Auto Companies' Performance Accelerated Differentiation In The First Half Of The Year?

Chinese auto companies have successively released the first half of 2021 reports.

As of 6:00 p.m. on August 30, a number of auto companies, including SAIC, Geely, BYD and Great Wall Motors, have issued semi annual reports. On the whole, with the gradual control of the domestic epidemic situation, the automobile market recovered in the first half of this year, and some automobile enterprises achieved double growth of operating income and net profit.

Take SAIC Group, whose net profit fell by 40% in the first half of last year, as an example, and finally returned to growth this year. In the first half of this year, SAIC Group achieved a total operating revenue of 366.1 billion yuan, up 29% year-on-year, and a net profit of 13.3 billion yuan, up 58.6% year-on-year.

However, the shortage of upstream chips and other parts has also brought a lot of uncertainty to the automotive market. Although the market demand has been restored, automobile enterprises may not be able to seize this hard won market opportunity immediately. Judging from the situation announced in the semi annual report, there are also some car companies whose performance is not satisfactory or even optimistic.

Performance differentiation of automobile enterprises in the first half of the year

In the first half of this year, the revenue of the vast majority of automobile enterprises increased, and the profit situation also improved. In terms of relative value, great wall motor is more brilliant. In the first half of this year, Great Wall Motors achieved a revenue of 61.93 billion yuan, a year-on-year increase of 72.4%. The net profit attributable to the parent company was 3.53 billion yuan, with a year-on-year increase of 207.9%.

Geely, another big auto group, has done well. In the first half of this year, Geely Automobile made an operating revenue of 45.03 billion yuan, up 22.3% year on year, and the net profit attributable to its parent company was 2.38 billion yuan, up 3.7% year on year.

But there are also market surprises, such as BYD. According to the semi annual report released by BYD, its operating revenue in the first half of the year was 90.89 billion yuan, a year-on-year increase of 50.2%, while the net profit attributable to its parent company was 1.17 billion yuan, a year-on-year decrease of 29.4%. BYD is one of the auto companies with the highest sales volume of new energy vehicles in China. In the first half of this year, the new energy vehicle market grew significantly, and the market value of the company was pursued to more than 800 billion yuan, but it fell into the situation of "increasing income without increasing profit".

From the financial report itself, BYD's revenue from automobile, automobile related products and other products business was about 39.147 billion yuan, up 22.09% year-on-year. Analysts who have long paid close attention to BYD said that BYD's automobile related businesses not only accounted for a decline in the company's total revenue, but also had a relatively low growth rate, which led to the relatively strong profitability of the automobile industry to make a small contribution to the overall profit, and thus led to BYD's "revenue increase but no profit increase".

In addition to automobile related business, BYD also has mobile phone parts, assembly and other product businesses, as well as rechargeable battery and photovoltaic business, in which the gross profit margin of battery business may be significantly reduced. Some analysts say that the price of raw materials in the upstream of lithium battery has increased greatly since this year, including hexafluoro and lithium carbonate, which have doubled, and the gross profit margin of battery manufacturers has also been affected to a certain extent.

"Chip" shortage and uncertainty

In the first half of this year, one of the biggest uncertainties affecting the automotive market was chip supply. From the semi annual report of listed companies, chip supply has indeed had a significant impact on vehicle enterprises.

SAIC announced quarterly financial reports. In the second quarter, when the shortage of chips was serious, SAIC Group achieved revenue of 177 billion yuan, a year-on-year decrease of 0.45%, a month on month decrease of 6.4%, and a parent net profit of 6.467 billion yuan, a year-on-year decrease of 11.1% and a month on month decrease of 5.54%. Compared with the overall revenue and profitability of the group in the first half of the year, the performance of the second quarter vividly shows the biggest challenge of the current car market.

Soochow Securities Research Report analysis pointed out that SAIC Group's profit level declined in the second quarter, mainly due to chip shortage and rising raw material prices. SAIC also admitted in the semi annual report that "the global supply of automotive chips is in serious shortage, which has a great impact on the completion progress of the company's production and wholesale sales."

