2024-05-27 00:02Investment Rating - The report maintains a "Buy" rating for the company, despite lowering the target price to HKD 120.34, indicating a potential upside of 53.8% from the current price of HKD 78.25 [2][10]. Core Views - The report highlights a downward revision in sales and profit forecasts due to lower-than-expected sales and changes in product structure. The first-quarter performance was below expectations, and the management announced a delay in the release of pure electric models to next year [1][2]. - The sales forecast for 2024 has been reduced by 15% to 484,000 units, and by 35% for 2025, primarily due to the delay in the launch of pure electric models and weak demand recovery for L7/L8/L9 models amid increased market competition [1][2]. - Despite these challenges, the report suggests that the stock price has over-reflected the negative fundamentals, with the company still maintaining a competitive position in terms of cash reserves and gross margin compared to peers [2][4]. Financial Overview - The company is projected to achieve revenues of RMB 123.85 billion in 2023, with a significant increase to RMB 144.83 billion in 2024, reflecting a year-on-year growth of 16.9% [5][11]. - The net profit is expected to be RMB 11.70 billion in 2023, followed by RMB 8.28 billion in 2024, indicating a decrease due to the adjustments in sales forecasts [5][11]. - The company’s cash position remains strong, with cash reserves of RMB 98.9 billion, and a gross margin of approximately 20%, which is still better than its peers [2][5]. Sales and Market Performance - The report notes that the key to reversing the current downturn is a recovery in sales, particularly following the launch of the L6 model, which is expected to account for about 50% of orders [1][2]. - The company has initiated various promotional offers for the L7/L8/L9 models to stimulate sales of higher-priced vehicles, which could support a rebound in stock prices [1][2]. - Monthly order stability for L8 and L9 models is crucial for supporting stock price recovery, with recent weekly orders ranging from 7,000 to 8,000 units [1][2].