Achieve net profit to mother, reverse loss to profit in 2023

On April 29, the company released the 2023 Annual Report and the 2024 First Quarter Report. In 2023, the company achieved total revenue of 45.016 billion yuan, +23.1% year-on-year, and net profit of 152 million yuan, an increase of 1,734 billion yuan compared to 2022's -1,582 billion yuan. Net profit attributable to mother turned a loss into a profit, after deducting net profit not to mother - 1,718 billion yuan, a year-on-year decrease of 1,077 billion yuan.

In the first quarter of 2024, the company achieved total revenue of 11.282 billion yuan, +4.6% year-on-month, and net profit of 105 million yuan, -28.7% year-on-year, an increase of 137 million yuan over the previous quarter of Q4 in 2023, an increase of 137 million yuan, net profit after deducting non-return to mother of -0.11 billion yuan, a year-on-year loss of 91 million yuan, and a year-on-year loss of 1,178 billion yuan.

Gross margin improved, and period expenses were well controlled

In 2023, the company's gross sales margin was 11.29%, +2.87pct. The sales expenses ratio, management expense ratio, and R&D expenses ratio were 4.07%, 3.68%, and 3.54%, respectively, and +0.08pct, -0.68pct, and -0.66pct.

In the first quarter of 2024, the company's gross sales margin was 11.44%, +0.61 pct. The sales expense ratio, management expense ratio, and R&D expense ratio were 3.90%, 3.64%, and 3.05%, respectively, and -2pct, -1.03pct, and -0.78pct month-on-month.

Passenger and commercial vehicle sales recovered, gross margin improved

In 2023, the company achieved sales of 3571,000 vehicles and 231,100 vehicles, +18.21% and 18.34% compared with the same period last year. The company achieved overseas sales of 169,600 units, or 47.99% year-on-year, of which 88,000 passenger cars were sold overseas, +74.57% year-on-year, and 79,400 commercial vehicles were sold overseas, +25.76% year-on-year. Passenger and commercial vehicles achieved gross profit margins of 8.70% and 11.90% respectively, +5.85pct and +3.05pct year-on-year.

Promote open cooperation at a high level, and the development potential continues to increase

The company and Huawei have comprehensive strategic cooperation in the fields of product development, manufacturing, sales and service, focusing on building luxury intelligent connected electric vehicles; the strategic cooperation with Volkswagen is progressing smoothly, and the first product exported to Europe has been officially mass-produced; strategic cooperation has been reached with NIO in fields such as power exchange; and collaboration with technology-based enterprises such as Ningde Era and Tencent continues to deepen to accelerate ecological integration.

Profit forecasting

The company's revenue for 2024-2026 is 484.9, 692.0, and 80.71 billion yuan, respectively, and EPS is 0.12, 0.27, and 0.44 yuan, respectively. The current stock price is 0.7, 0.5, and 0.4 times PS, respectively. Considering the company's long history, comprehensive business sector, and cooperation with Huawei, it has great potential for future growth and maintains a “buy” investment rating.

Risk warning

(1) The promotion of new models fell short of expectations; (2) automobile consumer demand fell short of expectations; (3) the progress of cooperation with Huawei fell short of expectations.