Ignition Dimension (ID: chaintruth) original
Produced by Burning Finance
Author | Cao Yang
Edit | Rao Xiafei
On March 22, Xiaomi Group (01810. HK, hereinafter referred to as "Xiaomi") released its financial results for the fourth quarter of 2021 and the full year of 2021. At the same time, Xiaomi also released a repurchase plan of no more than HK$10 billion.
Affected by this news, at the close of trading on March 22, Xiaomi's Stocks in Hong Kong surged 6.13% to close at HK$14.2 per share, with a total market value of HK$356 billion.
According to the financial report, Xiaomi's total revenue in the fourth quarter of 2021 reached 85.6 billion yuan (RMB, the same as if noted below), an increase of 21.4% year-on-year; adjusted net profit reached 4.5 billion yuan, an increase of 39.6% year-on-year. For the whole of 2021, Xiaomi achieved total revenue of 328.3 billion yuan, an increase of 33.5% year-on-year; adjusted net profit was 22 billion yuan, an increase of about 70% year-on-year.
According to the revenue of each business, in the whole year of 2021, the revenue of Xiaomi's mobile phone business was 208.9 billion yuan, an increase of 37.2% year-on-year. In terms of IoT and consumer goods, the annual revenue reached 85 billion yuan, an increase of 26.1% year-on-year. In terms of Internet services, the annual revenue reached 28.2 billion yuan, an increase of 18.8% year-on-year. Among them, the Internet advertising revenue that was sung in 2021 reached 18.1 billion yuan, and the game business reached 900 million yuan.
Source/Xiaomi earnings
In the financial report, Xiaomi wrote that in 2021, despite the impact of the global supply shortage of core components and the ongoing new crown epidemic, we are still firmly implementing the established strategy, and the annual revenue and profit have reached significant growth, and the annual revenue of each segment business has reached a record high. The growth of advertising revenue is mainly due to the continuous expansion of user scale, the increase in the proportion of high-end mobile phones and the enhancement of commercialization capabilities.
"High-end mobile phones" became one of the businesses that contributed the most to Xiaomi in 2021.
According to the financial report, in 2021, Xiaomi's global shipments of high-end smartphones priced at RMB 3,000 or more in Chinese mainland and 300 euros or more overseas will exceed 24 million units, far exceeding the level of about 10 million units in 2020. In terms of shipments, the proportion of Xiaomi's high-end smartphones increased from about 7% in 2020 to about 13% in 2021.
Overseas, Xiaomi's high-end smartphone shipments have also achieved rapid growth. In 2021, Xiaomi's smartphone shipments priced at 300 euros or more abroad increased by more than 160% year-on-year, accounting for about 6 percentage points higher than in 2020.
Canalys data shows that in 2021, Xiaomi ranked third in the overseas high-end smartphone market with a retail price of $350 or more. Xiaomi stressed, "We unswervingly implement the strategy of high-end mobile phones and continuously improve our competitiveness in the high-end mobile phone market." ”
In this regard, Lin Meibing, chief analyst of WitDisplay, said that whether it is from the sales volume or revenue of the smart phone business, Xiaomi's financial report is good. However, in addition to the data, there are more points worth paying attention to about the high-end of Xiaomi. "Maybe Xiaomi's high-end road has not achieved good results as stated in the financial report."
For the car-making business that the industry is concerned about, there is not much mention in the earnings report and the conference call. This is inevitably a bit disappointing for the outside world, after all, in the past year, car building has been considered the top priority of Xiaomi's future. At least, from the beginning of Lei Jun's decision to build a car, it was such a signal to the outside world.
In the eyes of more industry insiders, xiaomi's road has become more and more difficult to walk. While the high-end mobile phone section of its core business is under pressure, car building is far more difficult than imagined.
Sun Yanbiao, president of the First Mobile Phone Industry Research Institute, said bluntly to Burning Finance that Xiaomi has been benchmarking Apple in the field of mobile phones and wants to take the high-end route, but in the current state, Xiaomi must stand at the high end and build a good car, which is a great challenge.
High-end is tough
"High-end" is not only Xiaomi's top priority, but also what it must do.
