3Q22 performance is lower than market expectations.
The company announced 3Q22 results: revenue was 13 billion yuan, month-on-month + 26.3% Nonmuri GAAP home net loss of 3.499 billion yuan, battery prices and cost expansion led to 3Q performance lower than market expectations.
Trend of development
Gross profit margin and losses are lower than market expectations, and expenses are close to steady state. 3Q company's revenue is 13 billion yuan, 31606 vehicles are delivered, the corresponding bicycle ASP is 377546 yuan, the month-on-month ratio is-1.1%, the gross profit margin of 3Q car sales is 16.4%, year-on-year / month-on-month respectively-1.7/-0.3ppt, mainly due to the increase in battery costs, partly offset by reduced subsidies for users' auto finance programs; the corresponding comprehensive gross profit margin is 13.3%, year-on-year / month-on-month respectively-7.0/+0.3ppt. On the expense side, 3Q R & D costs 2.945 billion yuan, with a month-on-month ratio of + 37.0%, which is mainly invested in new brands, batteries and chips. The current R & D layout and work are basically finalized, and the company expects R & D investment to be stable at about 3 billion yuan in subsequent quarters; sales cost 2.712 billion yuan, month-on-month ratio + 18.8%, mainly due to the company's expansion of sales and service network in the domestic and European markets. Looking forward, the company plans to focus on improving R & D and marketing efficiency, and the current expenditure has reached a steady state. In addition, 3Q22 recorded other losses of 496 million yuan, mainly due to book losses on related RMB-denominated assets caused by the depreciation of RMB against the US dollar.
The net loss of Non-GAAP was 3.499 billion yuan, mainly due to the rise in battery prices and the rapid expansion of costs.
The 4Q delivery guidance is strong and the gradient layout is clear. Company 4Q delivery guidelines 4.3-48000 vehicles, corresponding to November-December monthly delivery of 1.6-18000 vehicles, month-on-month trend higher than expected. Looking forward to 1H23, the company plans to launch five new models, and the product matrix is further improved, which is expected to form a comprehensive coverage for users at a price of 30-500000 yuan. We expect that the formation of different product combinations is also expected to better resist industry competition and its own product cycle iteration. In the medium and long term, the company continues to demonstrate product power, business model, thinking towards globalization, and has made initial progress in the European market. In terms of the mass market, it plans to gradually launch sub-brands to provide differentiated services to more users and achieve rapid scale expansion with the ultimate performance-to-price ratio.
Increase inventory reserves to resist risk, and statement improvement is still in progress. 3Q company inventory of 6.7 billion yuan, nearly doubled month-on-month, mainly due to the company's increased reserves for core components, chips and so on. Looking forward to 2023, the company reiterates that the core business of 4Q23 is profitable; in addition, the company also guides the layout of batteries, chips and mobile phones to invest about 4 billion yuan in 2023. We believe that monthly sales are expected to gradually exceed 20,000 vehicles, overall expenses remain robust, cost pressure is released, and financial performance is in progress: in the medium to long term, the company is still confident about the steady-state gross profit target of 25% and 30%.
Profit forecast and valuation
Keep the company's outperforming industry rating unchanged. The current stock price corresponds to 2022 Universe 23 year 2.0 prime 0.9x Ev/Rev. Taking into account the sector valuation correction, the US stock target price is lowered by 46.4% to US $15, and the exchange rate translates to HK $118,000,000 (down 46.4%). Taking into account the epidemic restrictions on production and marketing, the 23-year profit forecast for 2022 Universe is lowered to-116.78 Universe 2.532 billion (the previous value is-6655 Universe 237m), corresponding to the 2022Universe 3.2 EV/Revenue in 23 years, which has an upside space of 45.1% of the current stock price 67.7%.
Risk.
The shortage of chips and supply chain affected the company's production and sales, and the number of new cars fell short of expectations.