Ping An's point of view:

The Internet has the potential to reach a scale of one million units, and is currently the key to increasing market capitalization. Quanjie is the focus of Cyris' future development. The high-end hybrid track where Quanjie is located is rapidly expanding. The competitive landscape is good, the model profitability is strong, and its future market space is expected to reach about 1 million units. As far as Huawei is concerned, Enquiry is a vehicle brand that has been deeply empowered by Huawei to build a successful vehicle brand over the years. It already has high brand value and consumer recognition. Continued in-depth empowerment of Huawei is the most invested and output initiative at this stage. Furthermore, increasing the expected market value is the main goal of Huawei's smart car business. In a context where other supporting customers have yet to increase their volume on a large scale, questioning the world is still the most important customer to look forward to. End-to-end advanced smart driving has entered the stage of competing for high-quality training data. Increasing the number of advanced smart driving vehicles as soon as possible is the key to maintaining the leading edge of Huawei ADS. Helping the world to increase the scale of production and sales as soon as possible is clearly a better strategy.

Cyrus's investment in the company is expected, and there is great potential for subsequent appreciation. The company used 11.5 billion yuan to acquire 10% of the company's shares. We believe that the market is currently not fully aware of the potential for future appreciation. We estimate that when the company reaches maturity, its revenue scale is expected to reach 127.5 billion to 165 billion yuan, and the annual net profit scale is expected to reach 19.1 billion to 24.8 billion yuan. The valuation still has a lot of room for growth, and the company is expected to benefit from future value-added flexibility. Huawei is in a leading position in the domestic high-end smart driving field. After the smart driving solution shifts from end to end, its experience mainly depends on high-quality training data. Currently, the number of Huawei models is growing rapidly. It is estimated that by 25, the number of high-end smart driving cars will exceed 1 million, and it has a greater chance of winning in the smart driving field in the future.

Profit forecast and investment advice: The company is also expected to launch a new model in the Questionnaire series in 2025, and the new model is expected to become another hit for the company. We judge that on the basis of consolidating existing results, the new model will become the key to the company's further profit release in 2025, along with the M9. We expect the company's net profit from 2024 to 2026 to be 6.5 billion/10.3 billion/12.8 billion yuan, respectively. Considering the company's future growth and value-added potential after joining the company, it was covered for the first time, giving the company a “recommended” rating.

Risk warning: 1) The macroeconomic downturn will lead to insufficient demand for automobile consumers; 2) Competition is becoming more intense, and the sales volume of the Questionnaire series may fall short of expectations; 3) The competitiveness of the Quanjie series comes in part from the empowerment of Huawei, and its profit level may fluctuate; 4) Expect the company to fall short of expectations; 5) the risk of abnormal stock price fluctuations.