Key investment points: The company released its 2024 three-quarter report. The company achieved revenue of 100.186 billion yuan in the first three quarters, +22.0% year over year; realized net profit of 4.509 billion yuan, or -25.4% year on year. On a quarterly basis, 24Q3 achieved revenue of 42.874 billion yuan, +23.6%/+35.3% YoY; net profit to mother of 2.814 billion yuan, or -0.3%/+155.2% YoY.

Q3 sales performance was excellent, and L6 volume led to growth in performance. 24Q3 achieved revenue of 42.874 billion yuan, of which automobile sales revenue was 41.324 billion yuan, +22.9% YoY/+36.3% month-on-month. The main reason was that local trade-in policies boosted downstream demand and continued growth after L6 was released. The total sales volume of Q3 Ideal Auto was 0.153 million units, +45% YoY/+41% month-on-month. Among them, L6 sold 0.075 million units, +92% month-on-month, accounting for 49.2% of total sales, increasing to 49.2%, or +13.1pct month-on-month. According to the company's guidelines, the estimated delivery volume for Q4 is 0.16-0.17 million vehicles, +21.4% to 29.0% year on year; revenue of 43.2-45.9 billion yuan was achieved, +3.5 to 10.0% year on year, and continued growth from month to month.

The scale effect expanded, and gross margin performance exceeded expectations. The company's gross margin for Q3 was 21.5%, of which the gross margin of the automobile business was 20.9%, +2.2pct month-on-month, and the performance exceeded expectations. Meanwhile, Q3 bike ASP was 0.27 million yuan, or -0.009 million yuan month-on-month, mainly due to the month-on-month increase in L6 sales; bicycle gross profit was 0.06 million yuan, +0.004 million yuan month-on-month. We believe that it mainly benefits from the scale effect of increased delivery volume, annual landing site, and increased ADMAX share.

Expense control has been effective, and bicycle profits have improved dramatically. The company's Q3 R&D expenses were 2.59 billion yuan, with a rate of 6.0%, -3.5pct month-on-month, mainly due to reduced design and R&D costs for new products and technologies and reduced employee remuneration. Q3 The company's SG&A fee rate was 7.8%, -1.1 pct compared to the previous month, which achieved significant improvements, reflecting the company's excellent cost control capabilities.

Due to the positive impact of the above increases in bicycle gross profit and cost control, Q3 Company's net profit from bicycles to mother was 0.018 million yuan, +0.008 million yuan over the previous month, achieving a significant improvement.

The new end-to-end smart driving solution is being promoted, and the sales structure is improving. In October '24, the company launched a new generation of “end-to-end + VLM” smart driving solutions for Mega and L series models, covering more than 0.32 million AD max users. At present, the company's AD Max orders for 0.3 million or more models have reached 70%, of which the Ideal L9 AD Max orders account for nearly 80%.

With the OTA 6.4 version improving significantly on the user experience side, it is expected to drive the company's AD Max version order ratio to continue to increase, which will continue to have a positive effect on bicycle profits.

The grid layout continues to improve, laying the foundation for starting the pure electric product cycle. As of October '24, Ideal has developed and operated 1,000 supercharging stations. It has the highest number of high-speed overcharging stations built by train companies. It can cover 175 cities in 31 provinces across the country, and is still in the rapid construction stage. A high-quality energy supplementation experience is the foundation for the sale of high-end pure electric products. It is ideal to continue to improve the power grid ecosystem to ease users' anxiety about energy supplementation and provide infrastructure support for subsequent launch of pure electric products.

Investment analysis opinion: The overall sales performance in the third quarter was excellent. We expect the company's total revenue for 24-26 to be 145.98/194.13/215.65 billion yuan (140.4 billion yuan in revenue for the previous 24 years, remaining unchanged); considering the reduction in interest income and other earnings, the net profit from the 24-26 downgrade was 7.52/12.6/16.43 billion yuan (original forecast 7.66/14.69/19.76 billion); corresponding to 24- The PE in '26 was 26/15/12 times. Considering that there is no clear date for the launch of pure electric models, the rating was lowered to “gain weight”.

Risk warning: Competition for new energy vehicles intensifies, raw material prices fluctuate, sales fall short of expectations, and delays in new vehicle launches.