SERES(SH:601127) EBSCN·2024-07-10 23:31Investment Rating - The report maintains a "Buy" rating for the company [1][2]. Core Views - The company's 1H24 performance is in line with expectations, with significant improvement in profitability driven by the scale delivery of the M9 model. Projected revenue for 1H24 is expected to be between 639.0 to 660.0 billion yuan, with a net profit of 13.9 to 17.0 billion yuan, compared to a loss of 13.4 billion yuan in the same period of 2023 [1]. - The M9 model's delivery has significantly contributed to the company's profitability, with a projected single-vehicle profit increase of 400.8% to 13,000 yuan in 2Q24. The company achieved a total vehicle sales increase of 142.2% year-on-year and 6.6% quarter-on-quarter, reaching 122,000 units in 2Q24 [1]. - The acquisition of the "Aito" trademark from Huawei for 2.5 billion yuan is seen as a strategic move to enhance brand control and reduce market controversies regarding Huawei's involvement in vehicle manufacturing. This acquisition is expected to positively impact the company's balance sheet in 2H24 [1]. Summary by Sections Financial Performance - 1H24 revenue is projected at 639.0-660.0 billion yuan, with a net profit of 13.9-17.0 billion yuan, a significant recovery from a loss of 13.4 billion yuan in 2023. 2Q24 revenue is expected to be 373.4-394.4 billion yuan, with a net profit of 11.7-14.8 billion yuan, compared to a loss of 7.1 billion yuan in the same quarter of 2023 [1][6]. - The company anticipates a continued improvement in profitability, with net profit forecasts for 2024-2026 adjusted upwards by 33.5%, 31.9%, and 21.3% to 63.7 billion, 76.2 billion, and 84.0 billion yuan respectively [1]. Vehicle Sales and Market Position - The company reported a 142.2% year-on-year increase in vehicle sales, with the M9 model accounting for approximately 47.8% of total sales in 2Q24. The M9 model's average monthly sales exceeded 15,000 units, making it the top-selling model in its category [1][6]. - The company is focusing on the 200,000 to 600,000 yuan SUV market segment, with successful model updates for the M5 and M7, leading to strong pre-orders and delivery performance [1]. Strategic Moves - The acquisition of the Aito trademark from Huawei is expected to enhance the company's control over its brand and reduce market controversies. This strategic move is anticipated to strengthen the partnership with Huawei, potentially leading to enhanced technological collaboration in future vehicle models [1][6].