Sales continued to exceed expectations, and profit inflection points were rising. Under the double increase in model volume and price, Cyrus's net profit for the first quarter of 2024 was 220 million yuan, achieving quarterly profit for the first time, and profit showed a positive inflection point.

In the second quarter, the AITO Questionnaire brand models continued to iterate, and the popularity of models increased again under new product facelift.

Qinjiexin M5: On April 23, Qinjiexin M5 was officially launched, and the fixed number of units exceeded 20,000 units in one month. Ask the new M7: On May 31, the new M7 Ultra version was officially launched, and the fixed number exceeded 12,000 units on the first day of launch. Questionnaire M9: In May, the QQ M9 surpassed 90,000 units in large quantities. Currently, the monthly delivery capacity continues to rise to 25,000+ vehicles. It is expected that AITO will deliver a total of 90,000 units in the second quarter, and the company's profit inflection point is expected to continue to rise as sales improve.

Cost improvements have accelerated, and profits will be released faster in 2024. In May 2024, the Quanjie M9 sold 16,500 units, accounting for more than 50% of the Quanjie brand. The share of high-end models in sales continued to increase, which contributed to a significant increase in overall brand average price and profitability. In terms of cost, the company's sales volume continues to rise, driven by AITO's models. The company's scale effect (improvement in depreciation and amortization) and period expenses (excluding sales expenses) released 0.60 and 40,000 yuan in costs, the marginal profit of bicycles increased, compounded by factors such as price control of core components and declining prices of raw materials such as lithium carbonate, etc., and the company is expected to release more profit margins in 2024. Overall, considering the company's alternation of old and new product lines, capital expenses, R&D expenses, and increased risk of subsequent competition, etc., the company's subsequent profits still have momentum beyond expectations.

The luxury car market competes in the blue ocean, and focuses on overfalling layout opportunities. The sales volume of luxury SUVs in 2021-2023 was 88.93, 84.51, and 928,500 units, respectively, and sales fluctuated upward. Huawei's smart car segment is still one of the best racetracks. It has the characteristics of a good pattern, high profit, and low competition. Domestic alternatives to trillion-class racing tracks have clear alpha growth potential. The automotive sector experienced negative year-on-year base growth in June, the overall beta of vehicles and components was weak, and the overall market showed volatile performance. We expect the sector to bottom out in July and reach an inflection point, as Huawei's new car cycle, autonomous driving, car BU, and procyclics continue to catalyze. Celis' orders and deliveries are expected to continue to rise steadily in the second and third quarter. It is still the leading smart car in Huawei. It is recommended to focus on overfalling layout opportunities.

Profit forecast: In 2024-2026, the company is expected to achieve revenue of 1369.74, 1843.39, and 213.477 billion yuan, and net profit to mother of 60.18, 101.59, and 11.729 billion yuan, giving it a “recommended” rating.

Risk warning: New energy penetration rate falls short of expectations; model sales fall short of expectations; industry competition intensifies.