Geely Automobile: From the financial report, we can see the upward road of a self-owned brand's technology

Geely's potential is gradually being unleashed.

On March 23, Geely Automobile (0175. HK) released its full-year 2021 financial results report, with core business metrics continuing to improve and cash flow at an all-time high.

Although in the earnings meeting, Geely management bluntly said that the company's "financial performance was lower than expected". However, in the face of a series of global challenges such as lack of cores, Geely's earnings report still released many positive signals to the outside world.

The agency is still generally optimistic about the medium- and long-term development prospects of Geely Automobile and expects Geely to "still hope to become one of the traditional car companies that have successfully transformed into intelligent electrification". On this basis, a number of institutions, including Everbright Securities, have maintained a "buy" rating.

As the first year of the 4.0 comprehensive architecture car manufacturing era, geely has already had more calm and self-confidence than the 3.0 era, to compete with opponents, and even surpass them.

The performance has improved steadily, and the technology output has promoted the diversification of profits

According to the financial report, Geely Automobile's revenue in 2021 reached 101.6 billion yuan, an increase of 10.3% year-on-year; profit attributable to shareholders after deducting share payments was 6.06 billion yuan, an increase of 9.4% year-on-year; and net profit was 4.35 billion yuan. At the same time, Geely Automobile's cash flow level reached a record high of 28 billion yuan.

Car sales remain the bulk of Geely's auto revenue. According to the data, in the past year, Geely Automobile's total annual sales volume was 1.328 million units, ranking as the star of Chinese brand passenger car sales for five consecutive years. Among them, the strong export performance is also a major highlight. According to the data, in 2021, Geely Automobile sold a total of 115,000 units to overseas markets, an increase of 58.2% year-on-year. With years of meticulous product layout, Geely's models will be at the forefront of many markets in 2021. Among them, Coolray (Binyue) maintained a year-round sales lead in the Philippines and Kuwait segments, while Tugella's sales volume was firmly at the forefront of the Saudi Coupe C-class SUV segment.

"Profit diversification" has become another highlight of the earnings report. According to the data, in 2021, the net profit of Geely Automobile's joint venture (Lynk & Co and Jizhi Financial) increased by 42%, and other revenues such as technical services and licensing profits continued to grow, soaring by 245.3% year-on-year. Ping An Securities pointed out in its research report that Geely's technical service revenue has "broad prospects". This means that the future Geely Automobile, with its technological output, has "infinite" earning potential to ensure its high-quality development.

At the same time, with the expansion of geely's automotive technology R&D and licensing services and the number of cooperative brands, Geely is expected to become a leader in China's automotive technology exports. "Based on the cooperation agreement with other brands under Geely Holding Group and Geely Holding Ecosystem partners, Geely Automobile's technical licensing and technical service revenue will maintain a stable growth trend in the future, laying the leading position and brand influence of Geely Automobile in global technology." Li Donghui, CEO of Geely Holding Group, vice chairman and executive director of Geely Automobile Holdings Limited, said.

Bicycle revenue is expected to continue to increase significantly, and high value will help the brand upwards

With the optimization of the product structure, the premium ability of Geely Automobile's brands is highlighted, and the most intuitive embodiment of this is the increase in bicycle revenue. According to the financial report data, the overall average bicycle revenue of Geely Automobile (including Lynk & Co) increased by 9% year-on-year to 87672 yuan.

Geely Automobile's ability to achieve continuous upward breakthroughs is mainly driven by the key brands Lynk & Co and China Star series. It is worth mentioning that Lynk & Co and China Star series have fully entered the market of more than 150,000, and Lynk & Co 09 has entered the price range of the luxury market, setting a new benchmark for products at the same level. It should be known that "150,000" has always been regarded as an insurmountable gap between domestic production and joint ventures, and the upward impact has thus become a common proposition of the times for independent brands.

Among them, the Xingyue L of the China Star series sold more than 10,000 yuan per month after listing, with an average price of 160,000 yuan; Lynk & Co Motors sold more than 220,000 vehicles throughout the year, refreshing the highest annual sales record of the Lynk & Co brand, with an average weighted transaction price of 165,000 yuan, successfully standing in the core area of the mainstream market. At the same time, the pure electric brand Extreme Krypton further increased the price of bicycles, and since the delivery began in October 2021, a total of 12,453 units have been delivered in four months, with an average order price of 335,000 yuan. In this regard, Ping An Securities believes that "benefiting from the increase in the proportion of Geely China Star series, the growth of Lynk & Co/Ji Kr sales and the suspension of low-end products, Geely Automobile's bicycle revenue will continue to increase in the future."

