Shenwan Hongyuan: Maintains "buy" rating on SAIC Group, company poised for strong performance after write-down provisions.

Shenwan Hongyuan Research pointed out that the profit of SAIC Group will decline in 2024, mainly due to a decrease in sales volume and provision for asset impairment. After the provision for impairment, the company will be lean and ready for future development. In Q1 2025, the company's sales volume was 945,000 vehicles, a year-on-year increase of 13.3%, with revenue of 140.86 billion yuan, a year-on-year decrease of 1.55%, but the net profit margin increased to 2.91% and the expense ratio decreased to 8.74%, a year-on-year decrease of 1.78%, showing significant internal integration effects. The "three driving forces" of independent brands, new energy vehicles, and overseas operations have jointly helped the group complete the transformation of new and old tracks. Considering the large investment during the transformation period, as well as the impact of declining sales of joint venture brand fuel-efficient vehicles on revenue and profit, the revenue forecast for 2025 is lowered from 805.2 billion yuan to 700.1 billion yuan, and the profit forecast is lowered from 21.3 billion yuan to 10.5 billion yuan. The new revenue forecasts for 2026-2027 are 749.6 billion and 800.7 billion yuan, with profit forecasts of 12 and 14 billion yuan, corresponding to PE ratios of 18, 16, and 13. Comparing to comparable companies such as GAC, Changan, Siasun, and Great Wall Motors, which are valued at 18/14 times their earnings for 2026/2027, there is still about 10% room for growth, so the "hold" rating is maintained.