On the afternoon of February 8, 2022, Xiaomi Group held the first important meeting in the beginning of the Year of the Tiger - the high-end strategy seminar. At the meeting, Xiaomi made it clear that the high-end road is the only way for Xiaomi to grow, and it is also the life-and-death battle for Xiaomi's development, and we will unswervingly implement the high-end strategy.
And this strategy, which Xiaomi calls unswerving, has been gone for two years.
At the beginning of 2020, Lei Jun, founder, chairman and CEO of Xiaomi Group, said at the press conference of Xiaomi 10 that Xiaomi mobile phones officially impacted the high-end market. At the end of that year, Xiaomi released the first flagship phone of the new decade, Xiaomi 11. With Xiaomi Mi 11, Xiaomi also has a seat in the high-end market. On December 21 last year, Lei Jun even released a bold statement: "Xiaomi's high-end mobile phones have officially begun to benchmark Apple and learn from Apple." ”
Behind the high-end, it is mainly higher profits, which can be seen from Apple's profit margins. According to the data released by the research institute Counterpoint, in the second quarter of 2021, although Apple's contribution to global mobile phone shipments was average, the company's revenue and net profit in the global mobile phone market remained strong. In terms of revenue, Apple's revenue accounts for 40% of the revenue of all mobile phone factories in the world, but the profit accounts for 75% of the profit of all mobile phone factories in the world.
Lin Meibing analyzed that if the sales of models of more than 3,000 yuan from the financial report "Xiaomi more than 3,000 units" mean that the overall high-end process of Millet has been successful, it is inevitable that it will be biased. In fact, Xiaomi's so-called high-end mobile phones have achieved an increase in sales by reducing prices. In addition, from the perspective of average price, Xiaomi's high-end has not achieved the results it deserves.
According to the financial report, in 2021, the average selling price ("ASP") of Xiaomi mobile phones increased by 5.6% from RMB1039.8 per unit for the year ended December 31, 2020, to RMB1097.5 per unit in the reporting period. Xiaomi attributed this rise to an increase in the proportion of high-end smartphone shipments to total smartphone shipments.
However, Lin Meibing said bluntly that from 1039.8 yuan to 1097.5 yuan, only 57.7 yuan. However, in 2021, whether it is the impact of the supply chain or the price increase of chips and the price of materials, it may increase by more than 57.7 yuan. At the same time, Lin Meibing also said that Xiaomi has been emphasizing research and development strength and research and development investment, but in fact, Xiaomi's high-end product quality is not so high-end. For example, Xiaomi 11 is caught in the "hot" in 2021, and Xiaomi folding screen mobile phones also need to continuously increase overall sales by reducing prices.
But high-end is an important strategy of Xiaomi. In recent years, the high-end strategy has always been talked about by the market.
At the beginning of September 2019, Xiaomi ushered in the darkest moment in the capital market, and its secondary market share price fell to HK$8.28/share, down half from the issue price of HK$17/share. 4 months later, Lei Jun officially announced xiaomi's impact on the high-end market, and subsequently, Xiaomi's stock price ushered in a "spring". Just one year later, Xiaomi's stock price stood at a peak of HK$35.9 per share, and its market value rose to nearly HK$900 billion.
But now, although the high-end story is still being told, the stock price has shown a different trend than two years ago. As of the close of trading on March 22, although Xiaomi's stock price closed at HK$14.2 per share, it still fell by more than 60% in one year compared with the highest point of HK$35.90 per share created at the beginning of 2021.
The only way to build a car?
In the past year, car building has always been the most concerned point of Xiaomi in the industry. However, in the annual report of the first fiscal year after the official announcement of the car, there is not much mention of the car.
In the earnings report, Xiaomi said that since the announcement of the car-making plan in March 2021, Xiaomi's smart electric vehicle business has progressed more than expected. Up to now, the scale of the automotive business R&D team has exceeded 1,000 people, and it will continue to expand R&D in core areas such as autonomous driving and intelligent cockpit in the future. And said that it is expected to officially mass production in the first half of 2024.
In fact, it's not just the lack of mention in earnings reports. In the past year, the news about Xiaomi's car seems to be more speculation from the media, and its real substantive progress is little known to the outside world. Even Lei Jun, who has always loved to share Xiaomi's dynamics on Weibo, has very little content related to car building on Weibo.
