Summary of Changan Automobile Conference Call Company Overview - **Company**: Changan Automobile - **Date**: June 18, 2025 Key Points Industry and Market Performance - Changan Automobile's Q1 financial report shows initial signs of integration effects, with actual performance exceeding market expectations despite initial pessimism [2][3] - The company has launched three new energy vehicles (NEVs) that have performed strongly in the market, with significant order volumes and delivery targets [2][4][5] New Energy Vehicle Sales - **Avita 06**: Orders exceeded 12,500 within 48 hours of launch, with over 6,000 units delivered in May and a target of over 8,000 monthly sales [2][4] - **Changan Qiyuan K07**: Orders surpassed 50,000, with over 12,000 units delivered in May and a target of 15,000 monthly sales [2][5] - **Deep Blue S09**: Orders exceeded 21,100, with a target of over 10,000 monthly sales [2][5] Upcoming Product Launches - Changan plans to launch three new NEVs in the second half of 2025: - **Qiyuan A06**: A mid-size sedan with a target of 150,000 to 200,000 monthly sales [2][6] - **B216**: An entry-level compact SUV with a target of 200,000 monthly sales [2][6] - **Deep Blue C518**: A compact sedan with a target of 100,000 to 150,000 monthly sales [2][6] Competitive Strategy - To address industry price wars, Changan is implementing differentiated competition and cost-reduction strategies through platformization [2][7][8] - The "333 strategy" will be employed for new product launches, allowing for rapid marketing adjustments based on market feedback [2][8] International Expansion - Changan's overseas business is performing well, with high-margin business nearly doubling [2][9] - The export target for 2025 is set at a minimum of 700,000 units, aiming for 1,000,000 units, representing a growth of 50% to 100% compared to 2024 [2][10] - The company plans to enter major markets such as Brazil and Algeria, with a focus on expanding local production capacity [2][10] Integration with Military Industry Group - Changan is undergoing a strategic integration with the Military Industry Group, which is expected to enhance its decision-making autonomy and accelerate internationalization [2][11] Financial Projections and Break-even Analysis - The break-even point for Avita is between 20,000 to 25,000 units, with expectations for profitability in the next fiscal year [2][13] - Changan Qiyuan aims to significantly reduce losses this year, with a break-even point of 30,000 to 35,000 units [2][13] Brand Promotion Strategy - Changan emphasizes brand promotion through product diversification and new media marketing, including collaborations with celebrities and influencers [2][15] Production and Delivery Timeline - New products typically require a production ramp-up period of two to three months to reach high-efficiency production levels [2][14] Additional Insights - The integration with the Military Industry Group is a significant strategic move aimed at enhancing Changan's market position and operational efficiency [2][11] - The company's proactive approach to international market expansion and product diversification positions it well for future growth in a competitive landscape [2][10]

Group 1: Current Business Performance - Avita has achieved a milestone of "three years and four vehicles," with a total sales volume exceeding 150,000 units since deliveries began at the end of 2022 [1] - In May 2025, Avita's sales reached 12,767 units, marking a year-on-year increase of 179% and setting a new monthly sales record [1] - The company has established over 700 channel touchpoints, covering 212 cities, with a city coverage rate of 82% and a core business district coverage rate of 76% as of the end of May [1] Group 2: Product Development and Future Plans - Avita plans to launch 17 new products by 2030, covering a full spectrum of vehicle types including sedans, SUVs, sports cars, and MPVs [2] - The company has upgraded its service commitment, enhancing service levels across the board [2] Group 3: Global Expansion Strategy - Avita aims to enter over 50 countries by 2025, with a target of 16,000 units in overseas sales and 60,000 units by 2027 [3] - The brand's first model, Avita 11, was successfully launched in Hong Kong, with prices set at HKD 513,800 and HKD 608,800 for the Premium and Max versions, respectively [3] Group 4: Battery Technology and Production Capacity - The company plans to complete the investment in 50GWh battery cell production capacity by 2026, reaching a total capacity of 75GWh [4] - Avita aims to achieve solid-state battery validation by 2026 and gradually ramp up production by 2027, targeting an energy density of 400Wh/kg [4] Group 5: Regional Market Strategies - In Southeast Asia, Avita's Thailand production base commenced operations in May 2025, with a goal to enter the world's top 10 brands by 2027 [5] - In Europe, the company plans to complete marketing and service infrastructure by 2025 and introduce six new energy models by 2027 [5] - Avita aims to enter the Brazilian market in 2025 and achieve top 10 brand status in the region by 2026 [5] - The company is focusing on fuel vehicles in the Middle East and Africa, with plans to establish channels in Egypt, Morocco, and Qatar by 2025 [5]

