In this season's U.S. stock roundup, Dolphin Jun covered the current macro situation of the U.S. stock market ("The U.S. stock carnival is over, too many people are swimming naked?"). 》）。
From the recent situation, a Russian-Ukrainian conflict has been added, which may further lengthen and raise inflation expectations in expectations, resulting in this round of inflation becoming more "stubborn".
In the whole of these three companies, NVIDIA, which is in the second-level leading position of the industry, and Tesla, which is in the explosive track, have enjoyed more than the valuation in the past year, and Dolphin Jun has pointed out in the previous judgment that in the context of the United States water collection, they have the risk of killing the valuation.
In terms of actual results, the performance of the two companies is indeed as beautiful as ever, but there is no "incremental" brilliance, and the stock price is not significantly corrected. Apple's performance, especially on the gross profit side, relatively exceeded Dolphin Jun's original expectations.
The current macro beta valuation pressure on growth and technology has become a consensus, and it is especially important to prefer individual stocks in this case. Dolphin Jun also updated its judgment on these companies based on the current macro situation and the incremental information transmitted by the fourth quarter performance of individual stocks, as follows:
The following goes directly to the specific analysis of the three hard technology companies:
First, Apple: pass on the cost pressure, just serve you!
Since 2022, the entire market has been shrouded in macro-level influences such as interest rate hikes and Fed water collections, and the Nasdaq has fallen by nearly 20% so far this year. In the context of a weak market, Apple once again handed over a financial report that exceeded expectations. Dolphin Jun has given a detailed interpretation for the first time in the interpretation of apple's financial report "Apple's hard power, sweet and fragrant".
Apple's performance this quarter is actually beyond the expectations of Dolphin Jun, if you remove trivial information and look at the biggest Beat, it is Apple's super strong ability to transfer supply chain pressure in the context of macro PPI inflation.
Among most of the consumer goods looked at (if you look at it as a consumer product according to buffett's logic of investing in Apple), such as the domestic United States, Gree, etc., in the process of lack of cores and raw material prices, gross profit is strongly diluted.
And Apple directly anti-routine, gross profit margin does not fall but rises, exceeding market expectations of nearly 2pct. Behind this is Apple's not only Apple's "soft" strength but also "hard" strength:
"Hard" strength: After the absence of the domestic Android camp leader H mobile phone, the relative bargaining power of Apple's industrial chain has increased, driving the price of mobile phones to jump to the high-end again; the whole product line promotes the interconnection of chip self-development + fruit operating system to further strengthen the hard power of the product, bringing a huge release of hardware gross profit, while the revenue side has also maintained its consistent strength in recent quarters.
"Soft" strength: After the global Internet entered the stock, Apple used the traffic entrance position of the app store in the mobile era, used the adjustment of the user privacy policy, rearranged the redistribution of the advertising budget, including guiding users to pay in the APP, strengthened the monetization ability of its own Internet sector, and promoted the release of both revenue and profits.
Source: Company financial report, Longbridge Dolphin Research
Overall, Apple's earnings report this quarter reflects the company's product capabilities and industrial chain status, and also increases investor confidence in its long-term holding. Although Apple has also been affected by macro beta in the near future, Apple is still one of the better performers among nasdaq companies.
For the increase in gross profit margin, the company's own interpretation is "improvement in product structure". In Dolphin Jun's view, the quantitative performance of product structure improvement is the rise in the price of iPhone and Mac, to a certain extent, this is the absence of the leading H manufacturers in the Android system, and the rise in product power brought about by self-developed chips + system interoperability, consumers have "bought" Apple's product prices upwards.
This is in the eyes of Dolphin Jun, which has long-term sustainability, so after this financial report, Dolphin Jun mainly raised the long-term gross profit margin expectations of Apple's hardware side and the growth expectations of the short-term and medium-term Mac business.
After updating the model, DCF is valued at $206 per share at a perpetual growth rate of 2.5% and a discount rate of 8.23%, representing a 25% premium to the current share price.
Recent concerns about changes in long-term yields may affect WACC levels. In this regard, you can pay attention to the range under the different discount rate levels given by Dolphin Jun. From the perspective of market performance, even under the influence of macro beta, Apple can still perform more steadily.
Second, people's hearts are scattered, and tesla should be "safety first"
After the beginning of the Year of the Tiger, the entire new energy sector is scattered, the Tesla stock price of the god has also plummeted, the year-to-date decline has exceeded 20%, the four quarters report released at the end of January has not been able to become a reassuring pill for investors, and the market sentiment such as the pendulum clock mentioned in the "Cycle" continues to swing in a pessimistic direction. At the end of the day, fundamentals are important for Tesla's valuation, but market sentiment is just as important. Market sentiment is volatile, so let's grasp the fundamentals first.
