Core views

Q3 The company's revenue, net profit to mother, and net profit after deducting non-net profit were 9.811 billion yuan, 2.7.1 billion yuan, and 0.273 billion yuan, respectively, +21.44%, -3.38%, and +14.05% year-on-year respectively. The revenue side benefited from the “sharp rise in volume and price” of vehicle sales. Net profit after excluding minority shareholders' profits and losses was 2.9.4 billion yuan, +30.43% year over month, -20.82% month over month; year over year, it benefited from product structure optimization and cost reduction and efficiency; month-on-month was affected by the increase in consumption tax and the reduction in government subsidies due to one-time sales expenses and the increase in Bronco's sales volume. Looking ahead, the recovery in vehicle sales combined with cost reduction and efficiency will help increase the company's profits; Ford's new product cycle begins, and overseas exports continue to increase, which is expected to drive continued release of performance. Jiangling and Wenyuan built the first L4 class light passenger Robovan in China. Currently, orders for more than 0.01 million units are on hand, and commercial operation can be expected.

occurrences

The company released its three-quarter report for 2024. Revenue for the third quarter was 9.811 billion yuan, up 21.44% year on year; net profit to mother was 0.271 billion yuan, down 3.38% year on year; after deducting non-net profit of 0.273 billion yuan, up 14.05% year on year.

Brief review

Vehicle sales volume and price increased sharply, and Q3 net profit was +30% year-on-year. Q3 revenue, net profit to mother, and net profit after deducting non-net profit for a single quarter were 9.811 billion yuan, 0.271 billion yuan, and 0.273 billion yuan, respectively, +21.44%, -3.38%, and +14.05% year-on-year, and -1.35%, -34.50%, and -29.95%, respectively. Revenue side: Q3 revenue grew by more than 20% year on year, and vehicle sales “rose sharply” in volume and price. 24Q3's vehicle sales reached 0.0825 million vehicles, +10.44% year over month, -3.29% month on month; bicycle revenue was about 0.1188 million yuan/unit, +9.96% year over month, and +2.00% month over month, mainly due to the optimization of the new vehicle cycle and product structure. Among them, Q3 light buses, light trucks, pickups, and SUVs sold 0.0221 million vehicles, 0.0139 million vehicles, 0.0174 million vehicles, and 0.0291 million vehicles, respectively, +1.54%, -2.82%, +43.64%, and +9.73% year-on-month, and +4.68%, -8.60%, -2.59%, and -6.49%, respectively. Among them, high-margin light passenger sales increased both year on month and continued to recover moderately; light truck sales declined due to industry demand; new products such as Pickup and Ranger on Picaine Avenue performed better than the industry; and SUV sales benefited from Bronco's increased contribution and overseas. Sales are expected to continue to rise in the fourth quarter due to the arrival of the peak domestic domestic season at the end of the year and improvements in domestic automobile demand combined with Ford channel exports. Profit side: Excluding minority shareholders' profit and loss, Q3 net profit of 0.294 billion yuan, +30.43% YoY and -20.82% YoY. The year-on-year benefit was the company's product structure optimization and cost reduction and efficiency; month-on-month was affected by consumption tax increases and government subsidies due to one-time sales expenses and the increase in Bronco's sales volume.

Q3 Gross profit was stable month-on-month, and sales expenses increased month-on-month. Q3 gross profit margin and net margin were 14.41% and 3.00% respectively, -2.18pct and +0.21pct year-on-year, respectively, and -0.18pct and -0.74pct month-on-month, respectively. The month-on-month decline in gross profit was mainly due to the one-time removal of new passenger cars from the channel as soon as they were launched. The Q3 period/sales/management/R&D/finance expense rates were 7.40%, 3.59%, 1.91%, 2.43%, and -0.53%, respectively, -4.02pct, -0.90pct, -0.76pct, -2.56pct, +0.19pct, -0.44pct, +0.97pct, -0.63pct, -0.57pct, and -0.22pct. Sales expenses increased a lot from month to month due to promotions.