Therefore, when the recent mobile phone China news, Luo Baojun, general manager of Xiaomi Beijing-Tianjin Branch, said, "The last piece of the closed loop formed by Xiaomi Home is new energy vehicles, and in the third quarter of this year, you can see the engineering sample car, which will definitely break through everyone's imagination", it has aroused widespread concern among netizens.
However, Burning Finance found that as of press time, "Mobile China" has deleted the message. Burning Finance asked Xiaomi for confirmation of this news, and as of press time, it has not received a reply.
It can be said that this low profile is diametrically opposed to the situation in which Lei Jun announced the construction of a car in the first place.
"I know very well what this decision means, and I am willing to bet on the entire reputation of my life, and once again put on the battle and fight for xiaomi cars!" This is the bold words left by Lei Jun, the founder of Xiaomi Group, in March 2021. It not only announced that Xiaomi officially went down to build cars, but also opened up Xiaomi's "buying, buying, buying" and "investing" in the automotive field.
On September 22, 2021, Xiaomi completed the acquisition of self-driving company Deepmotion for a total consideration of about US$77 million (about 500 million yuan).
According to Xiaomi's financial report, Deepmotion has the technology and research and development capabilities to focus on providing full-stack software solutions including perception, positioning, planning and control for advanced driver assistance systems and autonomous driving applications, which can enhance the Group's technical capabilities in the intelligent electric vehicle business.
At the same time, according to incomplete statistics from Burning Finance, Xiaomi has strategically invested in several companies related to the automobile industry.
According to tianyancha data, as early as 2016, Xiaomi invested in ruimi technology, a developer of in-vehicle intelligent hardware. In June 2019, it invested in new case technologies focusing on smart vehicles and smart mobility, and in November of the same year, it invested again in Xiaopeng Automobile, a manufacturer of electric vehicles.
In April 2020, Xiaomi invested in ioV products and service provider PATEO IoV. In August 2021, it invested in the development of smart parking management system and developed Shangai Parking. In February 2022, it invested in Zhiluchile, a provider of high-voltage electrical accessories for new energy vehicles.
In addition, in mid-2021, Xiaomi also released recruitment information for a number of autonomous driving-related positions on its official website. Specifically, it includes data platform, millimeter wave algorithm, decision planning, perception, high-precision map, development tools, vehicle infrastructure, front-end platform development, embedded software, control, simulation platform, etc.
When visiting the social recruitment of Xiaomi's official website in recent days, burning finance found that the first place is still the recruitment post for automobile-related positions, and it is marked "urgent".
Photo / Xiaomi company recruitment information
Source/Xiaomi official website
For the future of Xiaomi's car, many people in the industry are also optimistic.
McCa, who has been working in the automotive field for many years, told Burning Finance that there are several aspects of the importance of car manufacturing, such as brand image, product definition, core direction, supply chain management, manufacturing and marketing channels. In addition to the core direction and manufacturing has not been verified, other millets have ready-made. "The core direction refers to the fact that Xiaomi did not give a clear main direction of attack, whether it is to do services like Weilai, or to specialize in automatic driving like Xiaopeng."
"One of the things I'm optimistic about Xiaomi is that consumers are already very tolerant of car brands, focusing more on experience than previous brands." Compared with those previous brands, Xiaomi has at least so many stores and offline channels are relatively mature, and like Huawei, it should sell quickly. McCa stressed.
Lin Meibing is also optimistic about Xiaomi car manufacturing, in his view, Xiaomi car manufacturing is a point of view, the current electric vehicle is still entering the period, Millet still has opportunities. If explosive products can be produced after 2024, it is possible to improve Xiaomi's profit margin.
Sun Yanbiao expressed views similar to those of Lin Meibing. It said that new energy vehicle manufacturing is an outlet and an opportunity for the times to fight. At present, new energy vehicles for the entire automotive era, a bit like the functional machine to the threshold of smart machine. And Xiaomi decided to join the car-making team at this juncture, and there is still a certain opportunity.
Xiaomi is still not easy
However, from the current situation, although the future of millet looks very "plump", this road is not easy to walk.
On its mobile phone business, the pressure on Xiaomi is not small.
