Key investment points

On December 25, 2024, Ideal Auto released 2024 AI Talk. In Ideal AI Talk, Li Xiang showed that Ideal Auto takes AI as its core strategy for the future. The AI development process of an ideal car is mainly divided into three stages: the stage of enhancing capabilities, the stage of becoming an assistant, and the stage of silicon-based family (Agent).

How do you view the AI layout of the ideal car?

Intelligent driving: Looking at the three stages, the ability enhancement stage, the assistant stage, and the agent stage correspond to L3/L4/L5 functions in intelligent driving. The end-to-end +VLM model is the main solution for L3. The model upgrade path may change from Learning by Watching to Learning by Attending, to L4 vehicles or the ability to have “smart bodies”, and the world perception model may become the main solution to achieve L4.

Spatial intelligence: Looking at the three stages, the enhancement stage and the assistant stage correspond to the 3.0 and 4.0 versions of ChatGPT, respectively. Ideal Car Mind GPT has been iterated many times. Currently, the data scale is close to ChatGPT 2.0. The ideal student language interaction model gets on the bus faster, fully complementing the corpus and natural language processing capabilities.

Ideal spatial intelligence and intelligent driving may enter a stage of enhanced capabilities in 2025, gradually increasing user stickiness.

Facing AI, what are the ideal opportunities and challenges?

Judging from the review history, the ideal is to gradually upgrade AI into the company's core strategy. Looking at the talent pool, Lang Xianpeng, Jia Peng and others are deeply involved in intelligent driving, and Chen Wei is responsible for Mind GPT. The first stage, advanced smart driving: the foundation of the ideal AI strategy, is in a relatively leading position in computing power scale and data scale; the second stage is embodying intelligence: expanding the scenario and user base, and facing stronger competitors such as Xiaomi, Huawei, and BYD with improved ecology and manufacturing capabilities; and the third stage, AGI: larger capital expenditure, on par with leading technology companies.

Investment advice

We expect the company's revenue for 2024-2026 to be 147.3/205.4/280 billion yuan, respectively, with year-on-year growth rates of 19.0%/39.4%/36.3%, net profit to mother of 8.53/14.24/23.72 billion yuan, year-on-year growth rates of -27.1%/67.0%/66.6%, EPS 4.02/6.71/11.18 yuan/share, respectively, and a 3-year CAGR of 40.6%.

I am optimistic about the company's product strength improvement, intelligent electric acceleration, and the fulfillment of sales and profitability. Maintain a “buy” rating.

Risk warning: the speed of intelligent implementation and ability to deliver sales falls short of expectations; passenger car price war may affect subsequent sales