Incident: On January 1, 2025, the company released the December 2024 production and sales report: wholesale sales volume of 0.135 million vehicles, +20.3% YoY, +6.2% month-on-month; cumulative wholesale volume of 1.233 million vehicles from January to December, +0.2% YoY.

Among them, 1) Haval 0.083 million vehicles in December, +27.2% YoY, +6.4%; January-December cumulative wholesale 0.706 million vehicles, -1.3% YoY; 2) Weipai December 0.009 million vehicles, +150.8% YoY, +25.0%; January-December cumulative wholesale 0.055 million vehicles, +31.6% YoY; 3) Pickup 0.016 million vehicles, +1.3% YoY, +2.4% month-on-month; 1- Cumulative wholesale of 0.177 million vehicles in December, -12.5% YoY; 4) Euler 0.005 million vehicles, YoY -18.4%; January-December cumulative wholesale of 0.063 million vehicles, 41.7% YoY; 5) 0.022 million tanks, +26.4% YoY, +8.4%; January-December cumulative wholesale 0.231 million vehicles, +42.1% YoY.

Stable tanks in the leading position in the off-road market contribute to stable profits. Tanks sold 0.022 million units in wholesale in December, +26.4% year-on-year and +8.4% month-on-month. Tank's continued popularity in 2024 has proven that the company has a significant leading edge in the off-road market from product to brand, and has maintained a stable sales volume and market leading position in the face of the impact of competitive products represented by BYD Equation Leopard. In terms of products, the tank 500Hi4Z, a model with a new tank power system, was officially launched on January 1, 2025. The price is 0.3638 million. It focuses on a market dominated by urban commuting needs, gradually shifting from a niche market dominated by off-road demand to the mass market. We believe that in the context of adding new power systems in 2025, the tank brand will further expand its leading edge and contribute to stable profits.

Weipai Blue Mountain's popular high-end brand is expected to gain strength. In terms of high-end brands, Weipai sold 0.009 million vehicles in December, +150.8% year-on-year, +25.0% month-on-month; cumulative wholesale of 0.055 million vehicles from January to December was +31.6% year-on-year.

Among them, Weipai's new Blue Mountain has continued to be popular since its launch, selling 8,057 vehicles in December, an increase of 214.2% over the previous year.

We believe that Blue Mountain's popularity marks the optimization of the company's ability to build high-end brands, mainly due to 1) changing marketing channels from dealers to direct management, and 2) strengthening cooperative car circles to carry out new media promotion. With the popularity of Great Wall Weipai Blue Mountain, the company is expected to reshape its high-end brand image and enhance profit margins.

Overseas sales are steady, and globalization is progressing steadily. In December, the company's overseas wholesale sales volume was 0.041 million vehicles, +23.4% year on year, -4.4% month on month; in January-December, overseas wholesale sales volume was 0.453 million vehicles, +43.4% year on year. With the launch of CKD projects in Malaysia and Indonesia and the gradual entry of high-value models such as 300, 500, and 700 tanks into many overseas markets, the company's global production capacity has steadily increased, and its system advantages have been continuously strengthened. As production capacity and new models accelerate in 2025, we expect the company's export sales to continue to increase.

Investment suggestions: The promotion of the company's new products at home and abroad is progressing smoothly, a new cycle of intelligent electrification has begun, the proportion of new energy intelligent models has increased rapidly, and the high-end intelligent route is becoming more and more clear. We expect revenue of 2024-2026 to be 202.91/247.15/271.86 billion yuan, and net profit to mother of 13.16/16.07/17.98 billion yuan, corresponding to the closing price of 25.26 yuan/share on January 2, 2025, PE is 16/13/12 times, maintaining the “recommended” rating.

Risk warning: downside risks in the car market; competition in the market where brands such as WEY and Haval are located has intensified, and sales fall short of expectations; overseas progress falls short of expectations and risks related to EU tariffs.