24Q3 performance: Total Q3 revenue was 42.9 billion yuan, +24% year over month; automobile sales revenue was 41.3 billion yuan, +22.9% year over month, and +36.3% month over month, mainly due to increased car deliveries; other sales and service revenue in the third quarter of 2024 was 1.6 billion yuan, up 45.8% year on year and 14.1% month on month, mainly due to increased cumulative vehicle sales and increased vehicle deliveries, products and services Sales also increased.

Profit situation: The overall gross profit ratio is 21.5%, of which the vehicle gross profit margin is 20.9%. We expect that after L6's initial climbing gross margin is higher than expected, H2 will have a further scale effect and cost reduction logic. Net profit was 2.8 billion yuan, the same year on year, up 156.2% month on month; non-GAAP net profit was 3.9 billion yuan, up 11.1% year on year, up 156.2% month on month.

Vehicle sales: Ideal 24Q3 delivered a total of 152,831 units, up 45.4% year on year. The NEV market share of 0.2 million yuan or more increased from 14.4% in Q2 to 17.3% in Q3, ranking first among domestic passenger cars of 0.2 million or more in China. For the first time, the company's sales in the passenger car market of 0.2 million yuan or more in China surpassed many mature European high-end brands, ranking in the top three of all brands and number one among all Chinese brands. Since 2023, in the NEV market of 0.3 million yuan or more, the total delivery volume of the Ideal L7, Ideal L9, and Ideal L8 models has ranked first, second, and third in the market segment. Since its launch, the Ideal L6 has delivered more than 25,000 units in a single month, with a cumulative delivery volume of more than 0.139 million vehicles, ranking second in the passenger car market above 0.2 million yuan, second only to Tesla's Model Y.

Breakthrough in intelligent driving: In October, the company released the OTA 6.4 update for the Ideal MEGA and L series, which added and upgraded features in intelligent driving, smart space, and intelligent electric power; the company fully promoted a new smart driving solution combining end-to-end (E2E) and visual language models (VLM) to more than 0.32 million Ideal AD MAX car owners. Furthermore, Ideal Student continues to evolve, achieving more natural and personable user interaction by upgrading voice models and adding features such as eye tracking. We believe that the company's breakthrough in smart driving is expected to drive further order growth.

The layout of stores and infrastructure continues to improve: As of September 30, 2024, Ideal Auto is operating 479 retail centers in 145 cities across the country and 436 after-sales service centers and feedback centers in 221 cities. In terms of charging network construction, Ideal Auto has already operated 894 ideal supercharging stations, equipped with 4,286 supercharging piles, which may enhance the user experience and push more users to choose the company's products.

Follow-up outlook: Q4 automobile deliveries were 0.16 million-0.17 million, up 21.4% to 29% year on year; total revenue guide was 43.2 billion - -45.9 billion, up 3.5%-10% year on year.

Investment advice: We believe that the extreme sentiment of concerns about domestic consumption at the transaction level has been digested in Q3. In fact, automobile consumption recovered slightly under the July trade-in policy. Since then, it is true that the continuity of market demand is not easy to judge, but the gradual upward trend in the company's 3-4Q fundamentals is expected to resume, and we expect the development of intelligent driving technology to drive bike value/gross margin growth. With the completion of the L6 climb and the gradual recovery of 789 orders, gross margin was further released, so we believe that ideal is expected to release elasticity from gross profit and net profit in the second half of the year. We expect the company's adjusted net profit for 24/25 to be 11.6/14.8 billion yuan (previous value of 10.5 billion yuan in '24).

Risk warning: gross profit risk due to fluctuations in automobile sales prices; this year's new models fall short of expectations; the new energy industry and policies fall short of expectations, etc.