Text | Financial Street Old Lee
Ford's market capitalization changes are of great significance to the valuation reshaping of global auto companies.
Last night, Ford released a new generation of Mondeo at the newly unveiled Ford China Design Center, and Mondeo's new design language "Potential Energy Aesthetics" showed Chinese users the determination and speed of Ford's self-evolution, and in the past 2021, Ford China ran the best performance in the past three years.
A new generation of Mondeo
In Lao Li's view, compared with the improvement of performance, Ford's market value is more eye-catching. Last week, Ford's market capitalization exceeded $100 billion, creating the highest market capitalization in the company's history, while surpassing General Motors and Fiat Chrysler to become the most valuable company among traditional American car companies. In 2021, Ford's market value increased by nearly 1.5 times, surpassing Tesla, General Motors, Weilai and other U.S. listed companies.
Ford Motor's monthly K line
It should be noted that in the past year, in addition to Ford, GM, Fiat Chrysler, Toyota Motor and other companies also have a good market value performance, following the end of 2020, Tesla, Wei Xiaoli, the market has once again brought new valuation methods to car companies. Today, Old Li and everyone talk about what happened to Ford This Year? How to view the valuation methods of traditional car companies? What are the implications for Chinese car companies?
What happened to Ford this year?
In the capital market, overseas car companies and domestic car companies have different analysis methods, and there is no way to analyze Ford Motor from the perspective of A shares: first, because Ford is a global car company, it is necessary to look at Ford's strategy from a global perspective on global performance, and second, because Ford is a U.S. stock company, the valuation method of U.S. stocks and A shares is very different, and the analysis method applicable to A shares is not applicable to U.S. stocks.
Although the analysis method is slightly different, it is inseparable from the origin, and the market value trend of any listed company must look at the fundamentals. Over the past year or so, the fundamental reason for the increase in the market value of U.S. auto companies, including General Motors and Toyota, is that the fundamentals of the company have changed significantly, and in the transformation of smart electric vehicles, U.S. capital led by Wall Street capital has begun to pay attention to local companies.
Taking Ford As an example, the fundamentals of Ford In 2021 have risen steadily, and although the annual financial report has not yet been released, from the three quarterly reports, Ford has created the best financial performance in the past three years. Operating income in the first three quarters was $98.663 billion, an increase of 8.19% year-on-year, and annual revenue is expected to exceed $140 billion, a slight increase over last year, although the revenue did not change significantly, but the adjusted EBIT for the whole year of 2021 was $10.5-11.5 billion, greatly exceeding the expectations of the capital market.
Although the capital market has given Ford a good rating, but Ford's market sales ratio is still less than 1 (total market value / main business income), not only lower than Wei Xiaoli, but also far lower than Tesla, and General Motors is at the same level, a company with revenue of more than 130 billion yuan, the market value is just over 100 billion, which reflects the capital market's expectations for traditional car companies are still not as good as the new forces.
The performance of the capital market is essentially a reflection of performance and expectations, and the performance of the whole year of 2021, whether it is performance or expectations, whether it is Ford China or Ford Global, compared to last year, the performance is remarkable.
This year' market performance in Ford China is reversed, Ford's sales in China is close to 625,000 vehicles, although the absolute number is not large, but an increase of 3.7% year-on-year, especially the Lincoln brand annual sales reached 91,600 vehicles, an increase of 48.3% year-on-year, setting a record for the best annual sales since the brand entered China, steadily stuck in the second echelon of luxury brands, Ford China Although the impact on market value is not large, but it is also the epitome of Ford's initial results in global transformation.
In Lao Li's view, the fundamental reason for Ford's market value growth ahead of GM and Toyota is its acceleration of electrification in the United States, in 2021, Ford motor surpassed General Motors, and in the United States, electric vehicle sales were second only to Tesla. In the North American market alone, after the fourth quarter, the average monthly sales of Ford electric vehicles have stabilized at more than 10,000 units, which is the same order of magnitude as Wei Xiaoli's sales, and it is expected that the average monthly sales volume in 2022 is expected to exceed 20,000 units.
As with Jobs and Cook, Wall Street investors have always valued the company's leaders when they take money to vote, and the traditional car companies are traditional mainly because of management.
Ford is fortunate that since taking over Ford in October 2020, President Jim Farley has embarked on a radical overhaul, advancing the "Ford +" restructuring plan based on the electrification strategy of former President Jim Hackett, shifting more resources to the electrification transition, and Ford's financial reports are more transparent.
Old Lee's colleagues consider Jim Farley to be a master of capital because in the short year since Jim Farley took over, Ford's biggest gain of more than 200 percent. Jim Farley is good at dealing with the media and capital, will guide public opinion to carry out capital marketing, quite Musk and Li Bin feel, last year Farley posted, by 2023, Ford Mustang Mach-E production will triple to an average annual scale of 200,000 units. With this news alone, Ford's market capitalization increased by nearly 10%.
What is the valuation of electric vehicle companies?
When it comes to the market value of car companies, it has to be compared horizontally and vertically, because whether it is from the vertical dimension of time or the horizontal dimension between enterprises, Ford has a lot to say, and based on these comparisons, Lao Li vaguely feels that the positioning of traditional car companies in the US market is changing.
As we all know, since the middle of the previous year, the domestic A-share market has opened a good market, especially the private enterprise companies represented by Great Wall Motors have achieved good market performance, and the market value of new energy vehicle companies represented by BYD is close to one trillion, plus the performance of the three major American automobile companies in the United States this year, many friends are discussing, has the valuation logic of automobile companies changed?
