Ideal Auto announced unaudited financial results for the quarter ended March 31, 2024 (hereinafter referred to as the “2024 First Quarter Results Announcement”). The company achieved revenue of 25.63 billion yuan in 2024Q1, +36% year over month, and -39% month on month; realized net profit of 590 million yuan, -37% year on year and -90% month on month.
Over 80,000 new vehicles were delivered in 24Q1, +53% over the same period last year. According to the company's results announcement for the first quarter of 2024, 24Q1's vehicle sales revenue was 24.3 billion yuan, +32% year over month, -40% month over month; 24Q1 delivered 80,400 new vehicles, +53% year over year, and -39% month over month. According to our estimates, the company's 24Q1 bicycle revenue was about 302,000 yuan, down 47,000 yuan year on year, down 0.5 million yuan from month to month; net bicycle profit was 70,000 yuan, down 10,000 yuan year on year, down 36,000 yuan from month to month. We believe that the month-on-month decline in the company's 24Q1 bicycle revenue was mainly due to seasonal factors during the Chinese Spring Festival holiday and a decrease in vehicle deliveries due to falling short of expectations in March sales orders.
Expense rates have increased, and net interest rates are under pressure. The company's 24Q1 net profit margin was 2.3%, YoY -2.7 pct, 11.5pct month-on-month; 24Q1 gross profit margin 20.6%, YoY +0.2 pct, -2.8 pct month-on-month. The company's 2024Q1SG&A cost rate/R&D expense ratio was 11.6%/11.9%, respectively, up 2.9/1.0 pct year on year, and 3.8/3.5 pct, respectively. We believe that the month-on-month increase in SG&A expenses is mainly due to an increase in rent and other expenses due to the expansion of the sales and service network.
The L6 order performance was impressive, Q2 deliveries are expected to recover, and the first launch of the pure electric model was postponed to 25H1. According to the company's financial results for the first quarter of 2024, the three pure electric models scheduled to be launched on 24H2 will be postponed until 25H1. The company will complete the construction of overcharging piles and store booths for pure electric models to effectively support the future sales target of over 10,000 pure electric models per month. The new model Ideal L6, which was launched in April, has accumulated orders of more than 41,000 units from April 18 to May 5. Looking ahead to 24Q2, the company expects to deliver 105-110,000 new vehicles, an increase of 21%-27% over the previous year; total revenue is expected to reach 299-31.4 billion yuan, an increase of 4.2%-9.4% year on year.
Profit forecast and investment advice: Considering the company's 2024Q1 performance, combined with the 2024Q2 revenue outlook announced by the company in the first quarter of 2024 results announcement. We adjusted the company's profit forecast. It is estimated that the company will sell 54/71/950,000 new vehicles in 2024/25/26, with revenue of 1581/2076/283 billion yuan respectively, net profit to mother of 95/120/22.3 billion yuan, and EPS of 4.50/5.67/10.52 yuan respectively. Considering that the NEV industry is still developing rapidly, we used the PS method to value the company. The closing market value on May 31, 2024 was 1.0/0.7/0.5 times the 2024/25/26 PS, respectively. Referring to comparable companies, we gave the company 1.3-1.4 times PS in 2024, with a corresponding reasonable value range of HK$106.34-114.35 (converted at the exchange rate of HK$1 = RMB 0.93). Maintain an “better than the market” rating.
Risk warning: new car sales fall short of expectations; raw material prices have risen sharply; investment in pure electric models has exceeded expectations.