Text | Financial Street Old Lee
During the Spring Festival, Lao Li and some peers gathered, and the most discussed topic was that in the case of slowing economic growth, in the context of the transformation of the new four modernizations into a deep-water area, what structural changes will the automotive industry have in the future, and what new investment perspectives will capital have in the automotive industry, obviously, this is an open topic.
We have extended the time to 20 years, China's auto industry has experienced a stage from high growth to low growth to negative growth, and China's auto market has been bouncing between big changes and small changes. The capital market likes to take 2019 as the first year of the era of new energy vehicles, and before 2019, it is the era of fuel vehicles. In the era of fuel vehicles, the automobile industry has experienced many small changes such as the rise of independent brands and the growth of SUV blowouts, frankly speaking, at that time, capital was not interested in car companies, and even thought that automobiles were sunset industries.
The arrival of the new energy vehicle era is a big change, with the help of the capital market, starting from the second half of 2019, the US stock market represented by Tesla and Wei Xiaoli, the A-share market represented by the Ningde era and BYD has pulled up a valuation storm in the automotive industry, only three years, several trillion-yuan enterprises have been born, three years have passed, Lao Li and everyone talk, why is the auto capital market an era of three years? What has changed in the past three years? What will change over the next three years?
The capital market is an era of three years
When Lao Li visited ByteDance in 2018, the biggest feeling was that three months for mobile Internet companies is an era, while the automotive industry is an era for three years, in fact, the capital market is also an era in three years.
Thirty years of Hedong, thirty years of Hexi, in the era of strife in the automotive industry, three years can change a lot of things. Looking back at the history of automobile development in the past ten years, many laws are based on a cycle of 3-5 years, such as the rise of second-tier independent brands, the rise of Changan, Geely, and the Great Wall, and everyone is dominating the stage for three or five years.
There are objective facts behind the three- and five-year cycle, one is the product life cycle, foreign brands are often seven years a generation, independent brands are 3-5 years, so Chang'an, the Great Wall and Geely are also between you to catch up, this and the other; the second is the law of business operation, when the market is hot for 3-5 years, there will inevitably be new categories into the competition or substitution, so the various market segments are also three or five years a change.
The cycle of the fuel vehicle era is also applicable in the era of new energy vehicles, and new energy vehicles will certainly have periodic iterations, which is what Lao Li discussed with everyone during the holiday. From the appearance of the essence, three years ago and three years later, the automobile industry has undergone considerable changes, and the automobile capital market is a drastic change.
Old Li can still remember the scene of the automobile capital market before 2019, from 2014 to 2019, the primary market has been heavily injected into the new energy automobile industry, in that era of barbaric growth, everyone can call the name of no less than 30 new energy vehicle companies, the cumulative investment reached tens of billions of yuan.
In 2019, the patience of many funds has reached its limit, and the industry is a chicken feather: too many new energy vehicle companies, uneven products, begun white-hot competition, a large number of enterprises shut down and closed, old Li does not list one by one, coupled with the poor external environment, new energy vehicles have not met market expectations, of which the leader Weilai Automobile even has a financial problem, Li Bin also said that at that time, investors can sit down and chat with themselves, are very buddy.
For individuals, capital (money) represents value, but for the economy, capital (money) cannot create value, only entities can create value. Capital can accelerate the development of entities according to objective laws, but it cannot change the objective laws of physical development from the root. The capital market's expectations for new energy vehicles have exceeded the objective law, with the rupture of corporate funds and the sluggish market, the heat of capital for new energy vehicles in 2019 has dropped to the freezing point, and it is interesting that when the trough comes, the crest is not far away.
The story behind everyone is very clear, Tesla's blockbuster to the auto capital market heat again, many investors said that Tesla's most powerful place is to regain confidence in the market, and then, Wei Xiaoli and other Chinese stocks have been recognized by the US market, BYD and Ningde era also shined. With the general trend of new energy, Great Wall Motor and Geely Automobile have also been recognized in their respective markets, and from the second half of 2020, the A-share auto sector has opened a Yangchun for more than a year.
In three years, where has automobile capital changed?
In the past three years, the A-share automobile sector and the new energy sector have taken off in an all-round way depending on the changes in the industry, the continuous improvement of sales penetration and the excellent performance of leading enterprises, and the changes in the industry stem from objective laws, not capital changes the industry, but the industry changes capital.
Friends familiar with the auto capital market will find that this round of auto industry valuation is different from the past ten years, from the valuation point of view, the valuation of auto stocks, especially new energy vehicle stocks, has risen rapidly to a very high height in a short period of time, and the monthly increase of some companies has exceeded 100% or even 200%.
The essence of the increase in valuation is market behavior, in the face of this increase, auto capital is also "love and hate", "love" is because many institutions have made money because of self-investment, "hate" is because many institutions have not invested in, just like Sequoia Capital missed ByteDance, and the institutions that invested in felt that the company had become very expensive, whether to continue to invest.
What has happened to the market in the past three years? Lao Li feels that it can be summarized in one sentence: three years ago, the development of the automobile industry and the capital market were synchronized, what kind of performance the industry had, capital will give a corresponding or even lower valuation, because the automobile is a sunset industry, three years later, the capital market is 2-3 years faster than the development of the automobile industry, and the capital has given the industry a valuation of 2-3 years later, so we can see the 45-60 times the Ningde era, and we can see the N times of Wei Xiaoli.
