Key points of investment

Key points of the announcement: SAIC Motor's production volume in August 2024 was 261,662 vehicles, or -39.39%/+10.16% year over month, and sales volume was 257,635 vehicles, or -39.14%/+2.45% year over month, respectively. Among them: SAIC's passenger car production and sales volume in August was 42,238/41,827 units, respectively, 47.16%/-44.67%, and -15.80%/-16.81%, respectively; SAIC Volkswagen's production and sales volume in August was 86,317/85,000 units, -24.67%/-22.75% year-on-year, +11.03%/+4.93% month-on-month; SAIC-GM's production and sales volume in August was 14,319/15,855 units, respectively, -82.87% -/ 81.98%, +4.82%/+5.70% month-on-month; SAIC-GM-Wuling produced and sold 90,312/84,000 vehicles in August, respectively, -27.03%/-30.00% year-on-year, and +31.99%/+10.53% month-on-month respectively.

Wholesale declined year-on-year in August, and GM's performance needs to be improved. 1) By brand, SAIC Volkswagen Wholesale declined year on year, with a slight increase from month to month. The overall decline was lower than that of the Group as a whole. SAIC Motor's passenger car wholesale declined year on year; Zhiji Wholesale increased by 154.96% year on year, with terminal deliveries exceeding 6,000 units for three consecutive months (there is a difference with the published data); SAIC-GM Wholesale declined year over year, with a slight increase from month to month, delivering more than 0.0159 million vehicles in August, -81.98% year over year. GM's year-on-year decline was significant, and terminal/wholesale sales performance still needed to improve; SAIC-GM-Wuling Wholesale delivered 0.084 million vehicles in August, respectively. 2) By energy type, new energy vehicle production batches at the group level in August were 0.0878/0.0866 million vehicles, respectively, +4.88%/-6.19% year-on-year, and +26.87%/+21.76% month-on-month respectively. The penetration rate of new energy wholesale in August was 33.60%, +5.33pct month-on-month.

3) Looking at domestic and foreign markets, SAIC Motor exported 0.0799 million vehicles in August, which was -22.15%/-2.27% year-on-month, respectively. Among them, the MG brand delivered more than 0.16 million terminals in developed European countries in January-August, maintaining year-on-year growth.

In August, SAIC Motor Group added inventory as a whole. SAIC Motor Group companies had an inventory of +4,027 vehicles in August (compared to July 2024), while SAIC-Volkswagen, SAIC-GM, SAIC-GM, and SAIC-GM-Wuling had inventories of +1,317, -1,536, +411, and +6,312 vehicles respectively (compared to July 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 14.465/14.155/16.504 billion yuan, corresponding to PE of 10/10/9 times, maintaining 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.