After the close of trading on March 23, domestic auto industry giant Geely Automobile handed over its report card for last year.
According to the financial report data, in 2021, Geely Automobile achieved a total revenue of 101.611 billion yuan, an increase of 10.3% year-on-year; achieved a net profit of 4.35 billion yuan, down 22% year-on-year, although it was difficult to achieve the achievement of 100 billion revenue, but the overall performance is still not increasing revenue.
For this earnings report, Geely executives bluntly said that it was lower than expected: "The company's financial performance last year was lower than the management's original expectations, mainly due to the shortage of global chip supply during the year. From the perspective of stock price performance, as of the noon close on March 24, Geely Automobile's stock price rose by 1.34%, perhaps for investors, this financial report is more of a decent.
However, from a longer perspective, since the record high of HK$36.25 in January last year, Geely Automobile's stock price has begun to decline continuously. As of the close of trading on March 23, Geely Automobile's stock price closed at HK$11.96, a sharp drop of 67% at a higher point, and its market value evaporated by HK$243.3858 billion, equivalent to RMB198.2 billion.
Obviously, although Geely Automobile has achieved the achievement of 100 billion revenues, behind this 100 billion revenue, there are still many problems and hidden dangers waiting for Geely Automobile to solve.
The joys and sorrows behind the "100 billion revenue"
For this financial report of Geely Automobile, there are both bright spots and many hidden worries behind it.
First of all, it has to be said that Geely Automobile's diversified business.
From the financial report, Geely Automobile's main revenue comes from automobile sales - the total sales of automobiles reached 1.328 million units, an increase of 1% year-on-year, and the revenue was 87.697 billion yuan, accounting for 86.31% of the total revenue.
However, although the proportion of revenue from automobile sales is very high, it is not the core source of Geely Automobile's profits, and its profits mainly come from research and development and related technical support services and intellectual property licensing.
According to media reports, the net profit of Geely Automobile's joint venture increased by 42% last year, of which the net profit of Lynk & Co increased by 37% and the net profit of Jizhi Financial increased by 45%. Other revenues, such as technology services and licensing profits, also continued to grow, up 245.3 percent from last year.
There is no doubt that although it has achieved 100 billion yuan in revenue with 1.328 million car sales, Geely Automobile's profit growth does not come from buying a car, which can be said to be "profit structure diversification", but it is also a bit of an inversion of the taste.
Secondly, let's talk about the high-end and new energy of Geely Automobile.
Judging from the financial report, Geely Automobile's high-end transformation has achieved initial results. In terms of specific data, Geely Automobile's overall average bicycle revenue increased to 87,672 yuan, an increase of 9.0% year-on-year, geely brand CMA high-end series "China Star" series sales exceeded 200,000 units in 2021, and Lynk & Co's cumulative sales exceeded 650,000 units on the occasion of the fifth anniversary of the brand's founding.
However, on the other hand, Geely Automobile's new energy transformation has not gone smoothly. According to the data, Geely will deliver a total of 86,000 new energy vehicles in 2021, accounting for 6.8% of the total delivery, compared with BYD, which broke one million new energy vehicles as early as last May and is also a traditional car company, Geely Automobile has lagged behind in the field of new energy.
In fact, Geely Automobile has begun to explore new energy vehicles at a very early age, whether it is the early oil-to-electric model Emgrand EV, and later the new sub-brand Polar Star, Geometry, there is no good performance; and the newly launched Krypton brand, after the launch also encountered product quality problems, lack of cores, etc., Geely's new energy vehicle transformation is not optimistic.
Overall, from the perspective of sales, Geely Automobile is still the leader of the domestic automotive industry, but it is facing the situation that selling cars does not make money and new energy vehicles are gradually lagging behind.
The pros and cons of mergers and acquisitions
Geely Automobile's current situation is inseparable from its development direction of relying on "mergers and acquisitions" for many years.
The history of Geely Automobile's development dates back to 1991, 30 years ago. At that time, Li Shufu, who had earned the first bucket of gold by producing refrigerator parts, saw that BMW and Mercedes-Benz were still in ruins after seeing the domestic fire, so he resolutely threw himself into the automotive industry and began his "car-making dream".