The “new car cycle+overseas expansion” is expected to drive the upward trend in Jiangling's performance. (1) Light truck sector: 24Q3 sales volume -2.8% year-on-year, -8.6% month-on-month, which may be affected by weak industry demand. At the end of July, the commercial vehicle subsidy implementation rules granted 0.035 million yuan/vehicle purchase subsidy for new energy city cold chain distribution trucks. At the same time, the company has been deeply involved in the refrigerated truck field for many years. The first pure electric platform, the E-Luda E-Luther Extended Range Edition and refrigerated trucks were launched in September '24. Subsequent sales growth is expected to benefit from the subsidy policy and resonance with the expansion of the new energy cold chain market. (2) Light passenger segment: Since the beginning of the year, Jiangling's light passenger sales have been steady. 24Q3 sales volume was +1.5% year-on-year, and +4.7% month-on-month. Continuing a moderate recovery trend, the leading position in the industry continued to be consolidated. Jiangling's light passenger products are positioned as high-end, and the increase in sales volume is also conducive to further optimizing its products and profit structure. (3) Pickup truck sector: Q3 sales volume +43.6% YoY, -2.6% month-on-month, overall performance was better than the industry. In '23, the company launched Dao Pickup and Ranger to lay out the middle and high-end market to accelerate the transformation to off-road leisure pickups; at the end of August '24, the Dao Mountain Edition was launched to further improve the product matrix; at the same time, it went overseas smoothly. In August, it was delivered in batches to Middle Eastern countries such as Qatar and Saudi Arabia. In September, Dao Dao and New Treasure landed in Bahrain, and will continue to support sales in the future. (4) SUV segment: 24Q3 sales volume +9.7% YoY, -6.5% month-on-month. The sales volume in the past five years (0.029 million units) is second only to 24Q2. At the end of April, the company introduced a new popular Ford model, the Bronco Liema, officially launched, contributing an important increase in sales in the SUV segment. Jiangling's dual-collar SUV continues to be sold through Ford channels to contribute to growth in overseas markets. In addition, the passenger car hybrid and BEV projects developed by the company will be put into operation one after another from 2024-2025.

Partnering with Wenyuan to build China's first L4 class light bus, with orders over 0.01 million units in hand. The company and Wenyuan Zhixing launched a strategic cooperation in the field of pure unmanned L4 light bus VAN vehicles, applied to open road freight scenarios in the same city, and jointly released China's first L4 class autonomous light passenger WeRide Robovan in September 2021, which has now entered a commercial operation pilot state. Also, according to Wenyuan Zhixing's prospectus, in May 2024, Robovan obtained permission to conduct driverless tests in designated areas in Guangzhou, and as of September, it had received more than 0.01 million intended orders.

Investment advice

The company's vehicle business sales recovery compounded cost reduction and steady progress in efficiency, which is conducive to the continued growth of its own profits. At the same time, it ushered in a new Ford product cycle, and overseas exports continued to expand, driving the company's performance to be further released. Jiangling and Wenyuan built the first L4 class light passenger Robovan in China. Currently, orders for more than 0.01 million units are on hand, and commercial operation can be expected. The company's net profit for 2024-2025 is estimated to be 1.8 billion yuan and 2.3 billion yuan, corresponding to current stock prices of 14X and 10X.

Risk analysis

1. The industry boom falls short of expectations. Domestic economic recovery rebounded steadily in 2024, but the exact pace remains to be seen. Demand in the automotive industry may fluctuate accordingly; it will still take time to fully implement the trade-in policy for consumer goods such as automobiles, which will affect the recovery process of industry demand.

2. Export sales fell short of expectations. Exports are affected by various factors such as the international situation, national policies, and exchange rates, and there is a risk of fluctuations in overseas sales growth.

3. The competitive pattern of the industry has deteriorated. Domestic competitors are speeding up product launch. With changes in supply factors such as technological progress and new production capacity investment, future industry competition may intensify, and the company's market share and profitability may fluctuate.

4. The company's channels and sales volume of new models fell short of expectations. The company's channel construction and dealer optimization progress may fall short of expectations. There is a risk that sales volume of new models will fall short of expectations due to market demand.