GOLDEN SUN SECURITIES·2025-09-08 07:09Investment Rating - The report maintains a "Buy" rating for the company, with a target market value of approximately $17 billion (134.4 billion HKD) and a target price of 60.2 HKD for the Hong Kong stock and $7.6 for the US stock [5][7]. Core Insights - The company is expected to turn profitable in Q4, driven by strong new car sales and effective cost management strategies. Q2 saw a delivery of 72,056 vehicles, a year-on-year increase of 25.6% and a quarter-on-quarter increase of 71.2%, leading to a revenue of 19 billion RMB, up 9% year-on-year and 58% quarter-on-quarter [1][2]. - The company has introduced new models, such as the L90 and ES8, which are expected to enhance sales and production capacity significantly. The L90 achieved a delivery of 10,575 units in its first full month, and the ES8 is set to launch with a competitive pricing strategy [3][4]. - The company has implemented a new operational mechanism to control costs and improve efficiency, aiming for a non-GAAP net profit in Q4. The R&D expenditure is projected to be controlled at 20 billion RMB per quarter [4][5]. Summary by Sections Financial Performance - In Q2, the company reported a gross margin of 10%, with vehicle sales contributing 16.14 billion RMB and service and other income at 2.87 billion RMB. The non-GAAP net loss was 4.1 billion RMB, with a non-GAAP net loss margin of 22% [1][2]. - For Q3, the company has guided a delivery volume of 87,000 to 91,000 vehicles, with expected revenue between 21.8 billion and 22.9 billion RMB, reflecting a year-on-year growth of 16.8% to 22.5% [2]. Production and Sales Outlook - The company anticipates achieving a monthly average sales volume exceeding 50,000 units in Q4, with a gross margin for complete vehicles projected to reach 16% to 17% [2][3]. - The production capacity for the L90 is expected to reach 15,000 units by October, while the ES8 aims for a capacity of 10,000 units in the same month [3]. Future Projections - The company forecasts total sales of approximately 350,000, 530,000, and 660,000 vehicles for the years 2025, 2026, and 2027, respectively, with total revenues projected to reach 93 billion, 136.7 billion, and 170.5 billion RMB [5][6]. - The non-GAAP net profit is expected to improve significantly, with projections of -13.3 billion, -900 million, and 6.2 billion RMB for the years 2025, 2026, and 2027, respectively [5][6].