Is this valuation reasonable? No one can give a clear answer, but the market is how to price the automobile enterprises, if the existence is reasonable, we also try to find the reasonable essence from the appearance of existence, Lao Li does not know whether the essence has changed the appearance, or the essence of the appearance of the anti-launch, the automobile capital market has undergone some significant changes.
The first change is that the auto capital market has changed from "value" to chasing "growth", in the past, the technology companies and Internet companies in the US stock market often gave hundreds of times the valuation, the reason is that the company has grown; the automobile company as a typical traditional industry has not been seen by capital, even the core enterprises such as "Toyota Motor" and "Volkswagen" have not received any attention in the capital market, and the answer is that these companies have not grown. New energy vehicle companies and traditional car companies that transform new energy have seen the hope of growth in the capital market, and the importance of "growth rate" is much higher than the "revenue" indicator, and capital has swarmed into this track, and different market segments have structural markets.
The second change is that the valuation has changed from "now" three years ago to "front" three years later. To use the changing vision to look at the valuation of car companies, due to the industry attributes (from value to growth) has changed, the prospects of the industry can be expected, and the penetration rate of new energy vehicles in 2025 will reach 20%.
In the face of a certain industry, the valuation rate given by the capital market is also much higher, Wei Xiaoli, BYD, Great Wall Motors essentially shows the valuation after 2-3 years, after the industry reshuffle, investors chase a limited number of high-quality targets, making the crowded track and enterprises more crowded. In addition, in recent years, we are in an unprecedented era of low interest rates, the best flow of funds is to return to the industry, giving the future a high valuation, if you use traditional thinking valuation, it is tantamount to carving a boat and seeking a sword.
Where will the future change be?
Regarding the changes mentioned above, after the take-off of new energy vehicles, Lao Li and his small partners discussed a lot, which is basically the consensus of the market. The best opportunity for profitability is not in the past, not in the present, but in the future, the so-called change is the biggest change, think of danger in times of peace, take precautions, during the Spring Festival, everyone is thinking, where is the future change?
As stated at the beginning, capital can not change the industry, and the industry can change the capital, the change of capital traced back to the source is the change of the industry, at present there are two general directions are determined, one is that the sales of new energy vehicles are still stable, the second is the intelligent representative of the direction of science and technology There may be market opportunities, but about the specific market and structural changes in the industrial chain, we are not clear.
In the case of the industry is not clear, capital will automatically change, in the capital market, most decisions are "relative", are looking for the best balance between investment returns and risks, buy at a "good price", sell at a "good price", institutions are profitable, so it is extremely important to find the "good price" of auto capital for automobile valuation, and the essence of "good price" is determined by the three-rate model of "benchmark interest rate - growth rate - multiplier".
We all say that the benchmark interest rate is the "anchor" of valuation, liquidity directly determines the mood of the big market, and in 2022, in the context of stable growth, it should be more optimistic.
The growth rate is the "string" of auto stocks, we regard automobile companies as growth stocks, its own growth rate determines the valuation performance, the market is ruthless, because everyone believes that the growth rate of new energy vehicles in 2022 will slow down relatively slow down, the prosperity will decline, so new energy vehicles in December 2021 after the central economic conference in an all-round way, and when the Ningde era stabilized with a net profit of about 15 billion yuan, the market began to buy new energy vehicles again.
Smart money can always find the right place, when it faces the portfolio of value stocks and growth stocks, it will not be opened, but according to the market environment and corporate performance, when the growth rate of growth stocks remains at a high level, companies do not have to be cheap to attract buyers, those growth stocks in the leading enterprises, institutions will also flock in.
The multiplier rate is the "arrow" of the growth stock, it determines the sharpness of the valuation, the same enterprise, when we give 30 times and 60 times, its valuation difference is larger, the multiplier rate is a very important reference indicator in the valuation of growth stocks, in the case of unchanged corporate fundamentals, the killing valuation is the killing rate, the so-called valuation of the Ningde era The so-called wind vane of valuation is essentially the wind vane of the multiplier.
The current multiplier of the leading growth stocks in the Ningde era is 45-60 times, and other growth stocks cannot reach the level of the Ningde era without exceeding expectations, while the traditional value stocks with slower growth have performed worse.
There is a very interesting phenomenon, many friends say that big A has no backbone, if from the perspective of annual growth rate, in the past ten years, the annual growth rate of Wandequan A is about 10%, which means that the currency is depreciating at a rate of 10% per year, and correspondingly, our annualized yield in A shares is difficult to reach this level. The reason is that A shares have structural changes every year, the so-called slow bull in the past three years, but also the structure of the bull, auto stocks in the past three years has become one of the most eye-catching segments of the structural bull.
In the current stage of automotive industry and capital development, we have ushered in a new era and are increasingly entering a world full of uncertainties. The pricing power of valuation is not in the hands of the company, nor in the hands of the institution, but in the hands of the market, the valuation is completely determined by the market, and what we are looking for is the "change" of the market.