The technical service business provides stable cash flow, and the overall profit prospects depend on management optimization and product strength upgrades
Based on the lower sales volume of old models than expected, the 2024-2026 revenue forecast was lowered from 485/805/95.9 billion yuan to 474/787/93.3 billion yuan, corresponding year-on-year growth rates of 55%/66%/19%, respectively. Based on the profit contribution of technology services related to mass cooperation exceeding expectations, we raised our 2024-2026 non-GAAP net profit forecast from -87/-33/600 million yuan to -66/-21/1.1 billion yuan. The corresponding adjusted EPS was -3.4/-1.1/0.5 yuan. The current stock price of HK$34.65 corresponds to 1.3/0.8/0.7 times PS in 2024-2026 and 59.6 times PE in 2026. The technical service business provides stable cash flow, and the overall profit outlook depends on management optimization and product strength upgrades. The company will focus on expanding and strengthening channel marketing capabilities. MONA continues to decline, new main brand cars are expected to drastically reduce costs to highlight cost performance, and cooperate with the wider penetration of ADAS by the end of 2024 to drive clear business prospects and maintain a “gain” rating.
The overall gross margin of 2024Q1 rose above expectations, mainly due to the fact that revenue amounts from services related to mass cooperation exceeded expectations
2024Q1's revenue of 6.55 billion yuan is in line with our original expectations. It corresponds to the ASP increase from 203,000 yuan in 2023Q4 to 254,000 yuan in 2024Q1, mainly due to the delivery of new X9 models over 300,000 yuan, and the 2024Q1 X9 accounts for 36% of overall sales; the overall gross margin increased from 6.2% in 2023Q4 to 12.9% in 2024Q1, which significantly exceeded our expectations, mainly due to Volkswagen Group's technical service revenue volume and confirmation time exceeding our expectations, and the gross margin ratio of automobiles increased 1.4 pct to 5.5%, mainly due to cost reduction and model product portfolio improvement, corresponding non-GAAP net loss narrowed from 1.8 billion yuan in 2023Q4 to 1.4 billion yuan in 2024Q1.
Technical service revenue is expected to increase quarterly in 2024, and new vehicles from MONA and major brands are expected to drive a recovery in sales
The cooperation model between the company and Volkswagen Group is expected to provide stable cash flow support for the group. It is expected that the 2024H2 cooperative electronic and electrical architecture platform will also begin to contribute revenue. The company's guidance service revenue is expected to increase quarterly during the year, and similar cooperation with other car companies will follow. The company's overall profit prospects depend on the optimization of its own management and breakthroughs in product strength. According to the company's guidelines, the 2024Q2 delivery target is 29,000 to 32,000 vehicles. Approximately 9,400 vehicles were delivered in April, corresponding to the May-June delivery target of 196-22,600 vehicles. We expect the company to be able to complete the Q2 delivery target, and the company's monthly sales curve will rise steadily. Looking ahead to the full year of 2024, the company's new Mona brand is expected to be officially unveiled in June, focusing on the 10-15 thousand yuan price range. The first model of the Mona brand is expected to be launched and delivered in 2024Q3. It is expected that the shape is impressive, Xiaopeng's advanced intelligent features may sink to the 150,000 yuan price range; the main brand of the 2024H2 Xiaopeng is expected to release and deliver a new sedan, and is expected to launch a revised model in 2024.
Risk warning: Product launches fall short of expectations, production capacity and supply chain risks, and increased industry competition.