Incident: The company released the October production and sales report: the Group's wholesale sales volume in October was 0.251 million vehicles, +4.1% YoY, +17.7%; 2024M1-9's cumulative wholesale sales volume was 2.156 million vehicles, +2.1% YoY. Wholesale sales of autonomous passenger cars in October were 0.168 million units, +3.4% YoY, +29.9%; 2024M1-10 had cumulative wholesale sales of 1.329 million units, -0.9% YoY; Changan Ford's October wholesale sales volume was 0.02 million units, -12.7% YoY, +3.4%; 2024M1-10 had cumulative wholesale sales of 0.192 million vehicles, +3.4% YoY; Changan Mazda's October wholesale sales volume was 0.008 million units Million vehicles, -41.5% YoY, +25.1% month-on-month; cumulative wholesale sales of 2024M1-9 were 0.059 million vehicles, -13.5% YoY.

Benefiting from the increase in sales of new energy sources, wholesale sales increased sequentially in October. In October, the wholesale sales volume of the company's autonomous passenger cars was 0.168 million units, +3.4% year-on-year, and +29.9% month-on-month. Thanks to the subsidy policy and the promotion of the company's new energy vehicle sales, wholesale sales increased month-on-month. In terms of new energy, the wholesale sales volume of autonomous new energy vehicles in October was 0.085 million units, +48.6% year on month, and the cumulative wholesale sales volume of 2024M1-10 was 0.533 million units, +46.4% year over year; of these, Dark Blue sold 28,730 units in October, +26.5% month-on-month, and Avita 10,056 units, +121.6% month-on-month. Looking ahead, the peak season for gold, nine and silver continues, the company's new car cycle is intense, and wholesale sales are expected to continue to increase.

The new product cycle is intensive and the transformation of new energy sources is accelerating. On September 26, the Avita 07 was officially launched. The new model is a mid-size SUV, priced at 0.2199-0.2899 million yuan. The pure electric model uses a full 800V high-voltage platform, a silicon carbide electric drive system, and a Ningde Times Shenxing super rechargeable battery. The range extender model is equipped with Kunlun Range Extender technology developed by Avita's full stack, and is equipped with Huawei's latest Qiancun ADS 3.0 smart driving system and the Hongmeng 4 smart cockpit. After 17 days of Avita 07 launch, orders exceeded 0.025 million, and demand was strong. On October 26, Deep Blue S05 was officially launched, and 6 models with a pure electric version and an extended range version were launched, with an official guide price of 0.1199 million yuan to -0.1499 million yuan. On October 27, Deep Blue Auto CEO Tang Chenghao revealed that this month's Dark Blue order had officially reached the 0.03 million mark. Subsequent key new vehicles include the Avita 11/12 Extended Range Edition. The product cycle is strong, and the transformation of new energy sources is accelerating.

Overseas sales are growing at an accelerated pace, opening up the global market. In October, autonomous overseas sales volume was 0.031 million vehicles, +33.9% year over month; 2024M1-10's overseas sales volume was 0.319 million units, +61.8% year over year. Capacity recovered in October, and overseas sales increased month-on-month. The first phase of production capacity of the company's global “right-steering production base” in Thailand will be put into operation in 2025Q1. The initial production capacity will be 0.1 million vehicles, and the total production capacity will increase to 0.2 million vehicles after the second phase. The company expects to complete entry into the two key regional markets of ASEAN and Europe by 2024. The idea of globalization is clear and the pace is firm, which is expected to open up room for long-term growth.

Investment advice: We are optimistic about the company's electric intelligence transformation, combined with Huawei's intelligent power to maintain profit forecasts. We expect revenue for 2024-2026 to be 163/188.6/212.1 billion yuan, net profit to mother of 6.07/8.24/10.79 billion yuan, and EPS of 0.61/0.83/1.09 yuan respectively, corresponding to the closing price of 14.30 yuan/share on November 4, 2024. PE is 23/17/13 times, respectively, maintaining the “recommended” rating.

Risk warning: Industry demand declined; independent brand sales fell short of expectations; industry “price war” intensified; export sales fell short of expectations.