Author | Fan Zhilin
Source | Financial think tank
BYD, the leader in the new energy automobile industry, has also fallen into the process of increasing revenue and not increasing profits.
BYD's profits fell sharply
On March 29, BYD released its 2021 financial report, which showed that BYD achieved operating income of 216.142 billion yuan in 2021, an increase of 38.02% year-on-year, and net profit attributable to shareholders of listed companies was 3.045 billion yuan, down 28.08% year-on-year.
With a revenue growth of only 40%, BYD's net profit fell by about one-third year-on-year!
Why is this happening?
BYD's revenue structure is mainly composed of three major businesses, namely automobile business, mobile phone product business, secondary rechargeable battery and photovoltaic business, accounting for 51.9%, 40.49% and 7.29% respectively.
In terms of revenue, BYD's automotive, automotive-related products and other products business revenue in 2021 was about 112.489 billion yuan, an increase of 33.93% year-on-year; the revenue of mobile phone parts, assembly and other products business was about 86.454 billion yuan, an increase of 43.99% year-on-year; and the revenue of the rechargeable battery and photovoltaic business was about 16.47 billion yuan, an increase of 36.27% year-on-year.
Goldman Sachs and investment bank analysts said that the reason for BYD's net profit decline of 28% is mainly due to profit growth in 2020.
In BYD's business segment, there is another special business, that is, the production and sales of masks, but it is not classified separately, but is classified into automobile-related products and other products.
In 2020, due to the ravages of the epidemic, unlike other automobile forces, BYD quickly launched the production and sales of masks, and obtained super high profits in 2020.
Due to the outbreak of the epidemic in 2020, masks are scarce and the price is rising higher and higher.
In 2020 alone, the revenue of the mask business exceeded tens of billions of yuan, and the gross profit margin of BYD was increased to 19.38%, reaching the highest point in 5 years.
However, with the easing of the epidemic, the national mask production increased significantly, the price of masks began to fall back to the normal range, and in 2021, bydir's mask business profits directly plummeted.
Therefore, from the perspective of net profit, it is necessary to treat the mask business differently, and the tens of billions of yuan dividend is no longer there.
Another noteworthy factor is the government's subsidies for new energy vehicles.
From 2018 to 2020, BYD new energy vehicles received subsidies from the government of 2.073 billion yuan, 1.484 billion yuan and 1.678 billion yuan, respectively.
In the same period, BYD's annual net profit attributable to the mother was 2.78 billion yuan, 1.615 billion yuan and 4.234 billion yuan, which shows that BYD's dependence on government subsidies is very high.
In 2021, BYD's new energy vehicle subsidy revenue totaled 5.867 billion yuan, the government subsidy included in the profit and loss of the current period was 2.263 billion yuan, and the net profit was only 3.045 billion yuan.
In other words, if you deduct government subsidies, BYD's net profit in 2021 will only be 782 million yuan!
Such a low net profit is very incompatible with BYD, which once had a trillion-dollar market value.
In 2021, BYD's stock price is in a volatile rise, and its market value reached 1.5 trillion yuan at its peak.
Entering 2022, after several rounds of shocks and downturns, BYD's stock price has fallen by about one-third at a relatively high point, and the market value is only 690 billion yuan.
However, the market value of 690 billion yuan still firmly occupies the first place in the automobile manufacturing industry.
BYD is a recognized new energy vehicle manufacturing giant in China, and it is also a high-end manufacturing business that spans automobile manufacturing, automobile chip manufacturing, new energy vehicle battery manufacturing, mobile phone manufacturing, etc., which can be called a domestic manufacturing empire.
Why is BYD's profitability so low?
Do new energy vehicles really make money?
The curse of new energy vehicles
In fact, BYD can have a net profit of 3 billion yuan, which is already the absolute first in the entire domestic new energy automobile industry.
From the comparison of the situation of other new energy vehicle forces, we can know how difficult it is to make a profit in the field of new energy vehicles!
For example, on March 25, WEIO released its 2021 annual report, with annual revenue of 36.1 billion yuan and a net loss of 4.02 billion yuan.
Ideal Automobile's financial report shows that its net loss in 2021 is 321 million yuan; Xiaopeng Automobile's financial report shows that its net loss in 2021 is 4.863 billion yuan.
The three giants of domestic new energy vehicles, Weilai, Ideal and Xiaopeng, are all in losses, and the loss margin is huge.
There is also the international new energy vehicle giant Tesla, from the beginning of its establishment to 2019, has been in a huge loss, until 2020, Tesla built a factory in Shanghai, China officially put into production, and sold in China, Tesla finally turned a profit.
