Scale effect initially appears, institutions are increasing their investments in Chongqing Sokon Industry Group Stock (601127.SH).

In mid-December 2024, Chongqing Sokon Industry Group Stock (601127.SH), which has rapidly grown with the Wanjie series, was included in the four major indexes of the Shanghai and Shenzhen 300, Shanghai 50, China A500, and Shanghai 180 for the first time, marking its entry as a representative of new energy vehicles into the ranks of important A-share indexes, and currently the only Chongqing company in the Shanghai 50 index. Chongqing Sokon Industry Group Stock is also the fourth profitable new energy vehicle company after Tesla, BYD Company Limited, and Ideal. Why is the capital market optimistic about Chongqing Sokon Industry Group Stock? Scale effect acceleration, gross profit margin leading the industry over 25% In the past ten years, the Chinese automotive market has experienced a leapfrog development, with an annual production volume exceeding 10 million vehicles in 2024, becoming the world's largest new energy vehicle market. In November, the domestic retail penetration rate of new energy vehicles reached 52.3%, an increase of 12 percentage points compared to the same period last year, breaking the 50% mark for five consecutive months. Chongqing Sokon Industry Group Stock reached a turning point in profitability in the first quarter of this year, becoming the fourth new energy vehicle company to achieve profitability after Tesla, BYD Company Limited, and Ideal. Correspondingly, its sales of new energy vehicles have maintained a stable growth trend with monthly sales exceeding 30,000. From January to November of this year, Chongqing Sokon Industry Group Stock's cumulative sales of new energy vehicles reached 389,566 units, a year-on-year increase of 255.26%. "Cars sell well" is the general evaluation of Chongqing Sokon Industry Group Stock by the market. With the emergence of scale effects, in capital-intensive industries, profitability mainly relies on scale effects and cost control. Chongqing Sokon Industry Group Stock has been validated in both of these aspects. In the first quarter of this year, net profit was 2.2 billion yuan, first turning profitable, and the second and third quarters continued to improve. The company's revenue in the first three quarters was 106.626 billion yuan, a year-on-year increase of 539.24%, with a net profit of 4.038 billion yuan. Sales are expected to continue to grow steadily in the fourth quarter, with a high likelihood of profitability for the whole year. At the same time, the continuous improvement of gross profit margin also confirms Chongqing Sokon Industry Group Stock's control of costs and good operational capabilities from another perspective. The overall gross profit margin of Chongqing Sokon Industry Group Stock in the third quarter reached 25.53%. Institutional investors continue to be optimistic, with scarcity and growth attracting attention Since the beginning of the year, Chongqing Sokon Industry Group Stock has received "strong recommendation", "outperform the market", and "buy" ratings from securities firms including Everbright, CICC, Founder, CITIC, and Ping An. The latest research report from Guosheng Securities believes that Chongqing Sokon Industry Group Stock has now crossed the breakeven point, with strong sales combined with the improvement of scale effects, and subsequent sales and profits are expected to maintain high growth. Securities research reports believe that the potential of the new energy vehicle market is huge, and industry concentration is gradually increasing. The company's core competitive advantages lie in its intelligent technology attributes and luxury brand, and with the continuous iteration of products and the expansion of its product lineup from the launch of new models, overall sales are expected to continue to grow, helping Chongqing Sokon Industry Group Stock further expand its market share. This year, Chongqing Sokon Industry Group Stock's cooperation with Huawei has been upgraded again, with the two signing a deeper strategic cooperation agreement to fully leverage the advantages of joint business in product strength, marketing strength, brand strength, etc., and jointly create a world-class new luxury car brand. Especially following this is the fact that based on the integration of their businesses, Chongqing Sokon Industry Group Stock has acquired a 10% stake in Huawei, further enhancing their cooperation relationship through equity, clarifying the sustainability and certainty of long-term development. The cooperation between the two sides will be more comprehensive and closer, jointly promoting the Wanjie brand, and launching more new products. With the expansion of the investment