Looking back at Tesla's four-quarter report below, it reveals a hint of signs that fit the performance of the stock price (for details, please refer to "Tesla, a riding on the dust, will usher in an intermission?"). 》）。 Tesla, whose gross margin, net profit and other indicators have consistently impacted the hearts and minds of investors, has reported that the extent of its four-quarter report exceeding expectations is actually very small, and there seems to be a slowdown momentum.
Automotive manufacturing sales remain the cornerstone of the company's current performance. The gross profit margin of automobile sales in the fourth quarter was 30.3%, flat compared with the previous three quarters, each quarter will increase by 2-3pct month-on-month, and the process of the company's automotive business gross margin climbing may come to an end, which is obviously different from the logic of the capital market's expected automatic driving empowerment gross margin.
Software, energy storage, services and other businesses that are still in the storytelling stage will be quickly discounted in the context of macro water collection.
Before and after Tesla announced the third quarterly report, the market sentiment was optimistic, and The Dolphin Jun of the Longbridge had made an extremely optimistic valuation to try to find the ceiling of the company's stock price, (for details, see "Tesla sells tickets to supplement taxes, where does Tesla's stock price go?"). 》）。 The current market sentiment is pessimistic, so Longbridge Dolphin Jun takes a conservative attitude to see the value of Tesla and tries to find Investment Opportunities for Tesla.
We still return to the two core factors of sales volume and profitability that affect valuations:
[1] Sales
The continuous expansion of the new energy industry is the soil for Tesla's rapid shipments, and the recent killing of the new energy sector is affected by the macro environment on the one hand, and on the other hand, there is also the reason for the lack of confidence in the market for new energy vehicle shipments in 2022.
For Tesla's sales expectations, Longbridge Dolphin Jun is not pessimistic, but there is a slight downward revision compared to the previous optimistic assumptions.
Although the penetration rate of new energy passenger cars in China reached about 21% in December and 15% in the whole year of 2021, from the perspective of the global market, according to the National Energy Administration, global electric vehicle sales in 2022 doubled compared with 2021, reaching 6.6 million units, with a penetration rate of about 9%, still in the stage of vast space and rapid penetration.
In the case of demand base, production capacity has become an important factor restricting Tesla shipments, but Tesla's recent changes in production capacity are all good, including the start of production at the end of the first quarter of the Texas plant in the United States, the start of the Berlin plant in Germany in March, and the second plant in Shanghai to promote the company's Chinese production capacity to 2 million vehicles.
In summary, The Longbridge Dolphin Jun predicts that the adjustment to sales will not be large, predicting that Tesla sales will be 1.44 million in 2022 (downgraded by 100,000 vehicles), 2026 assuming a global new energy vehicle penetration rate of 25%, Tesla sales of about 4.5 million vehicles (downgraded by 200,000 vehicles, 5-year compound growth rate of 37%), corresponding to a global market share of 20%;
[2] Profitability
Previously, the optimistic expectations of the company's profitability of the Long Bridge Dolphin Jun referred to apple company that integrated soft and hardware, and had great brand power, believing that Tesla's strong engineering manufacturing capabilities and software realization were the company's profitability comparable to Apple's bottom line, and assumed that Tesla's gross profit margin in 2025 was 38% and net profit margin was about 20%.
Considering that the software realization is still in the early stages, Tesla FSD loading rate does not have the certainty of improvement, so from a conservative point of view, for the time being, do not put the gross profit margin improvement brought by software realization into the valuation, only consider the high gross profit of the hardware itself brought by Tesla's strong engineering manufacturing capabilities, assuming that the company's automobile sales gross margin is maintained at about 30%, energy storage, services and other low gross profit business resulting in the company's overall gross profit margin of about 28%, deducting about 12 points of expense rate and 15% income tax, the company's net profit margin is in Between 12%-15%.
And from the perspective of the trend of industry development, the competition in the new energy industry is bound to be more intense, the Chinese market has blossomed, and the short-lived sleeping automobile manufacturers in the European and American markets are gradually rising, and the increasingly fierce competition will weaken the market power of Tesla terminal pricing.
In addition, the rising pressure on raw materials represented by batteries and chips has not been eliminated, and the certainty of profitability improvement is not there.
Overall, under the core assumption that sales are relatively neutral and earnings are relatively conservative, Tesla's DCF valuation is about 777 billion yuan, corresponding to a stock price of about 750 US dollars, and there is still 7% room for decline from the closing price of 815 yuan on February 27, 2022.
Considering the downward pressure on the stock price brought by the current sentiment and liquidity on growth and high valuation stocks, Longbridge Dolphin Jun believes that although Tesla's stock price has not yet retraced to a comfortable "batting area", it is gradually approaching, and the subsequent stock price adjustment can begin to pay attention to the reversal opportunities of the industry and individual stocks.
