Core Viewpoint - Chery Automobile demonstrates significant growth in revenue and net profit, driven by a diversified product portfolio and effective market strategies, while facing challenges in gross and net profit margins due to competitive pressures and market dynamics [3][4][5][6]. Business Model and Market Coverage - Chery designs, develops, manufactures, and sells a diverse range of passenger vehicles, including both fuel and new energy vehicles, under multiple brands such as Chery, Jetour, and Exeed, targeting various market segments from budget to luxury [1]. - The company employs a combination of dealer networks in China and overseas, with 3,663 domestic and 2,958 international dealer outlets as of March 31, 2025, and utilizes a multi-brand strategy to enhance market penetration [2]. Revenue and Profit Analysis - Revenue has shown remarkable growth, with a compound annual growth rate (CAGR) of 70.7%, increasing from 92.6 billion yuan in 2022 to 269.9 billion yuan in 2024, and reaching 68.2 billion yuan in Q1 2025, a 24.2% increase year-on-year [3]. - Net profit also surged, with a CAGR of 57.1%, rising from 5.8 billion yuan in 2022 to 14.3 billion yuan in 2024, and a 90.9% increase in Q1 2025 compared to the same period in 2024, reaching 4.7 billion yuan [4]. Margin Analysis - Gross margin fluctuated, decreasing to 12.4% in Q1 2025 from 13.5% in 2024, influenced by increased competition and changes in product mix [5]. - Net margin showed variability, stabilizing at 6.4% in 2023 but dropping to 5.3% in 2024, before rebounding to 6.9% in Q1 2025, indicating ongoing challenges in cost management and pricing strategies [6]. Revenue Composition - Passenger vehicle sales dominate revenue, accounting for over 90% of total income, with fuel vehicles comprising 69.6% and new energy vehicles increasing from 13.2% in 2022 to 27.3% in Q1 2025 [7][8]. Related Transactions - Chery's inter-company transactions are compliant with regulations, but there are uncertainties regarding profit distribution and tax implications that could affect financial stability [9]. Financial Challenges - The net current liabilities have raised concerns, with figures of 4.8 billion yuan in 2022 and 17.4 billion yuan in 2023, although improvements were noted in 2024 and Q1 2025 [10]. Market Competition - The global automotive market is highly competitive, with Chery facing challenges from both domestic and international rivals, particularly in the rapidly evolving new energy vehicle sector [11][20]. Peer Comparison - Chery ranks as the second largest domestic brand in China and the eleventh globally, with significant sales growth, yet it still lags behind in brand influence and profit margins compared to some international competitors [12][13]. Customer and Supplier Dynamics - Customer concentration remains stable, with the top five clients contributing 19.0% of total revenue in Q1 2025, indicating a broad customer base [14]. - Supplier concentration is also stable, with the top five suppliers accounting for 17.1% of total raw material purchases, though risks related to price fluctuations and delivery delays persist [15]. Management and Ownership Structure - Chery's management team possesses extensive industry experience, with the founder having over 40 years in the automotive sector, which aids in strategic decision-making [16]. - The company's ownership structure is dispersed among 22 shareholders, including state-owned enterprises, which may impact governance and decision-making processes [17].