Behind the substantial increase in the brand premium ability is the support of the intelligent manufacturing system capability created by Geely, especially the modular architecture ensures that Geely's car can have certain advantages in cost, quality consistency and efficiency. In order to further expand its advantages, Geely said that it will accelerate the promotion of the full-scale architecture car manufacturing efficiency of the geely 4.0 era of technology, in addition to increasing the modular architecture model to 70%, the proportion of China Star's sales of the Geely brand will also be further increased to 30%.

As the big brother of its own brand, Geely's brand is full of rich meaning. Geely became the first Chinese auto group to make the list of "Top Ten Auto Groups with the Highest Comprehensive Brand Value in 2021" released by Brand Finance, a British brand evaluation agency. This means that the upward trend is not only reflected in the increase in the unit price of the product, but also in the shaping of the brand's value connotation.

Whether it is the Lynk & Co Cyan Racing team in the WTRC Touring Car World Cup with three consecutive championships to create the history of Chinese car brands in the world arena, or the honor of becoming the first Chinese car brand to sponsor international large-scale comprehensive sports events, it can be said that Geely has always explored the "high value" brand upwards.

R&D investment continues to grow, and institutions are optimistic about the long-term value of the company

In Geely's revenue diversification profit model, the most noteworthy is the growth of technical services and technology licensing revenue as the company's new sustainable profit point, and the substantial growth of technology revenue means that Geely has moved from product output to technology output, and the output of high-end research and development is the embodiment of its scientific and technological innovation ability.

Whether it is products such as The Star-Etsu L equipped with the "Raytheon Intelligence Engine Hi X Hybrid System" or the first model created based on the Haohan Architecture (SEA), The Extreme Kr 001, Geely is building a technology moat through a large amount of R&D investment to empower Geely Automobile's long-term high-quality development.

According to the financial report data, Geely Automobile's R&D investment in 2021 totaled 5.5 billion yuan, an increase of 16.1% year-on-year. In the past five years, Geely Automobile's R&D investment in revenue has shown a trend of increasing year by year, with a total total R&D investment of 25.6 billion yuan. In the past ten years, Geely Automobile, which has spent money on research and development, has invested more than 140 billion yuan, with more than 20,000 design and development personnel and 26,000 innovative patents.

Among them, it has to be mentioned that Geely attaches great importance to self-developed technology. In order to accelerate the process of intelligent networking, Geely Automobile has actively deployed in three areas: software self-research, hardware self-research and technical data self-research. For example, geely automobile's first domestic 7nm vehicle specification-level intelligent cockpit chip "Dragon Eagle One" has broken the monopoly position of international suppliers in this market and also filled the gap in the field of mainland independent design of high-end intelligent cockpit platform main chips. It is reported that the new generation of intelligent cockpit technology based on 7Nm chips will be displayed this year and will be the first to be installed on the new smart SUV.

In addition to strengthening the full-stack self-developed ecosystem in core technologies such as new energy, automatic driving, intelligent network connection, and intelligent cockpit, Geely will continue to increase investment and research and development in the fields of pure electricity, super hybrid, alcohol-electric hybrid, and power exchange to build a set of intelligent energy systems.

According to reports, Geely will launch the world's first alcohol-electric hybrid sedan (the 4th generation Emgrandol electric hybrid sedan) this year. In addition, the new power exchange travel brand Ruilan Automobile will officially open Geely's power exchange pattern, and more than eight Thor Hi X oil-electric hybrid and super hybrid products will also be another city for Geely in the market segment of the hybrid market after being put into the market.

However, the research and development of the above Geely Automobile is only the tip of the glacier, and the technology ecological empire built by Geely Holdings is rising, and the tentacles of the empire are reaching out to new energy technology, Internet of Vehicles, autonomous driving, low-orbit satellites, in-vehicle chips and operating systems. With the continuous growth of the empire and the continuous empowerment and blessing of technology, Geely promises to bring users products and experiences that exceed expectations.

Standing at the beginning of the 4.0 era, we always can't help but think of the glorious 3.0 era that belonged to Geely six years ago. At that time, through the boutique car strategy, Geely achieved transformation, jumped to the mainstream brand camp in one fell swoop, and had the confidence to compete with the joint venture brand on the same stage. Six years later, Geely Automobile proved with its achievements that Geely could do more.

This year, as a big year for Geely Automobile's products, Geely will create more star products for different market segments, and unswervingly set the sales target at 1.65 million vehicles (including 70,000 vehicles of Extreme Kr).

Given the different times, there are many uncertainties about achieving this goal. However, in the face of global challenges such as the market environment and supply chain, the big factories with deep and well-trained skills always have a higher degree of risk resistance and resilience.

With the institutional strength and forward-looking technology reserves built by the industrial precipitation in the past two decades, big brothers such as Geely have enough ability to "turn danger into disaster", and today's Geely Automobile is waiting to transform again, and do its best to find its peak self in the uncertainty of the times.