Company announcement: In the first half of 2024, the company achieved total revenue of 3.74 billion yuan, or -35.16% compared with the same period last year.

Net profit to mother - 2.571 billion yuan.

Comment:

Focus on sales and upgrade the marketing system. The domestic NEV market is very competitive. The company made positive changes this year, focusing on increasing sales volume. As of August data, the company sold 0.013 million vehicles in August, up 66% year on year. The cumulative sales volume from January to August this year reached 0.052 million vehicles, up 12.15% year on year.

The company made every effort to build the three major brands: Jihu, XIANGJIE and BEIJING. Among them, the company focuses on resources to build the Jihu brand for high-end intelligent new energy vehicles. The Xiangjie brand is a new brand under the company. The brand's first cooperative model, the Panorama Smart flagship sedan, the Xiangjie S9, was jointly built by BAIC New Energy and Huawei, and will have more than 8,000 units in 20 days.

High-end intelligent new production line to improve the quality of the company's products. By upgrading the advanced manufacturing technology at the Zhenjiang factory and investing in the construction of a high-end intelligent ecological factory in Beijing, the company's high-end manufacturing capacity has been further enhanced. The company is located at the Xiangjie Gigafactory in Beijing. As a production base for the company's cooperative models and Extreme Fox models, it fully embodies the concept of high-end manufacturing and intelligence. Currently, the factory has a production capacity of 0.12 million vehicles, with a reserved production capacity of 0.3 million vehicles.

Increase capital and expand shares, optimize the capital structure, and promote the company's business development. The company issued two announcements that BAIC New Energy will receive no more than 12 billion yuan in capital injections. The company announced that Beijing New Energy Vehicle Co., Ltd., a wholly-owned subsidiary of BAIC Blue Valley New Energy Technology Co., Ltd., plans to increase capital and expand shares by introducing strategic investors through public listing. The amount of capital increase will not exceed 10 billion yuan. After the successful implementation of this capital increase, the company remains the controlling shareholder of BAIC New Energy. Meanwhile, BAIC Motor Co., Ltd., a shareholder of BAIC Blue Valley New Energy Technology Co., Ltd., plans to increase capital by 2 billion yuan to its subsidiary Beijing New Energy Vehicle Co., Ltd.

Profit Forecast and Valuation:

We expect the company's revenue from 2024 to 2026 to be 25.35 billion yuan, 42.7 billion yuan, and 60.19 billion yuan, respectively, and net profit to mother of -4.3 billion yuan, -2 billion yuan, and 500 million yuan, respectively. The first coverage gives a “buy” rating.

Risk warning: Competition in the domestic automobile sales market has exceeded expectations, the company's product launch has fallen short of expectations, and the increase in the company's profitability has fallen short of expectations.