First of all, Xiaomi must face up to the fact that the current global smartphone shipments are showing a trend of growth and decline. Data from IDC data shows that global smartphone shipments have been negative for 4 consecutive years since reaching a high point in 2016, and shipments in 2021, although rebounding, have increased by less than 5% year-on-year.
Although the shipment volume of high-end machines seems optimistic, in fact, Xiaomi's high-end road has obviously not really found a breakthrough.
Lin Meibing told Burning Finance that the breakthrough of Xiaomi's high-end mobile phone is still a product force. "Being able to make differentiated products and meet the quality needs of high-end users is the key."
In fact, after 2015, Xiaomi has always wanted to impact the high-end market, but due to channel restrictions, insufficient product strength and other factors have not been successful, or only broke through the price of 3,000 yuan, there is still a distance from the real high-end mobile phone market.
As Lin Meibing said, the "2021 Q4 Global Best-Selling Mobile Phone Market Analysis Report" (hereinafter referred to as the "Report") released by Rising Sun Big Data shows that the total sales of the world's top 20 best-selling mobile phones with more than $800 in Q4 in 2021 were 83.81 million units, an increase of 71% compared with 49.01 million units in Q3 quarter. Among them, among the top 20 best-selling models, Apple occupies 9 models, reaching a record high. Samsung 4 models, Huawei 2 models, Google, OnePlus, Sony, OPPO, Honor 1 each.
It is worth noting that in the best-selling models of $800+, xiaomi mobile phones do not appear. However, according to the "Report", in the TOP20 of the world's mobile phones of $600-799 in Q4 2021, Xiaomi leads the Chinese brand, significantly surpassing other mainstream Chinese mobile phone brands with an 8% share.
Lin Meibing also stressed that not only xiaomi, glory and OV are also difficult to achieve high-end. Especially under the suppression of apple prices, companies that lack core innovation can only maintain in the low-end market.
"China's high-end mobile phone market lacks Android, and these mobile phone manufacturers still have the opportunity to make up for the lack of domestic high-end Android mobile phones." It's just that at present, it is not clear which manufacturer can break through the siege. ”
And the car construction that Lei Jun has high hopes for is probably difficult to achieve in a short period of time.
As Lei Jun said, Xiaomi does face great difficulties in building cars. After all, at this stage, the new domestic car-making forces have entered the 10,000-car club, and traditional car companies are also rapidly transforming.
According to the data of the Association, in the retail sales ranking of new energy manufacturers from January to December 2021, BYD Automobile, SAIC-GM-Wuling and Tesla China ranked in the top three, with sales of 584,020 units, 431,130 units and 320,743 units, respectively, an increase of 221.3%, 177.3% and 133.3% year-on-year. The manufacturers in the 4th to 7th places are Great Wall Motor, GAC Aegon, SAIC Passenger Cars, Xiaopeng Automobile, Chery Automobile, Weilai Automobile and Ideal Automobile.
Photo: Retail sales of new energy manufacturers from January to December 2021
Source/Multiply Association
Qiao Ling, a big V of Sina and a financial blogger, said that at present, Xiaomi car manufacturing is facing many pressures such as competitive environment, technology catch-up, profit model and supply chain.
In Qiao Ling's view, the current competitive pattern of the new energy market has basically been established in the high- and low-end. The future positioning of millet will be more embarrassing, first of all, the positioning of the millet brand has always been cost-effective, but obviously, there is no shortage of cost-effective brands in the current domestic new energy market.
In terms of technology, Xiaomi belongs to cross-border car manufacturing, even if it has certain technical reserves, it is difficult to make transcendent highlights.
In terms of profit model, in the field of mobile phones, Xiaomi's online model and extremely cost-effective model are effective, and it has not encountered too strong competitors. Unlike the automotive field, Tesla is taking the Internet model, although the price of model 3 has been lower than the price of competitors, its gross profit margin is still very high, and there is still a large room for reduction.
Finally, there is the supply chain. The power battery in the current market is basically monopolized by Ningde Times, LG, Panasonic and BYD. And these several (BYD is not yet) are already Tesla suppliers, and the production capacity is full, in a state of short supply. Although these large factories are also expanding production, but the downstream sales are also soaring, last year's sales of new energy vehicles increased by more than 1 times, the penetration rate of Europe and the United States is also soaring, in the past three years, the downstream demand is still huge.
