Text | Inside and outside the table, the author | Zhang Ranran and He Jinyi, Editors | Fu Xiaoling, Hu Jiawen
In the past 2021, the new car-making forces have almost won a big victory: Tesla sold more than 70,000 yuan per month in December; Wei Xiaoli increased by more than 100% year-on-year; ...
In this regard, some insiders said: the product of "a new car-making force" will certainly not be sold so much if it is replaced by a traditional brand car logo.
These words were handed to Wei Jianjun, chairman of Great Wall Motors, and he was intimidated by him with "they know a fart".
Behind the fragrance of his mouth, the expression is obviously disobedience.
At first, the author did not understand that the naked data and the contrast between the heat were there, and there was nothing to argue about. But when I saw the Tank 300 of the Great Wall in the eighteen-line small county town of my hometown in the New Year, I was a bit enlightened.
This owner hit a niche off-road SUV, listed for more than a year, and sold 84,588 units in 2021, accounting for nearly half of the domestic off-road vehicle market. In addition, it is also a frequent visitor to social platforms like the Euler good cat and the Euler black cat that can often be brushed on the Little Red Book.
The terminal has a way, which naturally affects the performance of the market. It can be seen that under the haze of the epidemic, the stock price of Great Wall Motors has risen nearly ten times from the high point of 2020 to 2021.
From this point of view, traditional car stocks are indeed not without opportunities or elusive.
So, how exactly do you capture the "pivotal moment" of auto stocks? In the following, this article will start from the valuation model of automobile companies and start the demonstration.
The "three axes" affecting the stock prices of car companies
In the extended time dimension from 2007 to 2021, China's automotive industry has experienced the glory of short supply of joint ventures after joining the WTO, experienced the prosperity of independent car companies from scratch, and also experienced some turbulence at the bottom and peak.
In this process, the stock prices of auto companies, subject to the interaction of PE (valuation level) and EPS (net profit per share), show volatility.
The specific impact logic is as follows:
The simple explanation is that the stock price of automobile companies is determined by three factors: the level of industrial β, the level of enterprise α and the performance of performance.
Among them, the level of industrial β changes with the demand trend, and there are three main factors affecting demand:
Consumer preferences change: such as consumers from liking cars to liking SUV cars.
Technological innovation: such as the transformation of automobiles from fuel vehicles to electric vehicles.
Macroeconomic cycle and policy orientation: If the policy introduces large subsidies, it will obviously stimulate automobile consumption.
The level of α of enterprises, that is, their own value estimates, mainly depends on the following two factors:
Product cycle: the possibility of a new product becoming a blockbuster, that is, sales expectations.
Competitive landscape: The competitive environment is good or bad, affecting the upper limit level of valuation.
Under these conditions, the market determines expectations. The next step is to be supported by the level of corporate performance (EPS), that is, whether sales and profits can eventually be cashed.
Here, we look at two extreme cases, how do these three factors affect the stock prices of car companies?
In 2015-2017, the preferential tax rate for small displacement purchases at that time stimulated the overall double-digit growth of domestic passenger car sales.
Under the demand, Geely Automobile achieved sales growth of 44.6% and 64.9% year-on-year in 2016 and 2017 with the explosive model Boyue, respectively, and GAC's sales volume increased by 27.4% and 21.2% year-on-year, driven by Trumpchi GS4.
The optimization of product structure and the climb in sales volume have significantly improved its profitability in the current period - Geely Automobile's gross profit margin rose from 18.2% in 2015 to 19.4% in 2017; GAC's gross profit margin rose from 9.9% to 19%.
The level of industrial β, the level of enterprise α, and the performance of "collective upwards", from 2015 to 2017, Geely Automobile's stock price rose nearly 10 times; GAC motor rose more than twice.
After 2018, the situation took a big turn.
The withdrawal of preferential purchase tax policies and repeated Sino-US trade frictions have affected the city's urban atmosphere, and passenger car sales have grown negatively for two consecutive years.
At this time, Geely Boyue/GAC Trumpchi GS4 also happened to enter a recession period, superimposed on weak demand, sales were greatly discounted - 2018: Geely Automobile sales increased by 20.3% year-on-year, GAC increased by 7.1%; in 2019: Geely Automobile sales fell by 9.3% year-on-year, and GAC motor fell by 3.7% year-on-year.