Time came to 1998, the first Geely automobile in China Taizhou Linhai base off the production line; not long after, Geely Automobile independently developed the first car - Haoqing, also officially off the production line in Zhejiang Linhai; in 2001, Geely got the automobile production qualification, became China's first private automobile enterprise, and then Geely began large-scale production, the volume expanded rapidly.
However, although it is difficult to get the production qualification, Li Shufu and Geely Automobile have been facing a problem - the technology is too backward, and the product quality is not good. How to quickly improve the company's technology, Li Shufu did not choose to be like other car companies, but chose to acquire foreign car companies, so that he can directly use the advanced production technology of foreign car companies.
Since then, under the leadership of Li Shufu, Geely Automobile has begun to implement the "take-ism" and started crazy mergers and acquisitions:
In 2006, Geely took a stake in the British Manganese Copper Company, and in 2013, it wholly acquired Manganese Copper Holdings;
In 2009, Geely acquired the world's second largest automatic transmission company, DSI Australia.
In 2010, Geely acquired a 100% stake in Volvo for a whopping $1.8 billion;
In 2017, Geely acquired a 49.9% stake in Proton Motors and a 51% stake in luxury car brand Lotus
……
With continuous external acquisitions, Geely Automobile's technology has also made rapid progress, especially after the acquisition of Volvo in 2010, Geely has obtained a complete automobile research and development, production standard system, coupled with the use of the CMA architecture and new engines and gearboxes jointly built with Volvo, which directly makes Geely Automobile's technical level reach the top of the industry.
With the blessing of advanced technology, Geely Automobile's sales have increased significantly, and it has gradually become the leader of the domestic automotive industry. Looking back, the reason why Geely can rise so quickly can be said to be indispensable to foreign acquisitions.
However, the development strategy of relying on mergers and acquisitions for a long time has also caused the situation that Geely Automobile is now weak in transforming new energy.
The reason for this is not difficult to understand. In the era of fuel vehicles, Geely Automobile can directly obtain the technology that foreign car companies have precipitated for decades by acquiring foreign car companies.
But now the development of new energy vehicles in the world is only more than a decade, which requires car companies to develop and invest in themselves, and for Geely, which has become accustomed to acquiring technology through the acquisition of car companies, the transformation of new energy vehicles is naturally not as easy as making gasoline vehicles.
Bet on "Two Blue Geely Actions" and whether Geely can overtake in curves
For the backwardness of new energy vehicles, Li Shufu naturally looks at it.
As early as the beginning of 2021, Li Shufu said in an internal letter that Geely is formulating "two blue Geely actions", one pointing to the hybrid (including plug-in hybrid, extender plug-in hybrid, and small displacement) path represented by Geely and Lynk & Co, and the other pointing to the pure electric market represented by extreme krypton and geometry.
Obviously, this is a correction to the failed "Blue Geely Action" in 2015; it is not difficult to see from it that Li Shufu is still firmly working hard to transform in the direction of new energy vehicles.
In the near future, Geely Automobile is also frequently moving in new energy vehicles. For example, on March 23, the launch of Thor Hi X "super mix", directly against the BYD fire of the "dmi hybrid technology", but also launched a pure electric mileage of more than 200km "super mix" model, from all indications, Geely Automobile is hoping to achieve curve overtaking of the current group of leading new energy vehicles through pure electricity and plug-in hybrid two directions.
However, at present, the competition in the new energy automobile industry is fierce, whether it is the new car-making force "Wei Xiaoli", or the traditional car companies BYD, Great Wall and Guangzhou Automobile, or even foreign giants such as Nissan, Honda and "BBA" are transforming in the direction of new energy vehicles, and it is undoubtedly very difficult for Geely Automobile to achieve curve overtaking.
Coupled with the price increase of raw materials, the lack of core in the automotive industry, the reduction of subsidies for new energy vehicles in the future, etc., Geely Automobile obviously has a long way to go in the transformation of new energy vehicles.