According to the financial report for the fourth quarter of 2021, Tesla's net profit was 2.321 billion US dollars, equivalent to about 15 billion yuan, an increase of 760% year-on-year!
In the case of these several, only Tesla and BYD are currently profitable.
Is it really so difficult to make money in the manufacture and sale of new energy vehicles?
In 2021, BYD's production and sales of new energy vehicles were 747,500 units and 721,300 units, respectively, up 73.06% and 82.8% year-on-year.
In terms of production and sales, BYD's new energy vehicles are very hot, and the market share has reached 17%.
However, the delivery volume of Weilai, Xiaopeng and Ideal in 2021 was 91,400 units, 98,200 units and 90,400 units respectively, and BYD lagged behind the three.
But from the perspective of net profit, Xiaopeng and Weilai, the more new energy vehicles are sold, the greater the net loss!
To find out whether the manufacturing and sales of new energy vehicles can be profitable, we must return to the new energy vehicle business itself.
According to the financial report, BYD's gross profit margin is 13.02% and net profit margin is 1.84%, which is already ten points low.
What's even more amazing is that the industry's average gross margin level is 10.29%, the average net profit margin is -11.24%, and the industry as a whole is in negative interest rates.
Wang Chuanfu, chairman of BYD, said when the company's net profit declined that the automotive industry is still facing challenges such as the intensification of the epidemic, the surge in raw materials, and the instability of the supply chain, but even so, the more enterprises must think of danger in times of peace and use technological innovation to develop problems.
This phrase has broken through the industry's predicament, and the rise of raw materials and the instability of the supply chain have brought great pressure to enterprises.
In terms of the new energy battery giant Ningde Era, NINGDE Era can be called the stock with the highest growth rate in 2020 and 2021, with a market share of more than 50% in the new energy battery industry, which is an absolute industry leader.
However, is it really good that the Ningde era is a big family?
Previously, it was revealed that Zeng Yuqun, chairman of the Ningde era, brought huge pressure to the entire new energy automobile manufacturing industry, because of the large customer demand, so the battery price of the Ningde era continued to rise, and at the same time, customers signed a lot of "overlord clauses", such as mandatory increases in deposits, deposits and so on.
Behind the popularity of the Ningde era is the rise in the manufacturing cost of new energy vehicles.
In addition, on the sales side, behind the surge in BYD's sales volume is a sharp increase in the cost of sales.
In 2021, BYD's sales expenses were 6.082 billion yuan, up 20.3% year-on-year.
In addition to rising costs, there is also an indispensable huge investment for all new energy vehicle forces, that is, research and development expenditure.
The major spare parts and batteries of new energy vehicles have high technical requirements and fast iteration of product updates, and if you are not careful, you may be left behind the times and fall sharply.
Therefore, all new energy automobile enterprises spare no effort to increase investment in research and development, and strive to seize the highlands through technological breakthroughs.
In 2021, the number of BYD R&D personnel was about 40,400, an increase of 31.52% year-on-year, and the R&D investment was 10.672 billion yuan, an increase of 24.2% year-on-year!
Among the other three, WEILAI's R&D expenditure in 2021 is 4.591 billion yuan, Xiaopeng's R&D expenditure in 2021 is 4.1 billion yuan, and the ideal R&D investment is 3.29 billion yuan.
Huge investment in research and development has put a lot of pressure on new energy vehicle giants, and it is very difficult to achieve the overall profitability of the industry in the short term.
In addition, the new energy vehicle track is a very promising track, in the future all fuel vehicles will be eliminated and turn to new energy vehicles, so many giants have also poured into this track.
In addition to bydir, Xiaopeng, Weilai, ideal four giants, there are traditional cars of GAC, SAIC, BAIC, Changan, Dongfeng, Wuling, etc., baidu, millet, Evergrande and other giants to enter this track, in addition, Jia Yueting's Faraday in the future will also be expected to build a factory in Zhuhai city mass production.
Today's new energy vehicle manufacturing field is like a "fairy fight" scene, and the fierce competition is unprecedented!
In the short term, the fierce competition in the industry and the difficulty of profitability will continue, and any automobile force will not escape this curse.
However, COMPARED has the advantage of a more perfect supply chain compared to other giants, not only the manufacture of new energy vehicle batteries, but also upstream manufacturing such as automobile chips, and the cost control of vehicle manufacturing is relatively advantageous.
I just don't know, in this unprecedented new energy vehicle melee, who can finally win!
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