At the same time as the sales of the main models are not good, the introduction of the new emission standards for automobile exhaust in major provinces and cities (switching from national V to national VI) has made enterprises tired of promotion and inventory clearance, resulting in profit contraction, and the result is that it is difficult to cash in performance.
Under the "three kills" of industrial β level, enterprise α level, and performance cash, the stock prices of Geely and GAC also fell sharply.
In general, the stock price performance of automobile companies is between these two extremes, fluctuating.
So, how to judge the change trend of each factor and seize the appropriate entry time? Below, we take Great Wall Motors as an example to conduct a detailed analysis.
Bet on the Great Wall of Wrong Demand, usher in "three kills" after the effort
As we all know, after the millennium, SUV of foreign companies such as Honda CR-V, Nissan X-Trail, and Toyota RAV4 entered the country, stimulating market demand. Great Wall Motors "desperately bet" and bet on low-cost SUVs.
Under the low-line market gap of "demand, but price sensitivity", SUV products, especially the main model Haval H6, sales climbed rapidly.
But at the peak of sales, the valuation killing "wave" quietly struck.
The first sign is the change in consumer demand, as can be seen from the chart below, the income growth rate of middle and low-income earners continued to decline in 2014, and after 2016, the growth rate was even lower than the growth rate of per capita disposable income in the country.
People in the lower tier market, the shrinking of money in their pockets, naturally affects the consumption of low-end cars - the market sales of compact and small SUVs, the biggest decline.
However, the industry does not seem to have captured this signal, and the low-priceD SUVs market is still pouring into competitors.
For example, in the 2018 annual SUV sales ranking, among the top 15 models, there are as many as 6 competitors at the same price as the Haval H6.
These competitors are both "eye-catching" in the field of the Great Wall and "young and strong" than the Haval H6:
GAC Trumpchi GS4 was listed in April 2015 and was in a stable sales period from 2017 to 2018, while Geely Boyue, Roewe RX5 and Baojun 510 were in a period of rising sales in 2017.
Under the "deterioration" of the competitive environment, since 2017, Haval H6 sales have continued to decline.
Great Wall Motors, which has lost its field and lost face, has taken a "stinky chess" in a hurry: trying to compete with low-price SUVs by further subdividing the price range and regaining market share.
This can be seen in the frequent launch of new models in 2017-2018:
With the launch of the red and blue label Haval H6 Coupe and the new Haval H6, the number of Haval H6 models on sale has increased from 22 in 2016 to 55.
Launched the Haval M series, which is priced lower than the Haval H6, and expanded the low price range.
But as mentioned above, the low-end SUV consumer market itself is shrinking. Without demand, more capacity supply is just a drag – homogenization exacerbates internal losses.
It can be seen that not long after the Haval M6 was listed, sales began to decline all the way. And the Haval H6 has not changed the sales decline because of the launch of the new model.
Deeply cultivating the low-end consumer market is not clear, and Great Wall Motors has set its sights on the mid-to-high-end market with a good situation - launching the WEY brand in order to drive sales.
However, from the perspective of market feedback, WEY, which is jokingly called the "high-priced version of Haval H6", has not performed as expected. In the chart below, sales have continued to decline less than a year after its launch.
With the decline in consumer demand, the capital market has lowered the β income expectations of the industry; the deterioration of the competition pattern and the weak product cycle, the company's own α income expectations are not ideal, and it is not surprising that the valuation level (PE) has dropped sharply.
Not finished here, Great Wall Motors, which is still obsessed with market share, has repeatedly suffered setbacks, and then made a faint move - price reduction.
According to the data, in 2018Q3, Haval officially announced that Haval's hot-selling models will be fully discounted, up to a maximum of 20,000 yuan. The result of "price for volume" is that profitability has fallen sharply and performance has failed.
So far, the Great Wall Motor industry β level, enterprise α level, performance cashing "three kills", becoming the stage of the collective decline of the vehicle sector, the largest decline in independent brands, nearly 60%. Geely is 50%, gazing and Changan Automobile are about 40%.
