24Q3 公司单车收入11.3 万元，同/环比+0.4/-0.1 万元，系新能源品牌提振单价。毛利方面，公司24Q3 毛利率为15.6%，环比-0.9pct，系产品结构变化所致。公司内部组织结构持续优化，费用端改善，24Q3 公司销售/管理费用率为4.5%/5.8%，同比-1.8/-0.5pct，环比-0.8/-1.2pct。24Q3 revenue was 60.4 billion yuan, +20%/+10%; net profit to mother was 2.5 billion yuan, +88%/-72% month-on-month. The month-on-month decline resulted in 7.5 billion non-recurring profit and loss due to sales of subsidiaries in Q2. The company's revenue for the first three quarters was 167.7 billion yuan, +36% year over year; net profit to mother was 13.1 billion yuan, +358% year over year.
The company's new energy brand turned losses into wins, and departmental integration progressed steadily, maintaining a “buy” rating.
Q3 sales increased 16% year over year to a record high, improving internal operating efficiency and improving the cost side. 24Q3 sold 0.53 million vehicles (including ZEEKR), +16% over the same period last year. Among them, Galaxy, ZEEKR, and Lynk & Co respectively sold 0.07/0.06/0.07 million vehicles, which were +111%/51%/21% year-on-year, respectively, to accelerate the release of new energy systems.
24Q3's bicycle revenue was 0.113 million yuan, +0.004/-0.001 million yuan YoY, which boosted unit prices for new energy brands. In terms of gross profit, the company's 24Q3 gross margin was 15.6%, -0.9 pct month-on-month, due to changes in product structure. The company's internal organizational structure continues to be optimized and the cost side improved. In 24Q3, the company's sales/management expenses ratio was 4.5%/5.8%, -1.8/-0.5pct year-on-year, and -0.8/-1.2pct month-on-month.
Galaxy E5 and Star Wish will improve brand profits. We expect Galaxy to sell 90 to 1 million vehicles in '25. Since August '24, the Galaxy brand will release two models, the E5 and Star Wish, to quickly open up the mainstream consumer market with the advantages of leading large space+smooth vehicles. E5 delivered more than 0.05 million in 100 days, and Starwish surpassed 0.02 million in 33 days of listing, driving the Galaxy brand's October sales volume to 0.063 million, +363% year-on-year and +119% month-on-month. Starship 7 has a large space, solid materials, and a pre-sale price of 0.1098 million yuan, which is cost-effective, and is expected to continue to be a hit. We believe that driven by the delivery of the 3 models, the scale effect of the Galaxy brand continues to expand, bicycle profits or marginal improvements, and the brand is expected to quickly reverse losses. Looking ahead to the company's strong new vehicle cycle in '25, it is expected to increase revenue and increase profits.
Strategic integration of ZEEKR and Lynk & Co, efficient and deep integration of internal collaboration
Since the “Taizhou Declaration” announced a strategic focus on transformation, the company's various business segments have been promoting integration at an accelerated pace.
On October 9, the Geometry brand was merged into Galaxy. On November 14, the company announced that GKrypton and Lynk & Co will carry out strategic integration, and GKrypton will hold 51% of Lynk & Co., Ltd.'s shares to achieve control. Currently, ZEEKR's pure electric strategy is progressing smoothly. In 24Q3, vehicle revenue was 14.4 billion yuan, +42%/7% month-on-month, and quarterly vehicle revenue and delivery reached record highs. The gross profit margin of the vehicle was 15.7%, an increase of 1.5 pct over the previous month, which is an increase in scale effect and an improvement in product structure.
ZEEKR has relaying Lynk & Co to complete the brand's technological transformation mission. After the merger, the two parties may achieve 1+1>2.
Profit forecasting and valuation
We expect the company's net profit to be 17.2/12.8/15.5 billion yuan in 24-26, up 15%/26%/30% from the previous value, and the increase is based on ZEEKR Lynk & Co's collaborative cost reduction and the scale effect of new Galaxy brand vehicles. Comparable to the wind of the company's 25E PE, the consistent expected average expected average is 15 times. We gave the company 15x PE for 25 years (the previous value was 24E PE 16x based on the comparable company average), and the corresponding target price was HK$20.61 (previous value HK$12.99). Give it a “buy” rating.
Risk warning: Consumer demand falls short of expectations, supply chain shortages, company product releases and orders fall short of expectations.
