Incident: On July 29, 2024, the company issued an indicative announcement on planning foreign investment. On the basis of early work progress with the relevant parties, the company initiated negotiations with Promising and its shareholders to join the investment in Hope to jointly support and become a world-class leader in the automotive intelligent driving system and components industry, and became an open platform for serving the automotive industry.

Looking to invest in shares, Cyrus is expected to become an important shareholder of Auto BU: According to the provisions of the cooperation agreement between Changan and Huawei, Huawei will establish a target company, including intelligent car driving solutions, smart car smart cockpits, smart car digital platforms, smart car clouds, ARHUD and smart car lights, etc., and inject relevant technology, assets and personnel dedicated to the target company's business scope into the target company, and transfer all aspects of Huawei's BU business leadership to the new company. On November 25, 2023, Changan Automobile and Huawei signed a “Memorandum of Investment Cooperation”. Changan Automobile and its related parties plan to invest to acquire no more than 40% of the shares in the promising company. According to the announcement, Changan Automobile is expected to sign the final transaction documents no later than August 31, 2024, leading the company to re-enter the schedule. With this announcement of the company's foreign investment, we expect Cyrus to become one of the important shareholders of the company.

Business cooperation transformed into equity cooperation, and Huawei's binding deepened further: after the transaction is completed, it is expected to become a subsidiary of Cyrus, and the scope of the company's consolidated statements will not change. In the future, it is hoped that the company's profits will be included in the company's statements in the form of investment income to increase the company's investment income. At the same time, cooperation with Huawei is expected to shift from business cooperation to equity cooperation, and the bond between the two sides continues to deepen. In terms of capital, 24Q1 Cyrus has 22.47 billion in capital (monetary capital & transactional financial assets). The announcement or indicates that the company is fully prepared with financial and resource support. There is no pressure to raise funds for this investment.

The five-seater version of the Quanjie M9 is expected to be launched, which is expected to resonate with investment: the AITO Questionnaire M9 currently has stable order performance. The total number of AITO QQ M9 units exceeded 0.11 million units in 7 months. By the end of June, it had delivered close to 0.06 million units. The brand's sales share in a single month in June reached 40%, and the model orders/sales performance was impressive. It is expected that the AITO Questionnaire M9 is expected to undergo a model facelift in the near future, adding a five-seater version, which is expected to further boost the profitability and market share increase of the AITO Questionnaire brand, and drive the outstanding performance of its new luxury brand. At the same time, it resonates with this promising investment, driving the release of the company's short- and long-term performance.

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