The company's recent situation

Recently, the company held an Ideal Car AI Talk event to update the latest developments in the application of artificial intelligence technology in intelligent driving and ideal student apps, as well as long-term thoughts on the development of enterprises under the AI trend 1.

reviews

Break through the boundaries of car companies and target the world's leading artificial intelligence companies. Reviewing Li Xiang's entrepreneurial journey, the gradual transformation from Auto Home to the vertical Internet, means that the ideal car will not be limited to the vertical field, but will use smart cars as the core hardware, and then gradually generalize to AI enterprises. The company believes that general artificial intelligence includes three stages of development: “enhance my abilities,” “become my assistant,” and “silicon-based family.” The end-to-end and VLM base models developed by the company are expected to become the operating system+programming language in the AI era, thus achieving a first-mover advantage in commercialization and functional implementation. In the development of artificial intelligence, data technology has also brought a new revolution to the industry, improving the efficiency of all aspects of enterprise operations. The company currently maintains industry leadership in data accumulation. In the long run, the company plans to integrate language models and spatial intelligence into a larger VLA model, thereby gaining a leading edge in artificial intelligence transformation.

Firmly transform from end to end, leading the industry in data iteration capabilities. As announced in this AI Talk, the company will upgrade the end-to-end + VLM technical architecture in all scenarios of high-speed cities, and plans to fully promote AD Max users on December 31. Looking at the review, the company has continued to increase investment in smart driving research and development since 2021. After several technical architecture adjustments, the company focused on exploring cutting-edge technology and pioneering capabilities in the industry. Currently, smart driving has entered the leading echelon in the industry, and the penetration rate of smart driving models continues to rise to 60-70%, establishing a leading edge in the next data iteration. In the long run, the level of smart driving is gradually becoming the core competency of car companies. We believe that the company has technical and data advantages and is expected to obtain tickets for the next L4 stage.

Release the Ideal Student App to enable access from the car to the phone. In June 2023, the company launched the self-developed cognitive model “Mind GPT”. It appeared in the car in the form of an “ideal student” app, which supports communication and sending instructions through natural language. From a data perspective, the company revealed that since Mind GPT launched Ideal Auto, “Ideal Classmate” has accumulated 2.38 billion wake-up times, a task completion rate of 96%, and a user satisfaction rate of 96.2%. In 2024, Mind GPT was upgraded to 3.0, and the company released the Ideal Student App for smart assistants, enabling large models to move from cars to mobile phones. In terms of ability, its ability to ask and answer questions and visual perception has performed well. In the long run, we believe it will help the company become an artificial intelligence enterprise vision.

Profit forecasting and valuation

The current market's expectations for the company's AI capabilities and long-term strategy, as well as the 2025 pure electricity cycle, are still poor. Maintain outperforming industry ratings and maintain 24/25 profit forecasts. Currently, US stocks and Hong Kong stocks correspond to 15/18x 2025E non-GAAP P/E, and maintain the target price of US/Hong Kong stocks at HK$33/HK$128, corresponding to 19/22x non-GAAP P/E in '25, respectively, with 30% and 28% upward space, respectively.

risks

Pure electric models fall short of expectations; intelligent driving falls short of expectations; market competition intensifies.