Incident: On July 9, 2024, the company released the 2024 semi-annual report performance forecast. The company expects to achieve operating income of 63.9-66 billion yuan, a year-on-year increase of 479% to 498%, and net profit to mother of 1.39-1.7 billion yuan. The same period last year was -1.344 billion yuan, after deducting net profit of 1.19-1.5 billion yuan. The performance is in line with expectations.

The Q2 performance was in line with expectations, and profit flexibility was excellent: 24Q2, the company's profit forecast range was 1.17-1.48 billion yuan, and the net profit center was 1.33 billion yuan, a strong increase of 502%, and the upward trend in operation was clearly highlighted.

24Q2 Cyrus's overall sales volume was 0.1217 million vehicles. The net profit of bicycles was 0.0109 million yuan, a sharp increase of 0.009 million yuan over the previous month, and the profitability of bicycles increased significantly by a significant margin. The 24Q2 Questionnaire brand delivered a total of 0.0954 million vehicles, an increase of 11.08% over the previous month. Among them, sales surpassed 0.04 million units for the first time in June, and sales continued to rise. In terms of structure, the 24Q2 Quanjie M9 delivered 0.0465 million units, accounting for nearly 50% of the Quanjie brand. The share of high-end model sales continues to rise, which has greatly boosted the overall brand's average price and profitability.

After deducting other businesses, the profitability of single-sector brands is strong: at the consolidated reporting level, the company's new energy and other businesses are in a state of loss. In 2023, the company's total loss was 2.45 billion yuan. Assuming 50% of this was loss from other businesses, it was -1.23 billion yuan. Assuming that losses from other businesses remain the same, the corresponding profit for the first half of 2024 was 2-2.3 billion yuan, and the corresponding bicycle profit range was 0.011-0.013 million yuan, and the actual profitability of the single-question brand increased significantly.

The annual results are expected to break through, and the price gap may be filled: Cyrus 2024's existing model orders and deliveries are expected to continue to be clear in the second half of the year, and subsequent quarterly results are expected to maintain an upward trend. Currently, it is the starting point for the company's profit. Under the overall marginal positive trend, annual profit breakthroughs are expected to be achieved. In response to 2024/2025, the net profit performance of 6.018/10.159 billion yuan to mother will be achieved respectively, corresponding to TTM's profit center. In terms of models, the AITO Quanjie brand has yet to release any models in the 0.3-0.5 million yuan price range. We expect that the brand's new models may fill the gap in this price band, which is expected to further boost the market share of the AITO Quanjie brand and drive the outstanding performance of its own brand's new luxury brand.

Profit forecast: In 2024-2026, the company is expected to achieve revenue of 136.974, 184.339, 213.477 billion yuan, and net profit to mother of 6.018, 10.159, 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.