Incident: The company released the November production and sales report: the Group's wholesale sales volume in November was 0.277 million vehicles, +22.0% year over month, +10.6% month on month; 2024M1-11 cumulative wholesale sales volume was 2.433 million vehicles, +4.1% year over year. Wholesale sales of autonomous passenger cars in November were 0.189 million units, +33.0% year over month, +12.5% month on month; cumulative wholesale sales of 2024M1-11 were 1.518 million units, +2.3% year on year; Changan Ford's November wholesale sales volume was 0.025 million units, +31.8% year on year, +26.9% month on month; 2024M1-11 cumulative wholesale sales volume of 0.217 million units, +6.0% year on year; Changan Mazda's November wholesale sales volume was 0.0086 million vehicles, -8.1% YoY, +14.4% month-on-month; cumulative wholesale sales of 2024M1-11 were 0.068 million vehicles, -12.9% YoY.

Benefiting from the increase in sales of new energy sources, wholesale sales increased sequentially in November. In November, the wholesale sales volume of the company's autonomous passenger cars was 0.189 million units, +33.0% year-on-year, and +12.5% month-on-month. Thanks to the subsidy policy and the promotion of the company's new energy vehicle sales, wholesale sales increased month-on-month. In terms of new energy, the wholesale sales volume of autonomous new energy vehicles in November was 0.102 million units, +102.2%, and the cumulative wholesale sales volume of the 2024M1-11 was 0.635 million units, +53.2% year over year; of these, Dark Blue sold 36,026 units in November, +25.4% month on month; Avita 11,579 units, +15.1% month on month, and the new Avita 07 model contributed to the increase; Qiyuan sold 18,455 units in November, up month on month. Looking ahead, the peak car purchase season at the end of the year combined with the company's new car cycle is expected to drive a continuous increase in wholesale sales.

Avita and Deep Blue accelerate the transformation of new energy sources. On October 20, the Deep Blue S05 was launched, with an official guide price of 0.1199 million yuan to -0.1499 million yuan. The DEEPAL megapixel smart light and video headlights were launched as standard. In the future, high-speed intelligent navigation assistance with OTA will also be promoted. In the future, orders for 217.3 million vehicles reached 217.3 million vehicles in the first month of the launch. On December 2, the Avita 11 was remodeled and launched with an extended range model. The extended range version was 0.2799-0.2999 million yuan, the pure electric version was 0.3399-0.3699 million yuan. The Avita 11 is equipped with a full-stack self-developed Kunlun Range Extender, with a comprehensive range range of up to 1065 km under CLTC conditions. In terms of intelligent driving, it is equipped with Huawei Qiankun Smart Driving ADS 3.0, which can achieve “car space to parking space, drive yourself with one click”.

With the launch of Avita 11/07 and Deep Blue S05, I am optimistic that the company will accelerate its transformation into new energy sources in the future.

Overseas sales are growing at an accelerated pace, opening up the global market. Overseas sales of independent brands in November were 0.019 million vehicles, -19.1% year-on-year, and -37.1% month-on-month. The month-on-month decline is expected to be affected by the high October base due to early rush shipments in response to the peak season at the end of the year; 2024M1-11's overseas sales volume was 0.338 million vehicles, +53.0% year over year. The first phase of production capacity of the company's global “right-steering production base” in Thailand will be put into operation in 2025Q1. The initial production capacity will be 0.1 million vehicles, and the total production capacity will increase to 0.2 million vehicles after the second phase. The company has a clear approach to globalization and a firm pace, which is expected to open up room for long-term growth.

Investment advice: We are optimistic about the company's electric intelligence transformation, combined with Huawei's intelligent power to maintain profit forecasts. We expect revenue for 2024-2026 to be 163/188.6/212.1 billion yuan, net profit to mother of 6.07/8.24/10.79 billion yuan, and EPS of 0.61/0.83/1.09 yuan respectively, corresponding to the closing price of 14.03 yuan/share on December 3, 2024. PE is 23/17/13 times, respectively, maintaining the “recommended” rating.

Risk warning: Industry demand declined; independent brand sales fell short of expectations; industry “price war” intensified; export sales fell short of expectations.