business, investment income will continue to increase Chongqing Sokon Industry Group Stock's profits. Analysis believes that with the investment in Huawei, Chongqing Sokon Industry Group Stock will deepen its cooperation with Huawei in the field of intelligent automotive solutions, jointly promoting the intelligent transformation of the entire automotive industry. Since the beginning of the year, the layout of car companies around smart driving has been accelerating, and in the foreseeable future, the competition for smart driving capabilities will definitely intensify. The above characteristics of sustainable development based on long-termism are the scarce and growth elements that the capital market is currently chasing. Chongqing Sokon Industry Group Stock was recently included in the four major indexes, proving this point. Being selected for the index will attract fund allocation, while Chongqing Sokon Industry Group Stock's influence will spread through the capital market. After all, before this, A-shares only had Kweichow Moutai, China Merchants Bank, and Ping An Insurance included once in the four major indexes. What does this mean? From the perspective of price fluctuationsSince being included in the Shanghai 50 Index, Kweichow Moutai has seen a cumulative increase of 80 times over the past 20 years, China Merchants Bank has seen a cumulative increase of 15 times over the past 20 years, and Ping An Insurance has seen a cumulative increase of 5 times over the past 17 years. This means that Chongqing Sokon Industry Group Stock has the potential to replicate this trend."Technology innovation driving, continuously building core competitiveness" Looking back at the market, there has been a clear change this year, which is the rise of extended-range electric vehicles. In fact, Chongqing Sokon Industry Group Stock started the dual technology route of "pure electric + extended-range" as early as 2016, and has continuously invested heavily in research and layout of extended-range technology. The super extended-range system has undergone several iterations, and the brand-new generation of Chongqing Sokon Industry Group Stock's super extended-range system, which was just unveiled at the Guangzhou Auto Show, can achieve intelligent active energy management, reducing comprehensive fuel consumption by 15% and reducing extended-range noise perception by 90%, achieving ultra-high efficiency of "1 liter of fuel generating 3.6 degrees of electricity". These technological achievements undoubtedly help Chongqing Sokon Industry Group Stock further enhance its product market competitiveness and promote corporate growth. Furthermore, Chongqing Sokon Industry Group Stock has always maintained a high level of investment in research and development. In 2023 alone, the research and development investment reached 4.438 billion yuan, accounting for 12.38% of revenue, with a year-on-year increase of 18.6% in research and development personnel. In terms of technological strength, Chongqing Sokon Industry Group Stock is also impressive. In addition to the leading super extended-range technology, the full-stack self-developed Rubik's Cube platform is the industry's first platform compatible with three new energy power forms: super extended-range, pure electric, and super hybrid. Integrated die-cast body, highly integrated seven-in-one electric drive unit, and other hardcore technologies also reflect Chongqing Sokon Industry Group Stock's deep accumulation in the field of new energy vehicles and its leading position in intelligence and electrification. In addition, Chongqing Sokon Industry Group Stock has established close cooperation with leading enterprises such as Dongfeng, Contemporary Amperex Technology, and Bosch through the integration of leading technologies, and has built a cooperation ecological system centered on cross-border cooperation with Huawei. This aggregation effect not only promotes the collaborative development of upstream and downstream enterprises in the industrial chain, but also effectively enhances the competitiveness of the entire industrial cluster. Returning to the topic of why Chongqing Sokon Industry Group Stock has become one of the few profitable enterprises currently, it is undoubtedly the inevitable result of its forward-looking layout, open cooperation, continuous innovation, and deep industry cultivation under the guidance of "long-termism". As competition among car companies intensifies, Chongqing Sokon Industry Group Stock has shown great potential and market prospects in products, intelligent manufacturing, innovation, and intelligent driving. The long-term optimism of the market and capital towards Chongqing Sokon Industry Group Stock reflects a firm confidence in its future development.