Third, NVIDIA: high growth is not false, on the cost performance or almost meaning
After the short-term inflation surge has raised the market's expectations for interest rate hikes, macro beta risk has become an important factor for market concerns.
And the most direct embodiment is in the killing valuation.
As a representative of highly valued stocks, Nvidia once had a maximum valuation of nearly 100 times PE. In this round of macro closing expectations, Nvidia's stock price fell from a peak of $346 to $208, a decline of as much as 40% in 90 days.
Admittedly, Nvidia delivered a good answer sheet this quarter, hitting new all-time highs in revenue and gross margin.
But on the day after the earnings report, NVIDIA still saw a decline of more than 7%. A good earnings report did not stop the market's concern about high-valued companies. (Dolphin Jun's Nvidia earnings report interpretation of "Nvidia: The Hidden Concerns Behind The Unexpected Performance" |.) Read the earnings report))
We look at the game business, data center business and gross profit margin from three aspects:
[1] Game business: NVIDIA's game business continued its high growth trend in the quarter. Lifestyles such as home work and home entertainment spawned by the epidemic have driven the demand for GPUs in the PC market. With the dilution of the impact of the epidemic, NVIDIA still ushered in nearly 40% growth in the quarter, mainly due to the mining demand brought by the rise in virtual currency and the market demand for high-end GPU products.
Nvidia's current game business not only has a unique PC field, but also includes a part of the mining field. Due to the versatility of the GPU itself, it can not only be used for unique display in the PC field, but also partly for the mining field. Although NVIDIA has introduced CMP cards dedicated to mining to reduce mining's unique run on PCs, there are still many GPUs in the market that are used for mining.
Judging from the trend of NVIDIA and Bitcoin prices in the past six months, there is a certain upward/downward trend between the two. When the price of Bitcoin rises, Nvidia's stock price also has upward momentum. The rise in the price of Bitcoin has stimulated mining demand and raised market expectations for the company's gaming business.
Dolphin Jun expects that NVIDIA's gaming business is expected to continue to grow with its own strong GPU product strength, especially driven by Ampere architecture products. In addition, since part of the business is used in the mining field, the growth of the gaming business is also affected to some extent by the price of virtual currencies.
[2] Data center business: NVIDIA's data center business hit a record high this quarter and has achieved high growth for 9 consecutive quarters. Previously, the growth of the company's data center business was mainly due to the acquisition of Mellanox, which directly led to high growth. The direct impact of this merger has ended in the second quarter of 2021, and the subsequent high growth of the data center business is mainly due to the strong demand for downstream cloud business and the strength of the company's endogenous growth.
The downstream of the data center business is mainly the world's major cloud vendors, and part of NVIDIA's high growth comes from the high growth of the entire industry. Dolphin Jun's capital expenditure of the world's major core cloud vendors has shown an unabated trend after the epidemic, with more than 30% growth in 2020 and 2021, which has laid the foundation for the high growth of NVIDIA's data center business.
Dolphin Jun expects that with the expansion of capital expenditure of downstream cloud vendors, NVIDIA's data center business is expected to continue to grow at a high rate, but the growth rate may decline from the current level. At the same time, due to NVIDIA's advantages in computing power, the company's business growth rate is still expected to be better than the industry growth rate.
[3] Gross profit margin: NVIDIA's gross profit margin also reached a new high this quarter, and continued to maintain the upward trend of gross profit margin. At the most serious time of the epidemic, the company's gross profit margin declined significantly under the influence of supply chain and so on. When the epidemic factor gradually eased, driven by products such as Ampere GPUs, the company's gross profit margin returned to a high of about 65%.
Dolphin Jun expects that with the shipment of Ampere GPUs and the advancement of the "three-core strategy", NVIDIA's gross profit margin is expected to continue to trend steadily upward.
Overall, NVIDIA delivered a good financial report this quarter, maintaining high growth in the game business and data center business, while gross margins also maintained an upward trend. Under the influence of macro beta, Nvidia's financial report still can't stop the market performance of killing valuations.
Although Nvidia gave more than expected guidance in terms of revenue in the next quarter, the increase in cost and expense brought greater performance pressure to the company. In particular, the termination of the ARM acquisition will result in $1.36 billion in operating expenses for Nvidia in the first quarter of fiscal 2023, which represents about 40% of the company's quarterly net profit.
After this financial report, Dolphin Jun mainly increased the growth expectations of NVIDIA's game business and data center business, while lowering the market interest rate hike expectations to raise the discount rate level. After updating the model, DCF is valued at $247 per share at a perpetual growth rate of 3% and a discount rate of 9.32%, which is not a significant premium to the current stock price.
Recent concerns about changes in long-term yields may affect WACC levels. In this regard, you can pay attention to the range under the different discount rate levels given by Dolphin Jun. As a highly valued stock, Nvidia is greatly affected by macro beta.