Core views

24H1 expects revenue of 17.92 billion yuan, +16.14% year over year; net profit to mother of 0.895 billion yuan, +22.77% year over year; deducted non-net profit of 0.811 billion yuan, +94.19% year over year.

The company's performance grew steadily in the first half of the year, mainly due to the increase in sales volume brought about by the new car cycle, combined with cost reduction and efficiency, and VAT deductions. Q2 The “sharp rise in volume and price” of vehicle sales may drive a significant increase in profitability over the same period last year. Looking ahead, the recovery in sales combined with cost reduction and efficiency is conducive to increasing the company's profits; Ford's new product cycle begins, and overseas exports continue to expand, driving the company's performance to be further released.

occurrences

The company released a quick performance report for the first half of 2024. It is expected to achieve operating income of 17.92 billion yuan in the first half of the year, up 16.14% year on year; net profit to mother of 0.895 billion yuan, up 22.77% year on year; after deducting non-net profit of 0.811 billion yuan, an increase of 94.19% year on year.

Brief review

24H1's performance grew steadily, mainly due to the increase in sales brought about by the new car cycle, combined with cost reduction and efficiency, and VAT deductions. 24H1 expects to achieve revenue of 17.92 billion yuan, +16.14% year over year; net profit to mother of 0.895 billion yuan, +22.77% year over year; deducted non-net profit of 0.811 billion yuan, +94.19% year over year. On the revenue side, the company's revenue in the first half of the year was +16% year-on-year, directly benefiting from the recovery in vehicle sales. The company sold 0.1597 million vehicles in the first half of the year, +9.11% year-on-year. Among them, light buses, light trucks, pickup trucks, and SUVs sold 0.0383 million, 0.029 million, 0.0366 million, and 0.0558 million vehicles, respectively, +14.78%, -8.83%, +33.43%, and +3.80% year-on-year respectively. Since the beginning of the year, the company's light passenger sales have maintained positive year-on-year growth for many months, and the leading position has continued to be consolidated; light truck sales achieved a positive growth rate in Q2 (+1.5% compared to the same period) and continued to recover moderately; pickup truck sales increased rapidly, mainly boosted by new products such as the Avenue Pickup and Ranger; at the end of April, Bronco launched a superimposed SUV model using Ford channels to support steady growth in passenger car sales. On the profit side, the company's total profit and net profit to mother in the first half of the year were +56% and +23% year-on-year, respectively. In addition to the scale effect of sales growth, the increase in profit also benefited from the impact of profit flexibility, cost reduction and efficiency, and VAT input deductions brought about by the company's new Ford vehicles.

Vehicle sales “soared in volume and price” in 24Q2, and profitability is expected to increase year-on-year.

On a quarterly basis, 24Q2's revenue, net profit to mother, and net profit after deducting non-net profit were 9.945 billion yuan, 0.413 billion yuan, and 0.39 billion yuan, respectively, +25.8%, -24.4%, and -4.4% year-on-year, respectively, and +24.7%, -14.4%, and -7.2%, respectively. Revenue achieved double-digit year-on-month growth, mainly due to the “sharp rise in volume and price” due to the optimization of the new vehicle cycle and product structure. In terms of quantity, Q2 sold 0.0854 million vehicles, +14.59% year over month; among them, light trucks, pickups, and SUVs sold 0.0211 million, 0.0153 million, 0.0179 million, and 0.0311 million vehicles, respectively, +33.18%, +1.54%, +19.51%, and +8.58% month-on-month, respectively. %, +26.05% Q2 Bike revenue +9.82% YoY and +8.59% YoY. The negative year-on-year increase in Q2 profit in a single quarter was mainly affected by changes in profit and loss of minority shareholders of the subsidiary Jiangling Ford Technology (-0.256 billion yuan and -0.243 billion yuan respectively in 23Q2 and 24Q1). After excluding this factor, it is expected that the company's Q2 gross margin will continue to increase month-on-month, and profitability will increase significantly from month to month.

With policy support, the company's commercial vehicle business may continue to pick up, and the “new vehicle cycle+deepening overseas expansion” is expected to drive a steady upward trend in Jiangling's performance. In 2024, the company plans to sell 0.36 million vehicles, with operating revenue of about 37.8 billion yuan, +16% and +14% year-on-year respectively, demonstrating the company's operating confidence. (1) Light truck sector:

In 24Q2, Jiangling light truck sales were +1.5% year-on-year and +11.2% month-on-month. The moderate recovery trend continues; with the steady recovery of macroeconomic growth and the implementation of equipment renewal policies in the second half of the year, sector sales are expected to be further boosted. (2) Light passenger segment: Since the beginning of the year, Jiangling Light Passenger sales have been growing steadily. Except for the impact of the Spring Festival in February, sales volume maintained positive year-on-year growth; 24Q2 sales volume was +33.2% year-on-year and +22.8% month-on-month, and the leading position in the industry continued to be consolidated. (3) Pickup truck sector: Jiangling pickup truck sales remained high and steady in the first half of the year, with double-digit year-on-year growth. Q2 was +19.5% year-on-year and -4.6% month-on-month. In 2023, the company launched Dao Pickup and Ranger one after another to lay out the middle and high-end markets, accelerate the transformation to off-road leisure pickups, and will continue to support high sales growth in the future. (4) SUV segment: 24Q2 sales exceeded 0.03 million units in a single quarter, a record high. At the end of April this year, the company's newly introduced popular Ford model, the Bronco Liema, was officially launched, and will continue to drive SUV sales in the future. At the same time, JMC SUVs will use Ford to enter overseas markets, which will also drive a high increase in overall sales. In addition, the passenger car hybrid and BEV projects developed by the company will be put into operation one after another from 2024-2025. (5) On July 19, the executive meeting of the State Council decided to coordinate the funding of ultra-long-term special treasury bonds to further promote large-scale equipment renewal and trade-in of consumer goods; this includes supporting the scrapping and renewal of old operating trucks, increasing the financial interest rate discount ratio for equipment renewal loans, and increasing automobile scrapping and renewal subsidies. We expect that with the further strengthening of the equipment renewal policy, replacement demand for national three models and four models in some regions is expected to be released at an accelerated pace, driving a super-seasonal recovery in domestic sales in the light commercial vehicle industry, and the company, as a light commercial leader, will also directly benefit.

Investment advice

The company's vehicle business sales recovery compounded cost reduction and steady progress in efficiency, which is conducive to the continued growth of its own profits. At the same time, it ushered in a new Ford product cycle, and overseas exports continued to expand, driving the company's performance to be further released. The company's net profit for 2024-2025 is estimated to be 1.8 billion yuan and 2.27 billion yuan, corresponding to current stock prices of 12X and 9X.

Risk analysis

1. The industry boom falls short of expectations. Domestic economic recovery rebounded steadily in 2024, but the exact pace remains to be seen. Demand in the automotive industry may fluctuate accordingly; it will still take time to fully implement the trade-in policy for consumer goods such as automobiles, which will affect the recovery process of industry demand.

2. Export sales fell short of expectations. Exports are affected by various factors such as the international situation, national policies, and exchange rates, and there is a risk of fluctuations in overseas sales growth.

3. The competitive pattern of the industry has deteriorated. Domestic competitors are speeding up product launch. With changes in supply factors such as technological progress and new production capacity investment, future industry competition may intensify, and the company's market share and profitability may fluctuate.

4. The company's channels and sales volume of new models fell short of expectations. The company's channel construction and dealer optimization progress may fall short of expectations. There is a risk that sales volume of new models will fall short of expectations due to market demand.