Some people may say that this is a good time to bottom out. But we believe that before we see a strong change in these three factors, we can let the bullet fly a little longer.
As for why we say so, let's move on.
Under the grim situation, Great Wall Motors once again adjusted its direction and tried to seize the dividends of a new generation of young consumers through explosive products:
In 2018, on the basis of the H and M series, Haval launched the F series, which focuses on youth and intelligence.
In 2019, the Haval H6 model classic model was discontinued, and after that, the sports models that were more in line with the preferences of young people were sold.
And in order to ensure the landing of new products, since the second half of 2018, Great Wall Motors has frequently "poached" marketing talents in the industry. The input of "new blood" has brought about the improvement of brand marketing.
For example, in October 2018, Haval titled the third season of "The Masked Singer Will Guess", conveying Haval's new image of youth, intelligence and technology, catering to a new generation of consumers.
The effect of the new strategy is that haval F7 sales exceeded 10,000 in the second month of listing, and monthly sales in 2019 were basically stable at more than 10,000 vehicles. This led to a return to sales growth in 2019 and stopped the downward trend in market share.
The improvement of the product cycle and the increase in sales volume have brought about a certain confidence in market expectations, and PE has rebounded.
However, a series of marketing activities have led to a sharp rise in corporate marketing expenditure. This makes the increase in haval F7 sales, although positively promotes the company's profitability, but the performance of the performance can only be regarded as decent.
Coupled with the fact that the industry boom is still downward - passenger car sales in 2019 fell by 7.4% year-on-year, the three major factors are "two weak and one strong", and the feedback is on the stock price, that is, Great Wall Motors did not have much improvement in 2019.
Since then, the outbreak of the epidemic has further suppressed the industry boom, and a number of car companies have come to a crossroads related to survival, not to mention the stock price performance.
So, what exactly is a powerful factor change?
"Three hits" solitaire, V-shaped rebound
"Can Great Wall Motors survive next year?" In the first half of 2020, Wei Jianjun issued such anxious words.
But soon, macro policies began to turn, and various initiatives were launched to stimulate automobile consumption (there are many related discussions, which will not be repeated here).
Driven by the policy, from April 2020, automobile sales have rebounded in V-shapes, and the year-on-year growth rate has turned positive. From May to November, sales increased by more than 10% year-on-year in each month.
At the same time, the improvement of the level of electrification and intelligence has also catalyzed this boom to a certain extent.
As shown in the following figure, in the second half of 2020, in the overall automobile sales, the sales growth rate of new energy vehicles is significantly ahead of fuel vehicles; in addition, its penetration rate is also rising.
Under the influence of many aspects, according to the monitoring results of the National Bureau of Statistics, the prosperity index of the automotive industry after 2020Q2 showed an upward trend quarter by quarter, with Q4 reaching 98.5.
In addition to the improvement of the industry boom, 2020 also happens to be in a new round of car replacement cycle.
The data shows that after 2016, the rapid increase in the proportion of total sales of a wave of car exchanges was released from the exchange demand of car buyers around 2010.
By analogy, new cars sold in 2020 or 2015-2016 have entered the beginning of a large-scale replacement cycle.
Generally speaking, the exchange of purchases will be accompanied by a special economic phenomenon - consumption upgrades, that is, the price after the exchange, have increased. Its specific logic can refer to McKinsey's data:
The price of the car before the purchase is >
Car owners with a price of 100,000-150,000 before the purchase will choose models greater than 150,000 when they buy.
......
This means that under the new round of exchange cycle, consumers who buy cars are more inclined to high-end cars.
Of course, although the exchange business is very important to the enterprise in the exchange cycle, the first purchase business, which accounts for 53%, cannot be ignored.
This year's first-time buyers are mainly post-90s and Generation Z, and their consumption concepts are driven by personalization and self-expression. Survey data shows that "appearance is justice" stands on the C position of automobile consumption.
Here, the industrial prosperity has improved, and a wave of relay has poured into the mouth of the enterprise. So, did Great Wall Motors "open its mouth"?
It is not only open, but also bold.
After 2020, Great Wall Motors let consumers vote for new cars, and a large number of strange names such as cats, dogs, tanks and cannons were born, running wild on the road of "net red".
