The company's recent situation
The company held a summer press conference on intelligent driving and plans to launch fully automatic AES (automatic emergency steering) and all-round low-speed AEB (automatic emergency braking) within July. At the same time, a new autonomous driving technology architecture based on the end-to-end model, VLM visual language model, and world model will officially launch the Early Bird Program.
reviews
2Q deliveries exceeded expectations, and the L6 model performed well. The company delivered 47,774 models in June, +36% over the previous month; 2Q delivered a total of 108,581 vehicles, which surpassed the pivotal level of 0.105-0.11 million vehicles in the previous 1Q24 earnings guidelines. Since delivery of the L6 model, 2,381/12,965 vehicles were delivered in April-May, and the monthly delivery surpassed 0.02 million vehicles in June. We believe that the L6 has shown outstanding product strength. Looking ahead to 2Q results, we believe that the scale effect is expected to be reflected, but considering the increase in L6 sales share, gross margin side or relative pressure, 2Q company personnel adjustments, etc., or related one-time expenses, etc., it is recommended to keep conservative expectations; we expect that a strong recovery in profit will still have to wait for 2H24 sales to rise further and operational efficiency to improve.
The NOA test performed brilliantly, with a smart driving range of over 1.9 billion kilometers. We believe that the company has reached the leading echelon in the field of smart driving through continuous R&D iteration and investment. The company revealed at the press conference that it previously started the NOA 1000 person experience test on May 10, expanded the test users to 10,000 people on June 17, and officially launched the unlimited experience on June 28, with a cumulative smart driving mileage of over 1.9 billion kilometers. Currently, the company officially launched the national NOA to AD Max users in July (including L series and MEGA, covering 0.24 million users). Looking ahead, the company plans to launch fully automatic AES (automatic emergency steering) and a full range of low-speed AEB (automatic emergency braking) functions within July to further guarantee the safe driving experience for users.
Dual systems are used in autonomous driving to increase the ability to handle complex scenarios. The company plans to launch an end-to-end + VLM (visual language model) supervised autonomous driving system trained through 3 million Clips (pre-trained models) to early-bird test users. From a technical perspective, the end-to-end model is responsible for processing daily driving information, and the VLM visual language model processes complex scenarios to increase logical judgment ability. At the same time, reconstruct+generative world models in the cloud, train and verify dual systems, and accelerate iterative capabilities. We think the highlights of the model are: 1) The end-to-end model is used to process conventional driving behavior. From sensor input to driving trajectory output, only one model passes through a model. Information transmission, inference calculation, and model iteration are more efficient, and driving behavior is more personable. 2) The VLM visual language model has strong logical thinking ability, can understand complex road conditions, navigation maps, and traffic rules, and cope with difficult unknown scenarios.
Profit forecasting and valuation
Stay ahead of the industry and maintain the 2024/25 nonprofit deduction forecast. Currently, US stocks and Hong Kong stocks correspond to 15x2025E minus non-P/E, maintain the target price of US/Hong Kong stocks at HK$33/HK$130, corresponding to 20x non-GAAP P/E in 2025, with upside of 61% and 64%, respectively.
risks
Pure electric models fall short of expectations; intelligent driving falls short of expectations; market competition intensifies.