Incidents:

On October 1, 2024, Ideal Auto announced delivery data for September 2024. In September 2024, Ideal Auto delivered 53,709 new vehicles, a year-on-year increase of 48.9%.

Delivery capacity has gradually increased, and the NEV market share of 0.2 million or more increased significantly. In September 2024, Ideal Auto delivered 0.054 million new vehicles, an increase of 48.9% over the previous year. The 2024Q3 delivered a total of 0.153 million units, an increase of 45.4% year over year, which is the upper limit of expected sales volume. Product strength was gradually improved, orders for the L series and MEGA grew steadily, and the delivery volume reached a record high in September. Product strength has yielded sales. Since the third quarter, the NEV market share of 0.2 million yuan or more has exceeded 17%, and is expected to continue in the fourth quarter.

Software functions are accelerated, and OTA6.2 functions have been upgraded

The urban NOA mileage penetration rate of the IDEAL CAR END-TO+VLM system has now exceeded 50%. In the “How to Evaluate the End-to-End Capabilities of Car Companies” report, we believe that Ideal has advantages in computing power and data scale, and is expected to remain ahead in future functions. The lower limit of intelligent driving functions has been significantly improved, and the improvement of AEB and AES functions enhances dual protection capabilities in extreme scenarios. On August 31, the OTA6.2 version further enhanced the Pro version's high-speed NOA capabilities, rear warning, etc., while the Max version's parking capacity and AEB capabilities were significantly enhanced. Ideal cars may maintain high R&D investment in the future, and high-quality intelligent performance is expected to improve the company's user satisfaction.

Ecosystem construction is accelerating, and the smart electric strategy is expected to be rapidly implemented and the ecology will gradually improve. As of September 30, 2024, Ideal Auto has 479 retail centers across the country, covering 145 cities; 436 after-sales maintenance centers and authorized sheet spray centers, covering 221 cities. Ideal Auto has put into use 894 ideal overcharging stations across the country, with 4,286 charging stations.

Product strength leads smart driving upgrades, profit margins have reached an inflection point

We expect the company's revenue for 2024-2026 to be 147.3/205.4/280 billion yuan, respectively, with year-on-year growth rates of 19.0%/39.4%/36.3%, net profit to mother of 8.53/14.24/23.72 billion yuan, year-on-year growth rates of -27.1%/67.0%/66.6%, EPS 4.02/6.71/11.18 yuan/share, respectively, and a 3-year CAGR of 40.6%.

The company's product strength has been improved, intelligent electric acceleration, sales volume and profitability have been realized. Maintain a “buy” rating.

Risk warning: The speed of intelligent implementation and ability to deliver sales falls short of expectations, and the passenger car price war may affect subsequent sales.