Incident: The company released its 2024 semi-annual report, with revenue of 57.3 billion yuan for the first half of the year, +20.8%; net profit to mother 1.6 billion yuan, or -47.4% YoY; non-GAAP net profit of 2.8 billion yuan, -32.9% YoY.
Among them, Q2 achieved revenue of 31.7 billion yuan in a single quarter, +10.6% YoY; net profit to mother of 1.1 billion yuan, -52.3% YoY, +86.2% month-on-month; and non-GAAP net profit of 1.5 billion yuan, or -44.9% YoY, +17.8%.
The organizational upgrade was an initial commercial success. Q2 revenue was 31.7 billion yuan, +10.6%/+23.6% year-on-month, of which automobile sales revenue was 30.3 billion yuan, +8.4%/+25.0% year-on-month respectively.
The gross profit margin of Q2 automobiles was 18.7%, -2.3/-0.6pct compared with the same period last month, which was mainly affected by price cuts, equity, and the increase in L6 share. The company spent 3 billion yuan on R&D in Q2, +24.8%/-0.7%, for smart driving technology research and development, and +1.1/-2.3 pct, respectively; SG&A expenses of 2.8 billion yuan, +21.9%/-5.5% from month to month, mainly for sales and service network expansion (central stores and supercharging stations), SG&A rate 8.9%, and +0.8/-2.7 pct, respectively. As ideal L6 sales drive the scale effect becomes prominent, and with various cost reduction and efficiency measures, the company's operating performance will further improve in the second half of the year.
The commercial performance of Ideal L6 is a masterpiece of organizational upgrading, and it was a hit as soon as it was released. Since June, L6 has delivered more than 0.02 million vehicles for three consecutive months, and Ideal Q2 has delivered more than 0.108 million new vehicles, an increase of 25.5% over the previous year. Ideal Auto is over 0.2 million yuan, and the NEV market share increased from 13.6% in Q1 to 14.4% in Q2, ranking first among domestic car brands in sales. Deliveries reached 0.051 million vehicles in July, a record high for monthly deliveries. It has now surpassed the cumulative delivery milestone of 0.9 million vehicles.
All models maintain leading positions in their respective market segments. Ideal L7 and L8 rank in the top two sales of medium and large SUVs above 0.3 million yuan, while Ideal L9 maintains the preferred position of full-size SUV users.
The company expects Q3 car deliveries to reach 0.145 million-0.155 million vehicles, up 38%-47.5% year on year, and total revenue is expected to be 39.4-42.2 billion yuan, up 13.7% -21.6% year on year.
End-to-end + VLM, AD Max orders increased dramatically. Ideal Auto's full-stack self-developed autonomous driving technology architecture - end-to-end +VLM. In July, Ideal promoted all uncharted NOA with unlimited cities and roads to more than 0.24 millionAd Max users, driving order growth. Since the launch of NoA in May, the proportion of NOA test drives in stores has tripled; since OTA6.0 was launched in July, the daily activity of urban NOA has nearly doubled by 8 times, and the average city NOA mileage has nearly tripled; by the end of August, the user usage penetration rate for intelligent driving of ideal cars was over 99%, and the cumulative mileage in all scenarios had exceeded 1.111 billion kilometers. From a market perspective, smart driving has had a very good effect on ideal sales. The share of AD Max orders for all models is increasing. In particular, for models over 0.3 million, AD Max orders already account for close to 70%. At the smart driving summer press conference held on July 5, Ideal unveiled the industry's first dual-system intelligent driving solution based on the E2E end-to-end and VLM visual language models, so that the intelligent driving system has stronger gaming ability, logical thinking ability and quick generation selection ability. The ideal computing power for intelligent driving training has reached 5.39 EFLOPS. E2E+VLM+ sufficient R&D investment+high-end smart driving vehicle ownership will gradually form a smart driving moat for ideal cars.
Investment advice: Successful organizational upgrade: from L6 to end to end+VLM. Ideal has led the larger 5-seater and family 6-seater SUVs with advanced configurations, which have achieved great commercial success. Since March of this year, it has carried through large-scale organizational upgrades. Under the siege of “Half Price Ideal” of around 0.2 million, the commercial performance of Ideal L6 became a masterpiece of organizational upgrading, and immediately hit the market when it was released. The new full-stack autonomous driving technology architecture - end-to-end + VLM, intelligent driving training computing power has reached 5.39 EFLOPS. E2E+VLM+ sufficient R&D service+ advanced smart driving vehicle ownership will gradually form an ideal smart driving moat. In addition, Ideal Auto has put into use 748 ideal supercharging stations across the country and has 3506 charging stations, which will lay a solid foundation for the success of next year's pure electric strategy. Revenue for 2024-2026 is estimated to be 147.1/192.9/246.3 billion yuan, and net profit to mother is 8.5/13.2/19.5 billion yuan, respectively. The corresponding PE is 19.64/12.72/8.58 times, respectively, maintaining the “buy” rating.
Risk warning: Automobile sales fell short of expectations, the intensification of price wars exceeded expectations, and fluctuations in raw material prices exceeded expectations.