SERES(601127) 长江证券·2024-07-19 04:31Investment Rating - The report gives a "Buy" rating for the company, with an estimated net profit of 4.702 billion, 8.14 billion, and 10.363 billion yuan for 2024-2026, and corresponding valuations of 24.38x, 14.08x, and 11.06x [2] Core Viewpoints - The company has formed a deep partnership with Huawei, leveraging intelligent technology to reshape the high-end automotive market and capture industry growth driven by consumption upgrades and smart driving [2] - The company has transitioned from traditional auto parts to commercial vehicles and now to high-end new energy vehicles (NEVs) through three major transformations, with the AITO series achieving significant market success [5] - The company's profitability has turned positive in Q1 2024, with revenue reaching 26.56 billion yuan and net profit of 220 million yuan, marking a turning point in profitability [5] - Huawei's technological and branding support has enabled the company to redefine luxury in the automotive sector, with the AITO series gaining market recognition and strong sales performance [6] - The company's profitability is expected to continue improving as the AITO series gains traction and new models are introduced, supported by the company's modular platform and DE-i electric drive technology [7] Company Overview - The company has undergone three major transformations, transitioning from auto parts to commercial vehicles and now to high-end NEVs, with the AITO series being a key product in its current portfolio [5] - The company's revenue in 2023 was 35.84 billion yuan, a 5.1% increase year-on-year, with NEV revenue reaching 28.95 billion yuan, up 16.1% year-on-year [5] - The company's net profit in 2023 was -2.45 billion yuan, with a net profit margin of -6.8%, but it achieved a turnaround in Q1 2024 with a net profit of 220 million yuan [5] - The company's founder and controlling shareholder, Zhang Xinghai, holds a 29.6% stake in the company as of Q1 2024, indicating a stable and concentrated ownership structure [5] Market and Industry Analysis - The high-end automotive market in China grew by 12.6% in 2023, with domestic brands accounting for 1.826 million units, a 54% increase year-on-year [6] - The AITO M7 and M9 models have achieved significant market success, with the M7 selling over 180,000 units since its launch in September 2023 and the M9 receiving over 90,000 pre-orders as of the report date [6] - The company's modular platform and DE-i electric drive technology are expected to support the launch of new models, further enhancing its product lineup and profitability [7] Financial Performance - The company's revenue in 2023 was 35.84 billion yuan, with NEV revenue accounting for 28.95 billion yuan, a 16.1% increase year-on-year [5] - The company's net profit in 2023 was -2.45 billion yuan, but it achieved a turnaround in Q1 2024 with a net profit of 220 million yuan [5] - The company's gross margin improved to 21.5% in Q1 2024, driven by strong sales of the AITO series and the launch of the high-end M9 model [67] Strategic Partnerships - The company's partnership with Huawei has been a key driver of its success, with Huawei providing advanced intelligent driving and smart cabin technologies, as well as leveraging its brand strength to support the AITO series [6] - The AITO series has benefited from Huawei's technological and branding support, with the M7 and M9 models achieving strong market performance and recognition [6] Future Outlook - The company is expected to continue benefiting from the growth of the high-end automotive market in China, driven by consumption upgrades and the increasing adoption of smart driving technologies [2] - The company's profitability is expected to improve further as the AITO series gains traction and new models are introduced, supported by its modular platform and DE-i electric drive technology [7]