So the question is, who is Xiaomi's battery looking for? It is unrealistic to find LG and Panasonic, there is no capacity. Ningde has production capacity, but Ningde wants to contract the production line, that is, it has to spend money first. "If it is really Ningde supply, then this price war cannot be fought at all."
Qiao Ling also told Burning Finance that Xiaomi's 100 billion yuan to build a car is certainly no problem, but from the current market environment, millet car pressure is very large, the expectation is not good, but millet does not build a car may be worse.
"Obviously, whether it is for Xiaomi or other mobile phone manufacturers, it is an established fact that there is no room for mobile phone growth, and the future increment of mobile phones is basically refined operation." Qiao Ling added.
As Qiao Ling said, in "This year's young people, change mobile phones also need a reason", a number of industry insiders have told Burning Finance that in recent years, the innovation of major mobile phone brands has weakened a lot, and related marketing is basically around the "pricing strategy", "expanding memory", "photography and video", and "fast charging and recoiling", and "high refresh rate" has become a symbol of domestic high-end machines in the past six months.
However, the innovations that can really be said to be revolutionary are missing. It is an indisputable fact that the era of smartphones, which has already entered the stock market, is in a period of relative "stagnation".
Sun Yanbiao told Burning Finance that with Xiaomi's current position in the global mobile phone market, it is necessary to be a high-end brand, which Xiaomi founder Lei Jun has emphasized more than once in public or within Xiaomi. The car is a pull for the mobile phone business, which is not only in terms of sales, but also for the pull and endorsement of Xiaomi's mobile phone to enter the high-end brand, which is the pull of scientific and technological content.
Sun Yanbiao stressed that this can also be seen in Apple's strategy. "Apple is in the lead because it sells not only products, but also dreams of technological innovation. Xiaomi's car is also establishing the dream of scientific and technological innovation. ”
As Sun Yanbiao said, in July 2021, Lei Jun topped the list in the "2021 Forbes China Best CEO List". In an exclusive interview with Forbes China, Lei Jun said that the challenge facing Xiaomi is that if one day we really become the world's first consumer electronics. Maybe because we don't do new energy vehicles, we have become a traditional company and are outdated.
In Lei Jun's view, intelligent electric vehicles are the general trend of future development and an indispensable link of intelligent ecology. "From personal devices to wearable devices, to smart homes to smart offices to smart travel, today's intelligence is the main theme, if there is no intelligent travel, the entire intelligent ecology is incomplete."
"Xiaomi doesn't do it, if it doesn't do it, it means it will be outdated." In the face of huge difficulties, we still chose to face the difficulties. ”
Xiaomi is also clearly determined about its future, which is evident from its investment in research and development.
According to the financial report data, Xiaomi's research and development expenditure reached 13.2 billion yuan in 2021, an increase of 42.3% year-on-year. In the past few years, Xiaomi's R&D investment has grown at a compound annual growth rate of more than 40%. At the same time, Xiaomi said that it will unswervingly adhere to technology-based in the future, and it is expected that the R&D investment will exceed 100 billion yuan in the next 5 years.
But despite this, at this stage, the pressure of millet is still obvious, after all, the car and high-end machine, one is not formed, and even if one has been proposed for 2 years, the effect is not obvious.
Don't lose sight of one or the other, perhaps it is something that Xiaomi is particularly concerned about.
Resources:
"Extremely insulting! Lei Jun 100 billion to build a car, the stock price has not risen at all, but also cut leeks! , source, Kung Fu Cars.
""Fierce Character" Lei Jun: New energy vehicles can't do it, and if they don't do it, they will be outdated", source, Forbes.
"Late Exclusive 丨 Xiaomi's 35th Adjustment This Year: Lei Jun Reduces The Burden, the International Business Department Reorganizes", Source, Late Post.
Just now! Xiaomi breaks again! 400 billion market capitalization evaporated in 2021", source, OFweek Electronic Engineering.
*The caption and some of the inner text illustrations are from Visual China.
*Macka is a pseudonym.
*Disclaimer: In no event shall the information herein or the opinions expressed herein constitute investment advice to any person.