Under the favor of consumers, several personalized and differentiated models extended from the basic Haval brand: Haval big dog, Haval first love and Haval red rabbit, Haval divine beast, the current monthly sales are about 5,000-10,000.
At the same time, Haval's ace model H6 has also been upgraded through upgrading, "old tree rejuvenation".
In addition, the focus on high-end growth disks and incubated new brands also performed well.
Among them, the new category of Great Wall Cannon, which fills the gap in high-end pickup trucks, has sold more than 10,000 for 18 consecutive months.
The off-road model tank 300 mentioned at the beginning of the article is a "big surprise" for Great Wall Motors.
In China, off-road vehicles belong to a niche market. In 2020, the sales volume of domestic + imports adds up to only about 200,000 vehicles, and the market penetration rate is 0.9%.
The domestic off-road model Beijing BJ40, which was earlier cut into the field, has only sold about 20,000 yuan in recent years.
But it was on such an unexpected track that the Tank 300 actually "exploded" under the impetus of "vanity".
The root of everything may be as discussed on the Internet: spending 300 dollars on tanks (about 200,000) and enjoying the "sense of respect" of big G shells (about 2 million), Bigger pulled full.
Based on this, the data shows that from the pre-sale in November 2020, in less than 20 days, the tank 300 orders exceeded 10,000, and the monthly order volume has gone all the way up since then.
The hot effect of "copying" big G is obviously unexpected by the Great Wall itself.
According to the data, the Great Wall Chongqing Yongchuan Factory, which produces tank 300, continues to be tight in production capacity, and tank 300 has to "suspend orders". After the production line was transformed and the production capacity was upgraded (from 5,000 units to 10,000 units), the order was restarted.
Of course, the "chicken thief" of tank 300 can succeed because of the following background conditions:
On the one hand, it is scarce, and the domestic off-road vehicles in this price range are mainly Beijing BJ40; while imported off-road models are expensive.
On the other hand, the product tonality matches the new generation of consumer demand. As shown in the figure below, compared with the Beijing BJ40, the user group of the Tank 300 is younger, and the post-00 users account for 12.31%.
The "muscles" on the product cycle are trained, driving the sales of Great Wall Motors and returning to adolescence.
At this time, the Great Wall Motors, which found the field, made up a knife for its peers.
According to the 2021 mid-year report: from 2020 to 2021, the company implemented two phases of equity incentives, with a total of more than 10,000 recipients, covering 50% of core employees.
In this way, employees have changed from "hit workers" to "partners", and the business has become their own, can they still fight?
The level of industrial β and the level of enterprise α have risen, the market is expected to have an "immediate effect", and pe has increased rapidly, reaching a maximum of 109.69.
The optimization of the product structure has brought about an increase in sales volume and bicycle prices - such as the price increase of new models such as the Tank 300, the Great Wall Gun, and the third-generation Haval H6, and the gross profit margin is higher, driving the profit of Great Wall Motors to rise, and the performance is expected to be fulfilled.
At this point, Great Wall Motor's expected valuation and performance have risen strongly, and its stock price has risen all the way since the second half of 2020.
So, does such a high position mean that Great Wall Motors has no chance to enter the market?
Of course not, I didn't see that the stock price of Great Wall Motors has been lowered in recent months, and the reason why this is so may be related to new concerns, specifically:
The product line is widely differentiated, although it captures consumers in the market segment, it also means that the target user group is small, and the continuity of the product life cycle may be limited, resulting in waste of resources.
Too intensive new product launches, there is a new round of homogenization to bring internal friction of hidden worries.
· There are signs of tightening policies again, and the industry boom is no longer clear.
At the beginning of a new round of fluctuations, how to cut in at the right time needs to keep up with and sensitively capture the new changes of the three factors.
brief summary
At the moment when the new car-making forces occupy the C position in the automotive industry and firmly attract the attention of capital, traditional car companies still have hidden "rich mines" for excavation and entry.
How to sensitively capture the trend and change of the industrial β level, the level of enterprise α, and the performance of the situation, between the "three kills" and "three strikes" of car companies, to find the right entry opportunity is the key to cracking.