Investment Rating - The report maintains a "Recommended" rating for the company [6]. Core Views - The company is experiencing a strong product cycle in the new energy sector, with significant growth in sales and a clear strategy for global expansion [2][4]. - The company aims to achieve a total sales target of 3 million vehicles by 2025, with 1 million of those being new energy vehicles [2]. - The report highlights the acceleration of the company's transformation towards electric and intelligent vehicles, supported by partnerships with Huawei [4]. Summary by Sections Sales Performance - In April, the company's wholesale sales were 191,000 vehicles, down 9.3% year-on-year and down 28.9% month-on-month. Cumulative sales from January to April reached 896,000 vehicles, a slight decrease of 0.7% year-on-year [1]. - The company's self-owned passenger vehicle sales in April were 109,000 units, down 11.1% year-on-year and down 33.9% month-on-month. Cumulative sales for the first four months were 562,000 units, up 0.3% year-on-year [1]. New Energy Vehicle Growth - The company saw a significant increase in new energy vehicle sales, with April sales reaching 62,000 units, up 19.8% year-on-year, although down 28.9% month-on-month. Cumulative sales for the first four months were 256,000 units, up 41.9% year-on-year [2]. - The deep blue brand sold 20,000 units in April, up 58.0% year-on-year, while the Avita brand sold 11,681 units, up 122.6% year-on-year [2][3]. Global Expansion Strategy - The company's overseas sales in April were 42,000 units, up 34.0% year-on-year, with cumulative sales for the first four months reaching 202,000 units, up 43.7% year-on-year [4]. - The company plans to establish 8 new operating entities and 16 logistics nodes overseas by 2025, aiming to enhance its global market presence [4]. Financial Forecast - The report projects revenues of 189.6 billion, 209.5 billion, and 233.5 billion yuan for 2025, 2026, and 2027 respectively, with net profits of 8.9 billion, 10.8 billion, and 12.7 billion yuan for the same years [5][21]. - The earnings per share (EPS) are expected to be 0.89, 1.09, and 1.28 yuan for 2025, 2026, and 2027 respectively, with corresponding price-to-earnings (PE) ratios of 14, 11, and 10 [5][21].

Investment Rating - The report maintains a "Recommended" rating for the company [6]. Core Views - The company reported Q1 2025 revenue of 34.16 billion yuan, a year-on-year decrease of 7.7% and a quarter-on-quarter decrease of 30.0%. The net profit attributable to the parent company was 1.35 billion yuan, up 16.8% year-on-year but down 63.8% quarter-on-quarter. The non-recurring net profit was 780 million yuan, a significant increase of 601.0% year-on-year, but down 13.7% quarter-on-quarter [1][2]. - The company's sales of self-owned passenger vehicles reached 453,000 units in Q1 2025, an increase of 3.5% year-on-year but a decrease of 10.8% quarter-on-quarter. The sales of self-owned new energy passenger vehicles were 194,000 units, up 50.7% year-on-year but down 30.4% quarter-on-quarter [1][2]. - The gross profit margin for Q1 2025 was 13.9%, a decrease of 0.5 percentage points year-on-year and 2.3 percentage points quarter-on-quarter, primarily due to increased terminal discounts and lower cost reductions recognized in the quarter [1][2]. Summary by Sections Financial Performance - Q1 2025 total revenue was 34.16 billion yuan, with a year-on-year decline of 7.7% and a quarter-on-quarter decline of 30.0%. The net profit attributable to the parent company was 1.35 billion yuan, reflecting a year-on-year increase of 16.8% but a quarter-on-quarter decrease of 63.8% [1][2]. - The company’s gross profit margin decreased to 13.9% in Q1 2025, impacted by increased competition and pricing pressures [1][2]. Sales and Market Position - The company’s self-owned passenger vehicle sales reached 453,000 units in Q1 2025, with a year-on-year increase of 3.5% and a quarter-on-quarter decrease of 10.8%. The sales of self-owned new energy vehicles were 194,000 units, marking a year-on-year increase of 50.7% [1][2][3]. - The company plans to launch new models under the Deep Blue and Avita brands, aiming for a global sales target of 500,000 units in 2025 [3]. Future Outlook - The report forecasts revenues of 189.6 billion yuan, 209.5 billion yuan, and 233.5 billion yuan for 2025, 2026, and 2027 respectively, with net profits projected at 8.87 billion yuan, 10.76 billion yuan, and 12.72 billion yuan for the same years [4][5]. - The expected earnings per share (EPS) for 2025, 2026, and 2027 are 0.89 yuan, 1.09 yuan, and 1.28 yuan respectively, with corresponding price-to-earnings (PE) ratios of 14, 11, and 10 [4][5].

