[Core conclusion] We expect the company's net profit to be 7.07/10.75/12.43 billion yuan in 2024/2025/2026, respectively, up 389%/52%/16% year-on-year. We selected four car companies, BYD, Ideal, Changan, and Great Wall, as comparable companies. The current stock prices of the four companies correspond to the average PE value of 21.5x in 2024. We expect Cyrus's 2024-2026 net profit CAGR to be 33%, while BYD, Ideal, Great Wall, and Changan average 2024-2026 net profit CAGR will be 31%.

Considering that Cyrus's profit growth rate is higher than the average of comparable companies, and considering that the company's shareholding is expected to increase the company's long-term profit (expected valuation of 115 billion yuan, company investment of 10%), and considering that the company's model structure is relatively high-end, it should enjoy a valuation premium, initial coverage, and give the company a “buy” rating.

The main logic #1：自研 + is empowered by Huawei, and car companies with 100 billion revenue are on the rise. The company joined forces with Huawei to become the fourth profitable NEV company in the industry. After 8 years of building new energy vehicles, the company collaborated with Huawei to design and market the M5/7/9 three high-end smart electric vehicles 3 years ago. The company adheres to core technology, autonomous and controllable industrial chain, self-developed range+electric drive+Rubik's Cube platform core technology, and selected partner Huawei to strongly empower the models in terms of product strength (especially in the field of intelligent driving and smart cockpit), marketing power, and brand power.

MAIN LOGIC #2：智能科技属性及豪华品牌为公司核心竞争优势。 Looking forward to the future, we believe that the Celis Q brand will continue to introduce new products in the price range of 0.2 million yuan and above, continue to fill the new energy product matrix in the price range of 0.4-0.5 million and 0.2-0.25 million, and are expected to become popular models.

The main logic is that in year #3：我们预计2025, the company's sales volume is still expected to grow rapidly. We believe that there is still a gap between new energy models in the 0.4-0.5 million range (the NEV penetration rate is only 21% in January-August 2024), and the ideal L9 is more biased towards the home market in terms of positioning. We believe that on the basis of the continued popularity of the QJ M9, the QG M8 is expected to fill the gap of smart luxury NEV models in the current market. In particular, it is expected to meet business travel needs, thereby leading to the rapid growth of the company's sales volume in 25 years.

Risk warning: risk of new model launches falling short of expectations; risk of price war in the car market; increased risk of competition for new energy high-end medium and large vehicles; risk of changes in cooperation; risk of abnormal stock price fluctuations.