On March 23, Geely Automobile Holdings Limited (hereinafter referred to as "Geely Automobile") (0175. HK) released its 2021 financial report. In 2021, listed companies achieved revenue of RMB101.6 billion, an increase of 10.3% year-on-year, and profit attributable to shareholders after deducting share payments of RMB6.06 billion, an increase of 9.4% year-on-year. The company's total cash reached RMB28 billion, up 46% from the previous year, the highest level in history, and net cash reached RMB20.8 billion. In addition, the Company proposes to pay a dividend of HK$0.21 per share, raising its dividend ratio to 35.3%, up 5.8 percentage points from 2020 to an all-time high.
It is worth noting that in the past year, the company's other revenues such as technical services and licensing profits have continued to grow, up 245.3% year-on-year, of which licensing revenue has become a new profit growth point for the company. In addition, Geely Automobile's new energy and electrification sales increased geometrically by 145.3%, and overseas markets increased by 58.2% year-on-year.
Geely Automobile Group CEO Gan Jiayue said at the 2021 annual results conference that the company will actively respond to the uncertainties brought about by the supply chain, continue to strengthen the deployment of localization and self-developed chips, and solve the chip shortage problem in a variety of ways through a variety of technical route solutions.
Sales fell short of expectations and the profit structure diversified
In 2021, Geely Automobile's total annual sales reached 1.328 million units, and although it won the first place in Chinese brand passenger car sales for five consecutive years, the market share increased to 6.4%, but this figure fell short of the company's sales target of 1.53 million units in 2021. Compared with the total sales of 1.32 million units in 2020, the company has not achieved significant growth in the past year, but the average bicycle revenue of Geely Automobile (including Lynk & Co) rose to 87,672 yuan, an increase of 9.0% year-on-year, which means that the company's brand premium has increased significantly. Among them, the total sales of CMA's high-end series "China Star" series exceeded 200,000 vehicles last year, the cumulative sales of the global new high-end brand Lynk & Co exceeded 650,000 units, and the average weighted transaction price of Lynk & Co products was 165,000 yuan.
In addition, the new pure electric brand Extreme Kr, launched in April 2021, has built a complete ecological system of pure electric intelligent technology for the company. Since the first model, the Krypton 001, was delivered in Four Months with a cumulative delivery of 12,453 units, with an average order price of 335,000 RMB, and is expected to hit the sales target of 70,000 units this year. In the next three years, Extreme Kr will launch 6 new products to meet the needs of more users with a more comprehensive product layout.
High-end research and development has helped technology output to promote the diversified development of Geely Automobile's profit structure. The company's geely automotive technical services and licensing profit and other revenue increased by 245.3% year-on-year, of which the technology licensing revenue was 1.275 billion, an increase of 125% year-on-year, becoming the company's new profit growth point.
It is worth noting that although the net profit of the joint venture company (Lynk & Co and Jizhi Financial) increased by 42%, of which the net profit of Lynk & Co increased by 37% and the net profit of Jizhi Financial increased by 45%, the overall net profit of Geely Automobile has declined for three consecutive years. Compared with the net profit of 5.534 billion yuan in 2020, the company's figure was only 4.847 billion yuan in 2021, down 12.41% year-on-year. The reason for the company's profit pressure may come from rising raw material costs, increased investment in research and development, and operating costs from developing new businesses.
Strengthen the intelligent and electrified layout
The emphasis on self-developed technology has promoted the intelligent and electrified layout of Geely Automobile. In 2021, Geely Automobile's R&D investment totaled 5.5 billion yuan, an increase of 16.1% year-on-year, and the proportion of R&D investment revenue increased from 5.3% in 2020 to 5.5%, with a total total R&D investment of 25.6 billion yuan in the past five years. The company's new energy and electrification sales exceeded 100,000, a geometric growth of 145.3%, and the market share of the A-class pure electricity market reached 7.43%, ranking third. Among them, the sales volume of new energy vehicles increased by 177.3% year-on-year.
In 2022, Geely will continue to increase its investment in research and development in new energy products, and make full efforts on pure electricity, super mixing, alcohol-electric hybridization, power exchange and other tracks. The new power exchange travel brand Ruilan Automobile officially opened the company's new pattern of power exchange, and more than 8 models of Thor Hi · X oil-electric hybrid and super electric hybrid products will open a new pattern of new energy travel.
In order to accelerate the process of intelligent networking, Geely Automobile will focus on strengthening software self-research and accelerating the realization of a new generation of intelligent driving and intelligent cockpit applications. In terms of smart cockpit, the "new generation of smart cockpit" technology based on 7Nm chip will be displayed this year and will be the first to be installed on the new smart SUV. In terms of autonomous driving, Extreme Kr and Mobileye have deepened their cooperation and will launch the world's first all-electric vehicle with L4 autonomous driving capability in 2024.
Extreme Kr x Mobileye
Image source: Geely Auto
Geely Automobile said that the company will build a technology moat through the layout of new energy technology, vehicle networking, automatic driving, low-orbit satellites, in-vehicle chips, operating systems and other businesses.
Expand overseas markets and practice the concept of sustainable development
Under the new development pattern of double circulation, Geely Automobile has steadily developed overseas markets. In 2021, Geely Automobile exported 115,000 units to overseas markets, an increase of 58.2% year-on-year. Lynk & Co has achieved normalized exports to Europe and achieved terminal delivery in the Netherlands, Germany, Belgium and other markets; the first stop of the Asia-Pacific strategy landed in Kuwait and began to be delivered in four countries in the Middle East.
In addition, Geely Automobile has set carbon neutrality targets, planning to achieve a 25% reduction in full-link emissions by 2025 and carbon neutrality by 2045. In 2021, in terms of sustainability, Geely Automobile was selected as a constituent of the Hang Seng ESG 50 Index, the Hang Seng Corporate Sustainability Benchmark Index and the FTSE Social Responsibility Index Series. In 2022, Geely Automobile will launch the world's first alcohol-electric hybrid sedan , the 4th generation Emgrandol-electric hybrid sedan. The company's CEO Gan Jiayue revealed that the upcoming "alcohol-electric hybrid" model has a 100-kilometer alcohol consumption of only 9.2L, a decrease of more than 40% in alcohol consumption, and a travel cost of less than 3 cents per kilometer.
Dai Qing, senior vice president and CFO of the company, proposed that in 2022, Geely Automobile's annual sales target will be 1.65 million units (including 70,000 units of Extreme Kr). In addition, the company will accelerate the efficiency of structural car manufacturing, and the proportion of models built with modular architecture will increase to 70%, while the proportion of "Chinese stars" will increase to more than 30%.
With the global macroeconomic uncertainty, the automotive industry is facing huge challenges such as rising raw material prices and chip shortages, in addition to coordinating supply-side resources, Geely Automobile will strengthen the self-research capabilities of smart electric vehicles to cope with the crisis. It is worth asking that since 2022, Geely Automobile's stock price has fallen by as much as 43.84%. In this regard, Ceo and Executive Director Gui Shengyue said that the company's stock market performance is affected by the macro environment, industry policies, market fluctuations and other factors, from the current stock price level, Geely Automobile believes that there is still a lot of room for improvement.