Key points of investment

Key points of the announcement: SAIC Motor's production in July 2024 was 237,524 vehicles, 42.57%/-22.68% year-on-month, and sales volume was 251,484 vehicles, or -37.16%/-16.32%, respectively. Among them: SAIC's passenger car production and sales volume in July was 50,164/50,279 units, respectively, -33.09%/-29.95%, and -5.23%/-7.87%, respectively; SAIC Volkswagen's production and sales volume in July was 77741/81,003 units, -27.63%/-18.18% year-on-year, -9.15%/-1.22% month-on-month; SAIC-GM's production and sales volume in July was 13,661/15,000 units, respectively -84.51%/-82.42%, month-on-month, month-on-month 51.80%/-42.35% respectively; SAIC-GM-Wuling's production and sales volume in July was 68,423/76,000 units, respectively, -39.00%/-31.72% year-on-year, respectively, and -38.20%/-28.97% month-on-month respectively.

Wholesale declined month-on-month in July, 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 brand NEV deliveries reached 0.057 million units in the first half of the year, up 48% year on year; SAIC passenger car wholesale declined year on year; Zhiji Wholesale increased 142.74% year over year, with terminal deliveries exceeding 6,000 units in July (which is different from the announced data caliber); SAIC-GM Wholesale all declined, delivering more than 0.015 million vehicles in July, -82.42% year over year; SAIC-GM-Wuling wholesale was -31.72%/-28.97% year on year, respectively, 0.076 million in July vehicle. 2) By energy type, production batches of new energy vehicles at the group level in July were 0.0692/0.0711 million vehicles, respectively, -21.1%/-21.9% year on year, and -26.54%/-23.89% month on month.

The penetration rate of new energy wholesale in July was 28.27%, -2.81 pct. 3) Looking at domestic and foreign markets, SAIC Motor exported 0.0818 million vehicles in July, -15.79%/+0.67% year-on-month, respectively. Among them, the MG brand delivered more than 0.15 million terminals in developed European countries in January-July, the highest in history during the same period.

In July, SAIC Motor Group added inventory as a whole. SAIC Motor Group companies' inventory in June was 13,960 units (compared to June 2024), while SAIC-Volkswagen, SAIC-GM, SAIC-Passenger Vehicle, and SAIC-GM-Wuling had inventories of -3,262, -1,339, -155, and -7,577 units respectively (compared to June 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.