BYD's 2021 financial report: Sales and revenue of new energy vehicles rose sharply, and net profit fell by nearly 30%.

21st Century Business Herald reporter Song Doudou reported that on the evening of March 29, BYD (002594. SZ) released its full year 2021 results report. According to the financial report, BYD achieved operating income of 216.142 billion yuan in 2021, an increase of 38.02% year-on-year; net profit attributable to shareholders of listed companies was 3.045 billion yuan, down 28.8% year-on-year. Net cash flow from operating activities was RMB65.467 billion, an increase of 44.22% year-on-year. Basic earnings per share were RMB1.06 per share, down 27.89% year-on-year. Net profit after deduction of non-net profit was 1.255 billion yuan, down 57.53% year-on-year.

For the double-digit growth of revenue in 2021 while the net profit fell by nearly 30%, BYD insiders told the 21st Century Business Herald reporter: "In 2021, due to the impact of the global epidemic, the electronics business is under short-term pressure; affected by factors such as rising raw material and commodity prices, the company's overall costs have risen." During the period, the sales volume of the automobile business increased significantly, and the profitability of the automobile segment increased. ”

For the first time, the revenue of the automobile business exceeded 100 billion, and the gross profit margin of automobiles reached a new low

According to the financial report, BYD's revenue mainly comes from three major sectors, of which the largest contribution is the automobile business revenue, with revenue of 112.489 billion yuan in 2021, an increase of 33.93% year-on-year, exceeding 100 billion yuan for the first time, accounting for 52.04% of the total operating income. Among them, the revenue in the second half of 2021 was 73.33 billion yuan, nearly double that of the first half of the year.

Second only to the revenue of the automobile business is mobile phone parts, assembly and other products, with revenue of 86.454 billion yuan in 2021, an increase of 43.99% year-on-year; revenue of rechargeable batteries and photovoltaic products in 2021 was 16.471 billion yuan, an increase of 36.27% year-on-year, accounting for 7.62%.

In addition, in 2021, the operating costs of BYD's major products will increase by more than the revenue growth. The cost of automobiles and related products increased by 47.90% year-on-year; the cost of mobile phone parts and assembly business increased by 49.86% year-on-year; and the cost of rechargeable batteries and photovoltaics increased by 50.30%.

According to BYD's official data, in the whole year of 2021, BYD's new car sales reached 730,000 units, an increase of 75.4% year-on-year. Among them, the sales volume of new energy vehicles was 593,700 units, an increase of 231.6% year-on-year, accounting for more than 80% of sales, and the cumulative sales of pure electric vehicle models and DM hybrid models were 320,000 units and 270,000 units, respectively, an increase of 44.9% and 467.6% year-on-year.

While sales have been rushing all the way, the gross profit margin of BYD's auto-related business has fallen by 7.81% to 17.39% year-on-year. In the first and second half of 2021, the gross profit margin of the automotive business in the first half of 2021 was 19.5%, and continued to decline to 16.2% in the second half of 2020, down nearly 10% compared with the second half of 2020.

In contrast, the gross profit margin of Tesla's automobile business with huge sales in 2021 is about 30%, and the gross profit margin of Weilai and Ideal Automobile, whose annual sales have not yet exceeded 100,000 vehicles, has also exceeded 20%.

Dolphin Investment Research pointed out in the analysis that the main reason for the decline in the company's gross profit margin comes from the change in the model structure of the revenue side and the aggressive pricing strategy on the one hand, and the price increase of upstream raw materials on the cost side on the other hand.

In 2021, BYD released the DM-i hybrid platform, and the advantages of low cost and low fuel consumption have promoted the parity between plug-in hybrid models and fuel vehicles to a certain extent. Subsequently, BYD launched a number of low-priced models such as Qin PLUS DM-i, Song PLUS DM-i, and Tang DM-i, and the starting price of its plug-in and mixed models was only 30,000 or 40,000 yuan higher than the starting price of the same oil car.

The surge in order volume has repeatedly extended BYD's delivery cycle and repeatedly apologized. The 21st Century Business Herald reporter previously learned that the current DM-i model is difficult to find, Qin PLUS DM-i, Song PLUS DM-i two models need 3-4 months to pick up the car, Tang DM-i delivery cycle needs at least 1-2 months.

In addition, the soaring prices of raw materials and commodities are also the reasons for the decline in BYD's net profit. Since 2021, the key metal resources of power batteries, nickel and cobalt, have also risen sharply, from the beginning of January 2020 to the middle of January 2022, the increase in battery-grade cobalt has reached 119%; the market quotation of battery-grade lithium carbonate has risen from 50,000 / ton in early 2021 to the current 500,000 / ton, an increase of nearly 10 times year-on-year; the price of nickel has also risen from less than 150,000 yuan / ton to more than 300,000 yuan / ton.

