The policy promotes the integration of central and state-owned enterprises, and the company actively adjusts management and operating strategies. The Central Committee and Shanghai State-owned Assets Administration Commission have promoted the deepening of state-owned enterprise reform through various policies and instruments since 2020. The company has responded positively, and there have been changes in personnel and management strategies: 1) In terms of personnel, SAIC passenger cars, SAIC Volkswagen, and SAIC MG have all introduced new executives. The new management is experienced in technology, supply chain management, and market positioning; 2) On the business side, the company reduced value in the early stages to achieve lightweight development. In addition, the national industrial layout was adjusted to promote the transformation and upgrading of production bases in the Yangtze River Delta and the Midwest, and strengthen localized R&D, increase model competition Strength to respond to changes in market demand.

VW brands are actively transforming, and the company's joint ventures are expected to welcome improvements. The company SAIC Volkswagen includes three brands: Volkswagen, Audi, and Skoda. Among them, Volkswagen brand models include product lines such as Polo, Lavida, Lavida, and Lingdu; SAIC Audi models include product lines such as the A7L, Q5 e-tron, and Q6. The company previously signed an extended joint venture agreement with the Volkswagen Group to extend SAIC-Volkswagen's joint venture period until 2040. The introduction of subsequent new models is expected to accelerate, and the company's CMP platform is expected to strengthen the competitiveness of Volkswagen models in China.

Independent technology is deeply accumulated, and domestic and overseas markets are being developed simultaneously. At the technical level, the company has seven major technical bases, including a pure electric “Nebula” platform and a “green core” electric drive assembly, and a hybrid “Everest” price and DMH powertrain. Its strength ranks first in the industry. In the domestic market, Feifan returned to SAIC's passenger car system in October 2024. In addition to channel integration, it is expected that the positioning and product lines of the two brands will be rearranged in the future, and subsequent models are worth looking forward to. In overseas markets, the company MG + MAXUS continues to make efforts. Site selection for European vehicle manufacturing bases will begin in 2023. Localized production is expected to maintain high sales growth in the future.

Profit forecast and valuation: The company's net profit for 2024-2026 is estimated to be 10.4, 11.9, and 13.1 billion yuan, respectively. The corresponding PE is 20, 18, and 16 times, respectively. Currently, PB is only 0.7 times, which is a significant discount. First coverage, giving a “buy” rating.

Risk warning: Export business growth falls short of expectations; industry demand falls short of expectations; passenger car transformation falls short of expectations.