SERES(SH:601127) EBSCN·2024-08-27 02:03Investment Rating - Maintain "Buy" rating [2] Core Views - 2Q24 performance met expectations with revenue of RMB 38.48 billion, up 547.9% YoY and 44.9% QoQ, and net profit attributable to shareholders of RMB 1.41 billion [2] - Gross margin improved significantly to 27.5%, up 23.3 ppts YoY and 6.0 ppts QoQ, driven by the delivery of high-ASP AITO models [2] - AITO brand sales surged 701.1% YoY to 220,000 units in the first 7 months of 2024, with M9 accounting for 34.5% of sales [2] - The company plans to launch lower-priced versions of core models to meet diverse consumer needs, such as the AITO M7 Pro priced at RMB 249,800 [2] - Strengthened control over the AITO brand through equity adjustments and a RMB 11.5 billion investment in Huawei's Intelligent Automotive Solution BU [2] Financial Performance - 1H24 revenue reached RMB 65.04 billion, up 489.6% YoY, with net profit attributable to shareholders turning positive at RMB 1.63 billion [2] - 2Q24 gross margin improved to 27.5%, up 23.3 ppts YoY and 6.0 ppts QoQ [2] - 2024E-2026E net profit attributable to shareholders is forecasted at RMB 6.37 billion, RMB 7.62 billion, and RMB 8.40 billion, respectively [2] - 2024E-2026E revenue is projected to grow to RMB 145.06 billion, RMB 169.82 billion, and RMB 174.24 billion, respectively [2] Market and Valuation - Current market cap is RMB 121.27 billion with a total of 1.51 billion shares outstanding [3] - 1-year stock price range is RMB 32.96 to RMB 106.66 [3] - 2024E-2026E P/E ratios are 19x, 16x, and 14x, respectively [2] - 2024E-2026E P/B ratios are 6.8x, 4.8x, and 3.6x, respectively [2] Strategic Developments - Acquired 19.36% equity of Seres Auto from minority shareholders for RMB 1.33 billion, enhancing control over the subsidiary [2] - Renamed the sales subsidiary to "Chongqing AITO Auto Sales Co., Ltd." to strengthen brand identity [2] - Invested RMB 11.5 billion for a 10% stake in Huawei's Intelligent Automotive Solution BU, deepening collaboration with Huawei [2]