Core Viewpoint - The company reported strong Q1 performance with revenue of 10.02 billion yuan, a year-on-year increase of 187.1%, despite a quarter-on-quarter decline of 25.6%, and a net loss of 130 million yuan, which exceeded expectations of a loss between 500 million to 1 billion yuan [1] Group 1: Q1 Performance Highlights - Q1 revenue reached 10.02 billion yuan, driven by a significant year-on-year increase of 187.1% and a quarter-on-quarter decrease of 25.6% [1] - The company delivered 87,552 vehicles in Q1, representing a year-on-year increase of 162.1%, which strongly contributed to revenue growth [1] - The gross margin for Q1 was 14.9%, marking a historical high, with improvements attributed to scale effects from increased sales, ongoing cost management, and an optimized product mix [1] Group 2: Future Outlook and Strategic Initiatives - The company is entering a strong new vehicle cycle in 2025, with three models from the B platform set to launch and updates for D and C platform models expected [2] - The company has expanded its distribution network, with 756 stores covering 279 cities as of Q1 2025, and plans to add 80 more cities by the end of the year [2] - International expansion is accelerating, with 7,546 units exported in Q1 and over 500 overseas outlets established, alongside plans for local assembly in Malaysia and localized manufacturing in Europe by 2026 [2] Group 3: Financial Projections and Valuation - Revenue projections for 2025-2027 are set at 68.7 billion yuan, 91.4 billion yuan, and 116.7 billion yuan, respectively, with net profits expected to be 350 million yuan, 2.04 billion yuan, and 4.31 billion yuan [2] - The company is assigned a target price of 81.15 HKD for 2025, reflecting a 10% premium due to the anticipated strong new vehicle cycle, rapid localization, and strategic partnerships [2]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 81.15 [7][8] Core Insights - The company reported Q1 2025 revenue of RMB 10.02 billion, a year-on-year increase of 187.1%, and a gross margin of 14.9%, marking a new high [1][2] - The strong sales growth in Q1 is attributed to the delivery of 87,552 vehicles, a 162.1% increase year-on-year, and an improved product mix with higher-priced models [2][3] - The company is expected to enter a strong new car cycle in 2025, with multiple new models launching and an accelerated overseas expansion [3][4] Revenue and Profit Forecast - Revenue projections for 2025-2027 are RMB 68.71 billion, RMB 91.41 billion, and RMB 116.66 billion, respectively, with net profits expected to be RMB 0.35 billion, RMB 2.04 billion, and RMB 4.31 billion [4][19] - The report anticipates that the company will achieve profitability in 2025, driven by high sales volume and improved gross margins [1][4] Market Expansion and Strategic Partnerships - The company has established 756 stores covering 279 cities as of Q1 2025, with plans to expand to 80 more cities by the end of the year [3] - The overseas market expansion is progressing, with over 500 outlets established and local assembly in Malaysia expected to start by the end of 2025 [3][4] - Strategic partnerships with Stellantis and China FAW are expected to contribute to revenue growth [3]

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Views - The company reported Q1 2025 revenue of 10.02 billion RMB, a year-over-year increase of 187.1%, and a gross margin of 14.9%, marking a new high [1][2] - The strong sales growth in Q1 is attributed to a significant increase in vehicle deliveries, with 87,552 units sold, up 162.1% year-over-year [2] - The company is expected to enter a new vehicle cycle in 2025, supported by strategic partnerships and cost management initiatives, leading to sustained revenue growth and profitability [1][3] Summary by Sections Revenue and Profitability - Q1 2025 revenue reached 10.02 billion RMB, with a gross margin of 14.9%, reflecting a 16.1 percentage point increase from the previous quarter [2] - The company aims for annual profitability in 2025, with projected revenues of 68.71 billion RMB, 91.41 billion RMB, and 116.66 billion RMB for 2025, 2026, and 2027 respectively [4] Vehicle Delivery and Market Expansion - The company delivered 87,552 vehicles in Q1 2025, significantly boosting revenue [2] - The company plans to launch three new models in 2025 and expand its distribution network, targeting an additional 80 cities by the end of the year [3] Strategic Initiatives - The company is enhancing its overseas market presence, with over 500 overseas outlets established and plans for local assembly in Malaysia by the end of 2025 [3] - Strategic collaborations with Stellantis and other partners are expected to contribute to revenue growth [3] Valuation and Price Target - The target price is set at 81.15 HKD, reflecting a 10% premium based on the anticipated strong vehicle cycle and strategic initiatives [4][8]

Financial Data and Key Metrics Changes - The company's revenue for Q1 2025 reached RMB 12 billion, representing an annual increase of approximately 187% [5] - Gross profit in Q1 2025 was 14.9%, up from 13.3% in Q4 2024, attributed to increased sales and optimized portfolio [5] - The net loss for Q1 2025 was about RMB 130 million, a significant reduction from approximately RMB 1 billion in the previous year [6] - The company reported RMB 25.7 billion in cash reserves, indicating strong capital availability [6] Business Line Data and Key Metrics Changes - C car deliveries in Q1 reached about 60,000 units, contributing to a total of 700,000 units delivered [6] - The launch of the Dayton model on April 10 resulted in over 18,000 units sold shortly after its release [7] - The A10 model showcased at the Shanghai Auto Show targets the young generation, emphasizing optimal range and performance [8] Market Data and Key Metrics Changes - The company plans to expand its retail presence, targeting over 80 additional cities in China, focusing on second-tier cities [11] - In Q1, the efficiency of retail operations improved by 4% compared to 2024 [12] - The company exported a significant volume of locomotives, ranking first among its peers in overseas markets [14] Company Strategy and Development Direction - The company aims to enhance investments in smart driving technology, with anticipated investments exceeding RMB 1 billion [11] - Strategic cooperation with Stellantis will facilitate localized assembly and manufacturing in Malaysia and Europe by the end of 2025 [15] - The company is committed to integrating technological innovation with social service, evidenced by a RMB 5 million donation to improve local livelihoods [16] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining robust sales in Q2, expecting sales to reach between 130,000 to 140,000 units [25] - The company aims for annual sales targets of 500,000 to 600,000 units, with a gross profit margin close to 10% [26] - Management remains optimistic about achieving annual breakeven based on Q1 performance [26] Other Important Information - R&D expenses increased by about 52% year-on-year to RMB 800 million, reflecting greater investment in labor and technology [18] - The company achieved a significant improvement in customer service response rates, with a 99.4% response rate within 15 minutes [13] - The company is focused on digital transformation to enhance customer service and operational efficiency [61] Q&A Session Summary Question: What is the expectation for gross profit margin in Q2? - Management indicated that while Q1 performance was robust, a slight decline in gross profit margin is expected in Q2 due to the launch of new models [24] Question: What percentage of revenue is due to strategic cooperation? - Management stated that specific data on revenue from strategic cooperation is confidential, but gross profit margins for complete vehicles are similar to 2024 levels [27][28] Question: How will the company handle tariffs in overseas markets? - The company plans to follow market-based pricing strategies and prioritize market share over immediate profits in international markets [46][47] Question: What is the target for channel stores? - The company aims to exceed 1,000 stores, with about 800 stores already established in Q1 [59] Question: How will the company address battery supply pressures? - Management confirmed that battery supply issues are expected to be resolved by May, ensuring sufficient production capacity [62]