Since the emergence of Tesla, Wei Xiaoli and a number of new car-making forces, the global automotive industry has a distinction between "new forces" and "traditional car companies", we put the time to 10 years or even longer, the new forces are no longer new, traditional car companies may go bankrupt, may also be reborn, so whether it is a new force or a traditional car company, not in the origin, but in whether to recognize the "tao" of the capital market.
The essential reason for the high valuation of technology stocks in the US market is that everyone recognizes the future of technology stocks, any track with market imagination, the market will give a higher valuation, and smart electric vehicles belong to this track - the global capital market believes that smart electric vehicles will have huge market space in the future.
Under this big logic, the new forces and traditional car companies have formed two different market value states: the market sales rate of intelligent electric vehicle companies represented by Tesla and Wei Xiaoli is extremely high, because the track is too optimistic, the market "advance" gives smart electric vehicle companies a high valuation; the market sales rate of traditional fuel vehicle companies represented by Toyota, Volkswagen, and Ford is extremely low, although the company's revenue is outstanding, but because it is not in the intelligent electric vehicle track, the market has no way to give a corresponding valuation according to the logic of intelligent electric vehicle companies.
But since last year, the traditional enterprises represented by Ford have embarked on the "road" of intelligent electric vehicles, and the capital of Wall Street is not a fool, although many traditional car companies are mentioning transformation, but there are not many companies that dare to "all in", Ford is one. Just as don't look at what men say, look at what men do, look at car companies, don't look at what companies say, look at what companies do.
When overseas companies are still announcing the transformation, Ford's F-150 Lightning, E-Transit and Mach-E have been delivered to the market one after another, and have a good sales performance, which should be highly valued by smart electric vehicle companies, and more interestingly, Ford will shout. Ford expects to invest $40 billion to $45 billion in strategic capital expenditures between 2020 and 2025, including more than half of the electrification investments previously announced in the same period, which are also used for strategic investments, basically in All in New Sihua, with the performance of the foreshadowing, coupled with market expectations, the capital market will naturally give a higher valuation.
The logic of the researchers is also very simple, in the United States, which is not very intelligent, as long as the focus is on electrification and get the favor of users, there is a high probability of achieving good market performance, and Ford's electric pickup truck is the most market opportunity. In Lao Li's view, the US market has no longer distinguished between the so-called new forces and traditional car companies, as long as it is an All in intelligent electric vehicle company, and has a good market performance, there will be a good valuation.
What does Ford's market capitalization teach China?
In the previous article, Lao Li described China's new energy automobile industry as follows, and in the first half of the race, China achieved a leading position in the field of electrification and approached and ran in the field of intelligence. Now, the second half of the game has just begun, Nvidia, Intel and other intelligent companies are still leading, can be described as the former strong, the United States Ford and GM have been focusing on electrification, can be described as a chase, China's intelligent electric vehicle companies seem to be a good life, but it is also a hidden crisis.
To be fair, the three major automobile companies in the United States are very capable of fighting, as a century-old enterprise, experienced various difficulties and challenges such as war, self-iteration, financial crisis, etc., until the twenty-first century, in the night of the century of great changes in the automobile industry, American car companies did not shrink back, but slowly came out of the trough.
Among the three major enterprises, Lao Li believes that the most changeable and resilient is Ford, from T-type cars to assembly line production, from oil shortage to financial crisis, Ford has been innovating in the change, the background of overseas car companies in the past hundred years is not available to Chinese auto companies and even China's auto industry, thirty years, Chinese car companies have not experienced systematic industrial and capital risks, in the new four transformations, Chinese companies have created a first-mover advantage, but this is a protracted war, the road is still very long.
In 2008, in the context of the market downturn and poor financing environment, Ford Motor Company began large-scale restructuring and structural adjustment, vigorously reduced costs, focused on core brand building, and continuously launched new auto products, which achieved more obvious results, thus surviving the 2008 global financial crisis and making it the only company among the three major AMERICAN automakers that did not apply for government assistance.
Three years ago, Ford did not keep up with the pace of transformation, not only in the transformation of smart electric half a beat slower, but also lagging behind in the competition of traditional cars. In just three years, Ford China has embarked on a drastic reform, electrification and intelligent transformation in China is also accelerating, the "Ford China 2.0" plan's first global strategic model New Ford EVOS and locally produced Mach-E have begun mass production, and the new generation of Mondeo was also unveiled last night.
In October last year, Ford released a new Ford Select high-end intelligent electric vehicle exclusive brand in China, independent electric vehicle brand is not easy, as we all know, a major European manufacturer wants to upgrade its electric vehicle series to a single brand, only the board of directors has been met with layers of resistance.
According to the classification method of the company in the Chinese capital market, Ford Motor belongs to the value stock, similar to Guizhou Moutai and Wuliangye, but most of China's current vehicle enterprises and leading enterprises in the new energy industry chain belong to growth stocks, such as BYD, Ningde times, etc. Chinese enterprises lack a century-old heritage, and the length of the intelligent electric vehicle track will determine the height of the enterprise.
Ma Yun said that Alibaba will be a company for three centuries, and has also ridiculed that the education industry will always be there, while New Oriental will not always be. The automotive industry is the same, Ford motor has more than 110 years of history, in the era of the big wave of sand, Chinese car companies need to experience more storms, the automobile industry is difficult to appear subversive changes in the industry, many centuries of enterprises in the reminder us, only in the change of iteration, in the iteration of growth, enterprises can maintain vitality.