Wen | Li Haoxian
I still remember that in July 2020, Wei Jianjun, who was the thirtieth anniversary of the car, did not choose a large banquet, but through a video, issued a soul torture question of "Can Great Wall Motors survive next year".
In the blink of an eye, 2022 has also passed a quarter, is Great Wall Motors really as Wei Jianjun said that "life hangs on the line"? Today, we may wish to start with the financial report to find out.
According to Great Wall Motor's 2021 financial report, in 2021, Great Wall Motor's revenue was 136.405 billion yuan, an increase of 32.04% year-on-year; net profit was 6.726 billion yuan, an increase of 25.43% year-on-year. Great Wall Motors has become one of the few listed car companies in China to "increase revenue and increase profits", with a net profit of more than twice that of BYD (BYD's 3 billion yuan).
Obviously, from a fundamental point of view, Great Wall Motors is still far from reaching the point of "life hanging on the line". However, this does not mean that Wei Jianjun is worrying about the sky, if you dig deeper, you will find that Great Wall Motors deducted non-net profit of 4.303 billion yuan, which is 2.323 billion yuan different from the net profit data, perhaps this is the root cause of Wei Jianjun's concerns.
Surface scenery?
As the two key indicators for evaluating the profits of enterprises, net profit is the net profit after the profit obtained by the operation of the enterprise plus the non-recurring profit and loss, including the income from the sale of the subsidiary's equity, the income from government subsidies, interest income, etc.; the deduction of non-net profit is the profit obtained after deducting all income and expenses unrelated to the operation of the enterprise, which is the indicator that truly reflects the operating profitability of the enterprise.
If you look at the growth of the Great Wall with the deduction of non-net profit, it only increased by 9.55% compared with the same period of previous years.
As can be seen from the statement, the amount of government subsidies included in the profit and loss of the current period is close to 2.2 billion yuan, which is nearly 1 billion yuan more than in previous years, of which the subsidy for new energy is 1.626 billion yuan, an increase of 722 million yuan year-on-year. It is worth mentioning that this year is the last year of new energy subsidies, if the new energy subsidies are cut, the Report of the Great Wall may become more embarrassing.
Of course, BYD also has similar troubles, BYD's net profit after deducting non-deductions is only 1.255 billion yuan, down 57.53% year-on-year. From another point of view, the Great Wall still maintains a year-on-year increase in net profit after "deducting non-deductions", which is already a blessing in misfortune.
So the industry has always had a question, that is, why BYD sells the most cars, but makes the least money, and the trend of divergence is becoming more and more obvious. Now from the financial report of Great Wall Motors, although the divergence is not as serious as BYD, the proportion also has an imbalance trend.
As we flipped through the research reports, we seemed to have found the answer.
Labor costs have increased dramatically
In terms of the number of employees, bydir, Geely and Great Wall, the three car companies have all expanded last year. Among them, the number of BYD employees increased the most, from 224,300 to 288,200, an increase of 63,900, an increase of 28.5%;
The number of employees of Great Wall increased from 63,200 to 77,900, an increase of 14,700, an increase of 23.3% year-on-year;
Geely increased from 38,000 to 44,000, an increase of 6,000, an increase of 15.8% year-on-year.
Among the per capita salaries, Geely employees have the highest average salary of 175,500 yuan, followed by the Great Wall with 135,500 yuan, while BYD ranks last with only 103,300 yuan per capita salary.
Affected by the expansion of employees and the increase in average salary, the staff costs of the three car companies last year showed a large degree of increase. Among them, Great Wall Motor ranked first with a year-on-year increase of 36.73%. Due to the largest number of employees, BYD's expenditure on employee costs is the highest, reaching 29.78 billion yuan.
Of course, BYD includes mobile phone foundry business, so the number of employees will be greater than the Great Wall and Geely. But there is no doubt that this data accurately reflects that the soaring cost of labor is one of the reasons why car companies do not increase profits.
In addition, Great Wall Motor reported management expenses of 4.043 billion yuan in 2021, an increase of 58.39% year-on-year. This is due to an increase in the number of managers and an increase in equity incentive expenses. It is understood that the Great Wall has indeed distributed a lot of shares to employees in the past two years.
By 2023, Great Wall Motor's global R&D personnel will double from the existing 15,000 to 30,000. It is foreseeable that Great Wall Motors' labor costs will continue to soar in the next 3 years, which may lead to a more serious divergence between net revenue and profit, but this is not necessarily a good thing.
A plan to move the tiger away from the mountain?
From 2021 to 2025, Great Wall Motors is expected to invest about 100 billion yuan in research and development, and the growth of research and development investment will inevitably lead to a decline in profits, which means that the financial statements will become more and more ugly, and BYD is the person who has come.
However, the report can be "beautified", and the Great Wall can still maintain a good profit, that is, it has played some small tricks behind the scenes.
