On February 25, Ideal Auto announced its unaudited financial results for the fourth quarter and full year ended December 31, 2021. At the same time, ideal cars also held a conference call to address the content and financial performance data mentioned in the conference call. As the head of the new car manufacturing force, the financial report of the ideal car is still worthy of our serious interpretation.
According to the announcement, in the fourth quarter of 2021, the total revenue of Ideal Automobile was RMB10.62 billion, an increase of 156.1% year-on-year and 36.6% month-on-month. Vehicle sales revenue was RMB10.38 billion, up 155.7% year-on-year and 40.5% month-on-month. Net profit was 295.5 million yuan, an increase of 174.88% over the same period last year.
For the whole year of 2021, the total revenue of Ideal Automobile for the whole year was 27.01 billion yuan, an increase of 185.6% from 9.46 billion yuan in 2020. In terms of net profit, in 2021, ideal automobile net loss of 321.5 million yuan, an increase of 111.9% from 2020 of 151.7 million yuan.
The ideal ONE of single-quarter profitability and stable price increase is still a hit, but the profitability cannot last
Ideal cars sold 35,000 Ideal ONE units in the fourth quarter of 2021, exceeding the 30,000-32,000 units expected in the company's third quarterly report. Of the total revenue of 10.6 billion, the vehicle sales revenue is 10.3 billion, indicating that the company's revenue mainly relies on vehicle sales, and ideal cars have not developed a new revenue model in addition to automobile sales.
A single model alone can achieve a single quarterly profit, on the single explosive product, the ideal car is the strongest of the three new forces of Wei Xiaoli.
But it is worth noting that in the Q4 financial report of 2020, the ideal car is also profitable. Why is it a Q4 profit every year and a Q1-Q3 loss, is it deliberate? In the case of a substantial increase in R&D investment, it is necessary to maintain Q4 profitability, perhaps to prove that the ideal car has the ability to achieve profitability. Judging from the net loss of 321.5 million yuan for the whole year of 2021, an increase of 111.9% year-on-year, it is not the time to pursue full-year profitability.
The cost reduction brought about by the increase in vehicle prices and scale effects has achieved a slight increase in gross profit margin
According to the financial report, in the fourth quarter of 2021, the gross profit margin of Ideal Automobile was 22.4%, compared with 17.5% in the fourth quarter of 2020. Throughout the full year of 2021, Ideal's vehicle gross margin reached 20.6%, compared to 16.4% in 2020.
For any new car-making force, it is not easy to improve the gross profit margin. Some investment research institutions have calculated that the ideal car's bicycle price in the fourth quarter was 295,000 yuan, the cost of the bicycle was 229,000 yuan, and the final gross profit of the bicycle was 66,000 yuan.
The gross profit margin of the ideal car can be improved, thanks to two points: First, the cost reduction brought about by the scale effect. Ideal ONE as a range extender hybrid model, the technology is relatively more mature, its cost pressure is not as great as pure electric vehicles. Second, the new ideal ONE is priced higher, and the 2021 ideal ONE was listed in May 2021, and the price is 10,000 yuan more expensive than the 2020 model.
R&D investment has increased significantly, preparing for pure electric models, and other expenditures have been relatively restrained
In the fourth quarter, the R&D expenses of Ideal Automobile were about 1.23 billion yuan, accounting for 11.6% of revenue, which was the first time that Ideal Automobile's research and development expenses exceeded 1 billion yuan in a single quarter. For the whole year of 2021, the R&D expenses of Ideal Automobile were 3.29 billion yuan, an increase of 198.8% from 1.1 billion yuan in 2020. The increase in expenses was mainly due to the development of new range-extending models and pure electric models.
From the perspective of product planning, the second quarter of 2022 will ideally launch a new full-size high-end SUV. At the same time, in order to release the first pure electric model in 2023, the relevant technical work in assisted driving technology, ultra-high voltage platform, super fast charging and other aspects needs to be rapidly promoted. Therefore, the ideal car changed the style of careful calculation in the past and began to increase investment in research and development.
Sales and administrative expenses amounted to $1.13 billion, representing 10.6% of revenue, and the expansion of sales channels led to an increase in sales expenses. In the fourth quarter, Ideal Automobile added 53 new retail stores, adding 17 new cities. By the end of 2021, Ideal already has 206 retail stores, covering more than 100 cities for the first time. But even so, the ideal is still the most restrained one in Wei Xiaoli's sales and management expenditure.
A few questions for 2022:
Sales volume and earnings will remain at the heart of capital markets in 2022.
Sales – Ideal's 2022 sales target is 200,000 units. But the market is changing rapidly, and how long the heat of the ideal ONE can last in 2022 is still a question.
The ideal X01 large SUV that will be launched in April this year can bring new growth momentum, but it takes a certain amount of time for mass production delivery and capacity ramp-up. Even if the ideal ONE can continue to maintain the momentum of monthly sales of more than 10,000, there is still a gap of at least about 50,000 vehicles that need to be made up by the ideal X01.
For an SUV priced at more than 400,000 yuan, it is still a big challenge for the ideal to achieve monthly sales of more than 5,000 units in the first year of listing. Launching a lower-priced model may be a better way to hit sales, but it's clearly not as profitable as a high-end model. In the end, it depends on the strategic considerations of the ideal car itself.
Production capacity - Ideal Automobile's Beijing plant is expected to be completed and put into operation in September 2023, and the current Annual Production Capacity of the Changzhou Plant is 100,000 units, and the output target after the expansion in 2022 is 180,000 units, and there is still a certain gap to meet the sales target for 2022. Therefore, how to match the production capacity with the sales target is also an important task in 2022.
Cost - Third, the problem of chip shortage in 2022 has not been well alleviated at present, and the Russian-Ukrainian conflict will lead to an increase in the cost of some raw materials. This will also affect the gross profit margin of the vehicle in the short to medium term.
On the whole, the ideal car's 2021 results are excellent, but there are still many uncertain factors in 2022, and it will take time to observe whether it can go to the next level. (Text/UVIS Auto Old Cannon)
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