UBS: Target price of HK$67 for the first ideal car-W (02015) “buy” rating

The Zhitong Finance App learned that UBS released a research report saying that it covered Ideal Automobile-W (02015) for the first time, giving it a “buy” rating, with a target price of HK$67; the bank believes that the ideal valuation is close to a historically low level, forming an attractive pattern of profit turnover and profit margin recovery.

According to the bank, ideal operations have been sluggish for a longer period of time since the beginning of the year, but the company has net cash of 80 billion yuan. Coupled with positive operating cash flow, it believes there are sufficient resources to wait for the next upward profit cycle, or to give back to shareholders through further repurchases.

The bank said that although many investors downplayed ideals due to weak sales growth and recorded losses in the first half of this year, the bank still sees advantages and opportunities. Since this year, the sales volume of the Ideal i6 SUV has surpassed the similarly priced Xiaomi Yu7, reflecting its brand value and customer loyalty; its Mach M100 and Mach VLA models are still leading in autonomous driving and physical AI.

With the launch of the Mega and i9 in the second half of the year, management expects the gross margin of cars in the fourth quarter to return to a healthy level of 15% to 20% from less than 10% in the second quarter. UBS agreed that market competition is still fierce, and the visibility of the next upward cycle is still unclear, but it believes that ideal financial resources and endurance can eventually seize market share from high-end European brands to support revenue growth and profit margin improvement.