SafariSpinSafari| Bank of America Securities: Reiterates that Ideal Automobile-W "Buy" rating target price drops to HK$140

Bank of America Securities released a research report sayingSafariSpinSafari, reiterated the "Buy" rating of Ideal Car-W (02015) because the company has a strong model pipeline, good gross margin management and strong free cash flow. However, the sales forecast for Ideal Car from 2024 to 2026 was lowered by 7%/11%/6% respectively, and the earnings per share forecast was lowered by 33%/21%/2% respectively; taking into account the new sales and free cash flow forecast, the target price was lowered from HK$160 to HK$140.

The bank said its first-quarter results fell short of expectations, with total revenue of 25.6 billion yuan, a year-on-year increase of 36%, and a quarter-on-quarter decline of 39%. Gross profit margin is 20SafariSpinSafari.6%, a year-on-year increase of 0.2 percentage points and a quarter-on-quarter decline of 2.9 percentage points, better than the bank's forecast of 19.8%. The operating loss was RMB585 million, in line with the bank's forecast but lower than market expectations. Net profit was Rmb593 million, down 36% year-on-year and 90% quarter-on-quarter, better than the bank's forecast of Rmb111 million.

According to the report, Ideal Automobile management expects deliveries to be between 105,000 and 110,000 units in the second quarter, a year-on-year increase of 21% to 27%, and a quarter-on-quarter increase of 31% to 37%. At the same time, the second quarter is expected to be the most challenging quarter for gross profit margins, with car gross profit margins likely reaching 18%, dragged down by more sales contributions from the low-margin L6. In addition, management expects that monthly sales from July to August will return to the level of 50,000 units.