47/$12, with 53%/45% upside compared to the current stock price, all corresponding to 2.5x EV/revenue in 2024.
risks
Demand for new cars and autonomous driving fell short of expectations, and delivery of new vehicles and cooperation with Volkswagen fell short of expectations.