Description of the event
Ideal Auto released its 2024 second quarter report: achieved revenue of 31.68 billion yuan, +10.6% year over year; achieved sales volume of 0.109 million vehicles, +25.5% year-on-year, with an average monthly sales volume of 0.036 million vehicles.
Incident comments
The ideal sales volume for the second quarter of 2024 is 0.109 million vehicles, and the average price of a bicycle is about 0.279 million yuan. Ideal 2024Q2 achieved sales of 0.109 million units, +25.5% year-on-year, with an average monthly sales volume of 0.036 million units. By model, the ideal L6/L7/L8/L9/MEGA achieved sales of 3.9, 3.1, 0.016, 0.02, and 0.002 million vehicles respectively, benefiting from the L6's complete growth product matrix after launch. Coupled with the rapid iteration of smart driving technology, it opened up overall sales space. Ideal Q2 achieved revenue of 31.68 billion yuan, of which vehicle sales revenue was 30.32 billion yuan, +8.4% year over year and +25.0% month over month. As the share of L6 sales increased, the price of the corresponding bicycle dropped to 0.279 million yuan, -0.044 million yuan year on year, and -0.022 million yuan month-on-month.
L6 volume has an impact on gross margin, and the scale effect brought about by subsequent sales growth is expected to drive a recovery in profits. In terms of gross margin, Q2 gross margin reached 19.5%, of which vehicle gross margin was 18.7%, -2.3 pct year over year, and -0.6 pct month over month. Due to increased discounts and scale effects, gross margin declined month-on-month. Q2 Sales, administrative and general expenses were 2.82 billion yuan, with a cost rate of about 8.9%, +0.8 pct year over year, and -2.7 pct month over month. The company continued to increase R&D investment in new models, intelligent driving, etc. The Q2 R&D cost reached 3.03 billion yuan, +24.8% year over month, and -0.7% month on month. The corresponding R&D cost rate reached 9.6%, +1.1 pct year on year and -2.3 pct month on month. Q2 The company achieved net profit to mother (GAAP) of 1.1 billion yuan. After adding 0.4 billion shares to pay compensation and other items, the company achieved net profit (non-GAAP) of 1.5 billion yuan, 44.9% YoY, +17.8% month-on-month, corresponding net interest rate 4.7%, -4.8pct YoY, -0.2pct month-on-month, bicycle profit 0.014 million yuan, YoY -0.018 million yuan, and -0.002 million yuan month-on-month. At present, Ideal has begun to optimize and adjust its organizational structure. With the release of new cars and the advancement of smart driving technology, it is expected that sales volume and share of sales of high-spec models will increase relatively well in the future. Looking ahead to 2024Q3, the ideal expected delivery volume is 14.5 to 0.155 million vehicles, +38.0% to +47.5% year over year, achieving revenue of 394 to 42.2 billion yuan, or +13.7% to 21.6% year over year.
Ideal Auto has clear plans for subsequent models, continuous layout of direct sales channels, and broad scope for future sales. At present, a product layout of “4 extended-range electric models+1 high-voltage pure electric model” has been formed. The product matrix covers a market of more than 0.2 million, meeting a wider range of consumer needs. On the smart driving side, the company launched the OTA 6.0 and 6.1 updates in July to push out the national unplanned NOA to all AD Max owners. At the same time, the ideal channel structure continues to be optimized, and the number continues to increase. By the end of July 2024, Ideal Auto had 487 retail centers across the country, covering 146 cities; 411 after-sales maintenance centers and authorized sheet spray centers, covering 220 cities. Looking ahead to this year, the ideal sales and service network will continue to be upgraded. It is planned to increase the number of retail centers to 800 by the end of this year, and the number of after-sales service centers and authorized sheet spray centers is expected to exceed 500.
Ideal Auto's product advantages and brand design are deeply rooted in the hearts of the people, and the “Dual Energy Strategy” is expected to further expand the advantages of Ideal Auto.
Subsequent new models will be launched one after another to further improve the ideal product matrix and increase the ideal overall sales space. The combined scale effect of high bike sales prices is expected to maintain a good profit level. The ideal sales volume is expected to reach 0.53 million vehicles (neutral) in 2024. The estimated net profit (GAAP) for 2024-2026 is 5.94, 9.19, and 12.2 billion yuan, respectively. The corresponding PE is 25.7X, 16.6X, 12.5X, and the net profit (non-GAAP) to mother (non-GAAP) is 8.74, respectively. 11.99 and 15 billion yuan, corresponding PE is 17.5X, 12.7X, and 10.2X, respectively, maintaining a “buy” rating.
Risk warning
1. Global economic recovery is weaker than expected; 2. Increased industry competition weakens corporate profits.