Key points of investment

Key points of the announcement: SAIC Motor's production in June 2024 was 307,184 vehicles, -26.11%/-6.26% year-on-month, and sales volume was 300,545 vehicles, -25.92%/-9.54%, respectively. Among them: SAIC's passenger car production and sales volume in June was 52,935/54,576 units, respectively, -32.56%/-24.62% year-on-year, and -5.56%/0.29%, respectively; SAIC Volkswagen's June production and sales volume was 88,568/82,003 units, -10.03%/-14.43%, month-on-month, -3.32%/-8.90%; SAIC-GM's June production and sales volume was 28,340/26,021 units, respectively. 2.02%, month-on-month -21.64%/-32.22% respectively; SAIC-GM-Wuling's production and sales volume in June was 110,711/107,000 units, respectively, -3.79%/-4.46% year-on-year, respectively, and +0.49%/-7.76% month-on-month respectively.

Wholesale declined month-on-month in June, and there was a significant month-on-month improvement in Zhiji. 1) By brand, SAIC Volkswagen Wholesale declined year-on-month, and the overall decline was lower than that of the Group as a whole. Among them, Volkswagen's NEV deliveries reached 0.057 million units in the first half of the year, up 48% year on year; SAIC Motor passenger car wholesale declined year on year; Zhiji Wholesale increased by 159.09% year on year, with terminal deliveries exceeding 6000 units in June (different from the announced data caliber), 2024H1 terminals delivered 0.022 million vehicles, up 135% year on year; SAIC-GM Wholesale all declined, with over 0.047 million new energy vehicles delivered in the first half of the year, up 85.1% year on year; SAIC-GM-Wuling Wholesale sales were -4.46%/-7.76% year-on-year, with a total delivery volume of 0.249 million vehicles in the first half of the year, an increase of 32.2% over the previous year. 2) By energy type, 0.0934 million new energy vehicles were sold at the group level, +8.80% compared to the same period last year. At the group level, NEV production batches in June were 0.0942/0.0934 million vehicles, +7.14%/+8.80% year-on-year, and +14.64%/+12.72% month-on-month respectively.

The wholesale penetration rate of new energy in June was 31.08%, +6.14pct. 3) Looking at domestic and foreign markets, SAIC Motor exported 0.0812 million vehicles in June, -14.47%/-7.61% year-on-month, respectively. Among them, the MG brand delivered more than 0.12 million terminals in developed European countries from January to June, the highest in history during the same period.

SAIC Motor Group as a whole added inventory in June. SAIC Motor Group companies had an inventory of +6,639 vehicles in June (compared to May 2024), while SAIC-Volkswagen, SAIC-GM, SAIC-GM-Wuling had inventories of +3,565, +2,319, -1,641, and +3,711 vehicles respectively (compared to May 2024).

Profit forecast and investment rating: 1) Independent brand new energy+ exports go hand in hand: the company's core technology, new energy three-power system+intelligent software and hardware full-stack layout, smart self promotes high-end independent brands. At the same time, the company's export performance continues to be impressive, and overseas sales continue to lead the domestic industry. 2) Active transformation of the joint venture: The company and Volkswagen Group have signed a number of technical cooperation agreements on SAIC Volkswagen's new product projects, including technical cooperation agreements for the development of three plug-in hybrid models and two pure electric models in China. China and Germany jointly “technically empower” the joint venture and open a new chapter of joint venture cooperation; SAIC Volkswagen actively adjusts its marketing strategy to accelerate the increase in the brand voice in the new energy vehicle market. We maintain the company's net profit forecast for 2024-2026 at 14.27/17.68/19.62 billion yuan, corresponding PE to 11/9/8 times, and maintain the company's “buy” rating.

Risk warning: The recovery in passenger car demand fell short of expectations; the increase in the penetration rate of new energy fell short of expectations; and the industry price war exceeded expectations.