The company completed a spectacular transformation and turned losses into profits in the first quarter of '24. The company is a comprehensive manufacturing enterprise with new energy vehicles as its main business. After eight years of new energy research and development and three years of cross-border cooperation, the company ushered in significant business growth in Q4 2023, and turned a loss into a profit in Q1 2024. The company's core products are already focused on the AITO Questionnaire series, focusing on B/C/D class SUV models around the 25-600,000 yuan luxury car price range.
The core business focuses on the 25-600,000 luxury SUV market
Most of the products under 200,000 yuan are traditional product lines, which are undergoing strategic contraction. The new product is the Blue Electric series.
The market size is 200,000 to 400,000 yuan. The company mainly lays out B/C-class models. Currently, representative products are M5 and M7. In the 400,000-600,000 yuan market, the company launched the flagship model M9, setting a new benchmark for luxury cars.
The company's own R&D and governance capabilities are strong, and the combination of Huawei's software/hardware capabilities fully empowers the company to have strong independent research and development capabilities in electric drives and electronic control, and launch a next-generation Rubik's Cube platform.
The company's modern management efficiency is high, and the mechanism is flexible to enhance the company's enthusiasm. Huawei fully cooperates with the company, and its technological strength empowers the company; in addition to technological empowerment, Huawei has five major functions in cooperation: sales network, marketing strategy, IPD consulting, supply chain management and resource pool, and product management.
Adhere to commercial success, four driving forces drive a sharp rise in profit
Deeply involved in the Questionnaire series, the changes/new models continue to gain vitality; our own brand and overseas business are still gathering strength, and it is expected that new growth will begin in the future. Scale effect and product structure optimization enhance the company's profit margin; platform-based design and production of core products enhance efficiency and profitability.
Investment advice
The company's revenue for 24/25/26 is estimated to be 1328.96/167.70/193,587 billion yuan, respectively, and net profit to mother is 61.82/112.44/14.244 billion yuan, respectively, and the corresponding PE is 21.72/11.94/9.43 times, respectively. First coverage, giving a “buy” rating.
Risk warning
New car sales fall short of expectations, passenger car industry risks, cost control falls short of expectations, etc.