Investment Rating - The report maintains a "Recommended" rating for the company [6] Core Views - The company reported Q1 2025 revenue of 34.16 billion yuan, a year-on-year decrease of 7.7% and a quarter-on-quarter decrease of 30.0%. The net profit attributable to shareholders was 1.35 billion yuan, up 16.8% year-on-year but down 63.8% quarter-on-quarter. The non-recurring net profit was 780 million yuan, a significant increase of 601.0% year-on-year, but down 13.7% quarter-on-quarter [1][2] - The company's sales of self-branded vehicles reached 453,000 units in Q1 2025, a year-on-year increase of 3.5% but a quarter-on-quarter decrease of 10.8%. The sales of self-branded new energy vehicles were 194,000 units, up 50.7% year-on-year but down 30.4% quarter-on-quarter [1][2] - The gross profit margin for Q1 2025 was 13.9%, a decrease of 0.5 percentage points year-on-year and 2.3 percentage points quarter-on-quarter, primarily due to increased terminal discounts and lower cost reductions [1][2] Financial Performance Summary - The report forecasts revenues of 189.55 billion yuan, 209.46 billion yuan, and 233.54 billion yuan for 2025, 2026, and 2027 respectively, with corresponding net profits of 8.87 billion yuan, 10.76 billion yuan, and 12.72 billion yuan [4][5] - The earnings per share (EPS) are projected to be 0.89 yuan, 1.09 yuan, and 1.28 yuan for the years 2025, 2026, and 2027 respectively, with price-to-earnings (PE) ratios of 14, 11, and 10 [4][5] - The company plans to accelerate its new energy transition with new models and aims for global sales of 500,000 units in 2025, including 400,000 units domestically and 100,000 units overseas [3][4]

Investment Rating - The automotive industry maintains a "Recommended" investment rating, indicating a positive outlook for the sector's fundamentals and expectations for the industry index to outperform the benchmark index [5][30]. Core Insights - The automotive industry experienced an overall decline of 0.6% from April 13 to April 19, with significant new car launches ahead of the Shanghai Auto Show, including models from Zeekr, AITO, and NIO [1][2]. - Huawei and SAIC jointly launched the "Shangjie" brand, with an initial investment of 6 billion yuan and plans for a dedicated factory, aiming to introduce their first model priced between 180,000 to 250,000 yuan by mid-year [1][24]. - The automotive sector is witnessing a global expansion, with companies like BYD entering new markets in Europe and Southeast Asia, and Xpeng planning local production in Indonesia [21][23][27]. Market Performance Overview - The automotive sector's performance was mixed, with some sub-sectors like automotive services and motorcycles showing gains of 1.9% and 1.3%, while passenger vehicles and auto parts saw declines of 1.0% and 1.2% respectively [2][11]. - Notable individual stock performances included Huayang Racing (+19.4%), Jianbang Technology (+18.1%), and Jiuzhi Co. (+17.8%), while Xinquan Co. (-9.1%) and Meili Technology (-7.7%) faced significant declines [3][13]. Recent Developments - Several new models were launched, including the BYD Han L and Tang L, as well as the AITO Wenjie M8 and NIO Firefly, with prices ranging from 119,800 to 449,800 yuan [18][20]. - The industry is also seeing advancements in smart driving technology, with Xpeng aiming for L3 level autonomous driving by the end of 2025 [21]. - The establishment of the "Shangjie" brand by Huawei and SAIC is seen as a strategic move to capture a significant share of the growing market for new energy vehicles [24].

Investment Rating - The report maintains a recommendation for the automotive industry [4] Core Insights - The Shanghai International Auto Show will commence on April 23, showcasing several significant new models, including those from Geely, NIO, and Li Auto, which are expected to impact stock prices [3][10] - The report highlights the anticipated launch of nine major new or updated models in April 2025, suggesting a potential catalyst for investment in the automotive sector [9][12] Summary by Sections Industry Overview - The automotive sector comprises 225 listed companies with a total market capitalization of approximately 30,810.37 billion CNY and a circulating market value of about 23,623.17 billion CNY [4] Market Performance - The absolute performance of the automotive sector over the past month, six months, and twelve months is -3.5%, -4.3%, and -9.1% respectively, while the relative performance shows -2.1%, 1.3%, and 3.2% [5] New Model Launches - Key new models expected in April include: 1. Leapmotor B10: A-class flagship pure electric SUV, expected to sell 5,000 to 8,000 units monthly [11][13] 2. BYD Han L: C-class flagship plug-in hybrid/pure electric sedan, expected to sell 10,000 units monthly [20][28] 3. BYD Tang L: C-class flagship plug-in hybrid/pure electric SUV, expected to sell 8,000 units monthly [30][31] 4. NIO Firefly: A0-class pure electric hatchback, expected to sell 5,000 to 8,000 units monthly [11][20] 5. Avita 06: B-class range-extended/pure electric sedan, expected to sell 5,000 units monthly [11][20] 6. AITO M8: C-class range-extended family SUV, expected to sell 15,000 to 20,000 units monthly [11][20] 7. Lynk & Co 900: C-class plug-in hybrid six-seat SUV, expected to sell 6,000 to 8,000 units monthly [11][20] Investment Recommendations - The report suggests focusing on the new models from Leapmotor (B10), BYD (Han L, Tang L), NIO (Firefly), Changan (Avita 06), and Geely (Lynk & Co 900) due to their expected market impact [11][20][30] - Key investment recommendations include Geely and Li Auto, with expectations of exceeding market performance in upcoming financial reports [11][20]