According to the data, the wholesale sales volume of SAIC Group in the second quarter was 1.155 million, a year-on-year decrease of 15.7%. Among them, SAIC Volkswagen and SAIC-GM decreased by 28.2% and 34.7% respectively. However, although chip supply restricted production capacity and wholesale sales, the domestic and foreign auto markets recovered and SAIC's inventory level improved significantly. According to the Research Report Analysis of BOC securities, the company's inventory of 648000 vehicles was reduced by 31.5% in the first half of the year. As the chip shortage eased, the company's sales are expected to rise rapidly.

The shortage of chips will continue to plague the auto industry this year. The industry originally expected that the chip supply problem would gradually ease in the third quarter of this year, but with the repeated epidemic situation in Malaysia, chip supply was cut off again. Previously, Great Wall Motors issued a document calling for the relevant parties to assist in Malaysia's epidemic situation and help restore its chip supply. According to preliminary estimates, the shortage of chips caused by the epidemic in Malaysia will limit the production of about 2 million vehicles in August and September.

Although Great Wall Motors has made remarkable business performance in the first half of the year, it also stressed in the semi annual report that the impact of chip supply on enterprise production is still prominent, and the sharp rise in raw material prices will further increase the cost pressure of enterprises.

The turning point of new energy vehicles has arrived?

New energy vehicles are a fast growing market segment in the first half of this year. According to the data released by the Travel Association, the retail sales volume of new energy vehicles in China reached 1.001 million from January to June this year, a sharp increase of 218.9% over the same period of the same period.

In the first half of the year, all major auto companies achieved good sales results in new energy vehicles. Data show that SAIC Group's sales of new energy vehicles exceeded 280000, with a year-on-year growth of more than 400%; BYD sold 150000 new energy passenger vehicles, up 161% year-on-year (including 93000 pure electric vehicles and 5.7 plug-in hybrid electric vehicles), and 4000 new energy commercial vehicles, with a year-on-year increase of 35%; The sales volume of new energy vehicles of Great Wall Motors was about 52000, with a year-on-year increase of 373%.

New energy vehicles are gradually changing from policy oriented to market-oriented. According to the data of China Automobile Industry Association, from January to July this year, domestic sales of new energy vehicles reached 1.478 million, accounting for 10% of the total vehicle sales. Some industry insiders pointed out to the 21st century economic report that new car sales accounted for 10%, and the new energy vehicle market may usher in an inflection point, and the next industry development speed may exceed imagination.

However, for the vast majority of auto companies, new energy vehicles are not a business that can make positive profits. Take SAIC GM Wuling, a subsidiary of SAIC Group, as an example. Its popular electric car Hongguang Mini EV has been occupying the top of the domestic sales list of new energy vehicles. However, it is pointed out by some analysis that this car with the lowest price of less than 30000 yuan is positioned at the lowest end, and its profit level is not high. It may even be a loss making business.

According to the financial report data, in the first half of this year, SAIC GM Wuling achieved revenue of 32.26 billion yuan and net profit of 410 million yuan to its parent. Based on this calculation, the average profit of each vehicle of SAIC GM Wuling is about 600 yuan. Although it has increased compared with the same period of last year, the overall profit is still not high.

The same is true of the new car makers. According to the latest financial data, Weilai has a net loss of 336 million yuan in the second quarter, Xiaopeng automobile's net loss attributable to common shareholders in the second quarter is 1.195 billion yuan, and that of ideal automobile is 235 million yuan.

The overall development of new energy vehicles is still in the initial stage, and the overall scale has not reached the level of profitability, which is the reason why many new energy vehicle enterprises can not achieve profit. As for the new forces of car making, the R & D expenditure and production base construction at this stage will also bring greater pressure on their operation. How to cultivate their own new energy vehicle market steadily and form scale effect will be the key problem to test the players of new energy vehicles.

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