In the face of the rapid rise in the price of power battery raw materials, BYD is still difficult to balance by relying on technological innovation alone, and has raised the price twice this year. In January this year, BYD announced that the price of new energy vehicles increased by 1,000 to 7,000 yuan; in March, it released price adjustment information again, announcing that the official guidance price of new energy vehicles related to Dynasty Network and Ocean Network was raised by 3,000 to 6,000 yuan.

It is worth noting that the financial report shows that the government subsidies included in the profit and loss of the current period in 2021 were 2.263 billion yuan. In 2021, BYD's net profit attributable to shareholders of listed companies was 3.045 billion yuan, and after deducting government subsidies, BYD's net profit was less than 1 billion yuan.

BYD volume and price rise in 2022?

"With the introduction of new models and the expansion of production capacity, sales will be further expanded in the future. In the context of rising volume and price, profits are expected to improve. BYD insiders told the 21st Century Business Herald reporter.

The "price" of "volume and price rise" refers to the high-end brand that BYD is preparing, and BYD once entered the automotive market as a low-end model.

It is understood that BYD will rely on two brands to enter the high-end market, one is the Denza brand, positioned in the range of 300,000-500,000 yuan, and in 2022 to 2023, it will successively launch 3 new models of pure electric multi-purpose vehicles, including MPV and SUVs; the other is a new high-end brand of new energy, positioned in the price range of 50-1 million yuan.

At the end of last year, BYD and Daimler each increased their capital by 1 billion yuan to Denza, and at the same time, the two sides signed an equity transfer agreement, and the equity ratio of BYD and Daimler in Denza will change from the previous 50:50 to 90:10, which is subject to the approval of the relevant regulatory authorities and is scheduled to be completed in mid-2022.

On February 14 this year, BYD's 100% shareholding, Denza Automobile Sales Service Co., Ltd. obtained a business license, and Zhao Changjiang, director of bydir's high-end brand preparation office of BYD Automobile, said on Weibo that this means that BYD will soon launch high-end products and open high-end services.

Another high-end brand of BYD is also in preparation. Li Yunfei, general manager of BYD's brand and public relations business department, previously said in an interview with the 21st Century Business Herald reporter that in the second half of 2022, BYD will launch a high-end brand, the price range is expected to be more than 500,000-1 million yuan, and its brand, products, sales and service networks, and operation teams are new and independent, and the first model is a hardcore off-road vehicle.

In the future, BYD's automotive business will be composed of four sections: Dynasty.com, Ocean.com, Denza and high-end brands.

It is worth mentioning that in addition to selling cars, BYD is also cultivating new growth points.

Wang Chuanfu, chairman of BYD, said in an interview with the 21st Century Business Herald reporter, "Subsidiaries only earn BYD's money is not called skill, and it is called skill when it is dismantled to earn money in the market, which means that the product is competitive." So we have a market-oriented 1.0 strategy, that is, the separation of the parts business. Motors, batteries, powertrains and other businesses are killed in the form of business units to compete with their peers. ”

BYD's decision to open up its first business to the outside world is its highest quality asset - power batteries. At present, BYD power batteries are mainly installed in its products, but it intends to play the role of suppliers. In April last year, Wang Chuanfu said that he had begun to supply blade batteries to the whole industry, and among the partners on display, in addition to the "red flag" clearly marked, the others were replaced by "secret".

Following the news that BYD may supply Tesla last year, this year's "gossip object" has become Weilai and Xiaomi Motors.

On March 25, according to the news of 36Kr, BYD's Fordi Battery Company is actively expanding the new car market, targeting Weilai and Xiaomi Automobile. According to sources, the fixed-point cooperation between Weilai and Fordi batteries has been finalized before the Spring Festival, and BYD's lithium iron phosphate batteries will be used. At the same time, Xiaomi Automobile also signed a fixed-point cooperation agreement with Fordi Battery, and it is said that BYD gave many preferential treatments in business terms in order to win the cooperation of these star car-making projects.

In addition to batteries, it is understood that BYD e platform 3.0 has cooperated with Mercedes-Benz, Toyota, Didi and so on.

After the release of BYD's 2021 financial report, a number of securities companies gave buy or overweight ratings. Huaxi Securities pointed out that BYD relies on the two advanced technology platforms of DM-i and E3.0 to shift from defining technology to defining users, and the iteration speed of models and the probability of explosive models have increased significantly. BYD is ushering in an inflection point in sales growth and scale-driven performance. Huaan Securities said that in 2022, BYD will further improve, based on the e3.0 platform and DMi's technical fundamentals, through the further subdivision of product categories, it is expected to drive byBYD's product sales and brand premium at the same time.

On the second day of BYD's 2021 financial report, A-shares and Hong Kong stocks rose in the capital market. BYD (002594. SZ) closed at 237.02 yuan / share, up 2.61%, with a market value of 690 billion yuan, down 27% from the high of 333.33 yuan / share in October last year; BYD shares (1211. HK) rose 3.61% to HK$223.8 with a market capitalisation of HK$651.5 billion.