Incident 1: Cyrus released the 2024 semi-annual results report. 2024H1 achieved revenue of 65.044 billion yuan, +489.58% year over year, of which Q2 achieved revenue of 38.484 billion yuan, +547.66% year over year, and +44.89% month over month. Net profit to mother was 1.625 billion yuan, compared to -1.344 billion yuan in the same period last year, achieved net profit of 1.405 billion yuan in Q2, and -0.719 billion yuan in the same period last year, +538.64% month-on-month, close to the upper limit of the performance forecast.

Incident 2: On August 25, 2024, Cyrus announced the progress of planning foreign investment. Cyrus Auto, a wholly-owned subsidiary of the listed company, plans to purchase 10% of the shares in the target company Shenzhen held by Huawei Technology in cash, with a transaction amount of RMB 11.5 billion.

New M7/M9 models grew year on month, driving continued high revenue growth. 2024H1 achieved revenue of 65.044 billion, +489.58% YoY; of these, Q2 achieved revenue of 38.484 billion yuan, +547.66% YoY and +44.89% YoY. The 24Q2 Questionnaire brand sold 0.0988 million vehicles, +749.30 year on year, and +18.56% month on month. Among them, the Quanjie M9 sold 0.0482 million units, accounting for nearly 50% of the Quanjie brands, and the model continues to sell well. In terms of other models, on April 23, the new Wenjie M5 was officially launched, and the fixed number of units exceeded 0.02 million units in one month. On May 31, the new M7 Ultra version was officially launched, and the fixed volume surpassed 0.012 million units on the first day of launch. In the second quarter, the AITO Questionnaire brand models continued to iterate, and the popularity of models increased again under new product facelift.

Q2 The profit performance was impressive, and large-scale profit began. 2024H1 achieved net profit of 1.625 billion yuan, compared to -1.344 billion yuan in the same period last year, 1.405 billion yuan in Q2, and -0.719 billion yuan in the same period last year, or +538.64%. Among them, the impact of other income such as government subsidies due to current profit and loss was 0.538 billion yuan, and asset impairment losses such as impairment of intangible assets and depreciation of inventory prices were -0.198 billion yuan.

In terms of bicycle profit, the net profit of 2024H1 bicycles was 0.0069 million yuan, -0.0146 million yuan in the same period last year, and the net profit of 24Q2 bicycles was 0.0115 million yuan, a significant increase of 0.0096 million yuan over the previous month, and the profitability of bicycles increased significantly by a significant margin. The share of sales of 24Q2's high-end models continues to rise, which has greatly boosted the overall average price and profitability of the brand. It is expected that the Quanjie M7 Pro, the Quanjie M9 five-seat version and other new products will continue to be released and launched, and the company's large-scale profit channel will open.

AITO continues to drive M9, and gross margin performance is outstanding compared to the previous month. In 2024, H1 gross margin was 25.04%, +18.70 pcts year over year, 24Q2 gross margin was 27.47%, +23.30 pcts year over year, and +5.96 pcts month over month. The gross margin of the Quanjie M9 model is expected to reach more than 30%, and high-margin products will drive the company's overall gross margin increase. At the same time, the gross margin performance was excellent due to the effects of increasing the scale and changes in product structure of AITO's new M7 and M9. In terms of cost rates, 24Q2 sales/management/R&D expense ratios were 15.41%, 1.89%, and 4.87%, respectively, totaling 22.18%, -5.09pcts year over year, and +4.07pcts month-on-month. Among them, the increase in advertising fees, three packages and sales service fees for new energy vehicles increased sales expenses, strengthened the company's marketing efforts, continued investment in product R&D and increased amortization expenses for intangible assets led to a month-on-month increase in the overall cost rate.

Business cooperation is superimposed on equity cooperation to create a second growth curve. On August 25, 2024, the company plans to purchase 10% of the shares of Yuanwang Company in cash. In the first half of 2024, the Huawei Auto business delivered a total of 0.1942 million vehicles, of which the cooperative models between Huawei and Cyrus delivered about 0.19 million vehicles, accounting for more than 90%. Through this transaction, Cyrus and Huawei upgraded their strategic cooperation to “business cooperation+equity cooperation” based on equity ties, further consolidating the sustainability of the cooperative relationship between the two sides. In terms of investment income, the company's revenue from 2022 to the first half of 2024 was 2.098, 4.7, and 10.435 billion yuan, respectively, and net profit was -7.587, -5.598, and 2.231 billion yuan respectively. With the opening of scale effects, the company has opened a profit channel and is expected to achieve a high profit growth rate. It is hoped that the company's profits will be included in the company's statements in the form of investment income equivalent to the share ratio, creating the company's second growth curve. At the same time, it is expected that subsequent Cyrus valuations will be composed of the main business of autonomous vehicles and car BU, and high-quality assets are expected to greatly open up the company's valuation space.

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 6.214, 11.024, and 13.71 billion yuan, giving it a “highly recommended” rating.

Risk warning: New energy penetration rate falls short of expectations; model sales fall short of expectations; industry competition intensifies.