In 2021, Great Wall Motor invested about RMB9.1 billion in R&D, accounting for 6.65% of total operating income, and the amount of R&D investment capitalization was about RMB5.8 billion, with a capitalization rate of about 64%. In terms of BYD, in 2021, BYD's total investment in research and development will be about 10.6 billion yuan, the capitalization amount will be about 2.6 billion, and the capitalization rate will be only 25%.
What is capitalization of R&D expenses? In layman's terms, R&D investment is included in the balance sheet development expenditure, and the capitalization of R&D investment can reduce the cost of the enterprise, thereby increasing the net profit to achieve the purpose of beautifying the statement.
The same "means" are used by Geely, and the capitalization rate is as high as 77%, the highest of the three.
In other words, if BYD increases the capitalization rate to 64% of Great Wall Motors, then BYD's net profit in 2021 will increase by about 4 billion yuan in an instant, and the statement will not be so bad.
So the question is why doesn't BYD do that? This is because the low research capitalization rate can get more R&D subsidies and income tax deductions, which is conducive to BYD getting more funds to develop technology, and obtaining "visible, tangible" benefits (technology) rather than book benefits.
On the contrary, if the capitalization rate of R&D investment in Great Wall and Geely is high, the R&D subsidy will be less, and the amount of income tax deduction will also be less, so that the net profit reflected in the financial report will be significantly improved. This approach has fewer tangible benefits for companies (fewer subsidies), but the financial report is good.
Speaking of this, we seem to have unveiled the mystery of BYD's lack of money, he is like an honest and generous gentleman, will not "add oil and vinegar" to the financial report, and only wants to do a good job in technology, make the cake bigger, and create more employment opportunities, not only for shareholders and capital.
However, the Great Wall is also forgivable for doing so. Compared with BYD, Great Wall Motors is experiencing a critical period of product structure adjustment and corporate strategic transformation. In particular, in the second half of 2021, chips and other issues led to fluctuations in corporate transformation, in order to stabilize investor confidence, Great Wall Motors only used R&D investment capitalization to increase net profit in 2021. I believe that Geely is the same starting point.
Stock prices ride a roller coaster
Of course, how can a savvy market not see such a trick?
In October last year, Great Wall Motor's stock price reached a record high of 69.8 yuan, making Wei Jianjun, who holds 34.5% of the shares, the new richest man in Hebei. After the highlight, Great Wall Motor's stock price plummeted by 62% in more than 5 months, and its market value evaporated by more than 400 billion yuan.
After the disclosure of the 2021 report card, the decline in The stock price of Great Wall Motors has not stopped.
As of the close of trading on April 8, Great Wall Motor reported 26.34 yuan / share, and once again hit a new low in more than a year in the intraday, with a total market value of 243.3 billion yuan, a dynamic price-earnings ratio of only 36.17, and BYD, which is also located in A shares and announced the cessation of production of fuel vehicles, has a dynamic price-earnings ratio of up to 233.24, which is 6.5 times that of Great Wall Motors.
In addition, although BYD's stock price has also declined, it is far less serious than Great Wall Motors and Geely Automobile, and the reasons should not need us to talk about it, right?
How do securities companies view Great Wall Motors?
Combining the above data, I think everyone has a certain understanding of the current situation of Great Wall Motors, so in the eyes of those securities companies that are considered to be the most shrewd, how do they view Great Wall Motors?
Based on the impact of chip shortage and rising raw materials, almost every securities company's research report has lowered The net profit forecast attributable to the mother of Great Wall Motor in 22-23 years has been revised down, with its Middle East Wu Securities downgrading from 110 billion yuan to 17.1 billion yuan to 91 or 14.7 billion yuan, and Tianfeng Securities downgrading from 12.030 billion yuan and 15.592 billion yuan to 8.361 billion yuan and 10.952 billion yuan.
Although each company has lowered its net profit, it does not mean that these shrewd people are not optimistic about Great Wall Motors, on the contrary, everyone is optimistic about it in unison.
For example, Shenwan Hongyuan pointed out that in 2022, the transformation and landing of Great Wall Motors will be further accelerated, and the brand value will continue to increase. The company not only has a good product cycle, but also has the core ability to understand the market and read the needs of consumers. The superposition of a large number of new products that cater to the market is expected to achieve a double harvest of sales volume and profitability.
Tianfeng Securities pointed out: We are optimistic about the company's positioning ability in the market segment, optimistic about the "category definition brand" strategy; optimistic about the company's intelligent field layout; optimistic about the brand upward transformation; the company's hybrid DHT program, high-end intelligent electric salon brand, and firmly increase investment in research and development in the field of intelligence and electrification, all of which help the company's long-term development.
Therefore, the investment advice given by securities companies is basically like this: considering that the company's current valuation level has fallen below the nearly 3 hub, and the subsequent brand still has the potential to accelerate the release of profits, it continues to maintain the buy rating. Almost every securities company's research report gives a "buy" or even a "push" rating.
Of course, we are not selling stocks, and this article does not constitute any investment advice, but purely wants to tell everyone from the side what stage of development Great Wall Motors is in, and enrich readers' cognition of car companies outside the product.