Text | Financial Street Old Lee
Changan Automobile's performance in the capital market this year is worth looking forward to.
Since 2022, the secondary market auto sector has been tepid, the performance is completely unsatisfactory, Lao Li mentioned in the previous article, once the auto sector into the reversal, new energy vehicles on behalf of BYD and technology representative Great Wall Motors must take the lead in the reversal.
According to recent observations, many researchers believe that Changan Automobile in 2022 is also worth paying attention to, and it is likely to join the ranks of the first reversal. Because at last week's Changan Automobile's 2022 Global Partner Conference, Changan Automobile released its strategic plan for 2022 and many years after that, and unveiled Changan Automobile's pure electric brand - Deep Blue for the first time.
Over the years, Changan Automobile has always had ups and downs in its development, and there have been many peaks and troughs in its development process, and the secondary market has been controversial about it. Today, Lao Li and everyone talk about Changan Automobile in the eyes of secondary market researchers, talk about why Changan Automobile began to pay attention to brand building, will Changan Automobile, which has multiple brands, become the new favorite of the capital market?
Chang'an in the eyes of secondary market researchers
Lao Li has always felt that Changan Automobile is a magical existence in China's secondary market, the domestic secondary market automobile sector is clearly divided, the automobile stocks represented by BYD and Great Wall Motors are booming, the company's performance is outstanding, the layout of the new four modernizations is full, and state-owned big-name enterprises such as SAIC Motor, Dongfeng Motor, and GUANGZHOUC Group have been tepid, even in the big bull market, the weak independent plate performance still drags down the market value.
Among many enterprises, the most difficult to classify is Changan Automobile, which is neither as soaring as BYD and Great Wall Motors, nor is it as free as SAIC and Dongfeng, and the market value of Changan Automobile is always oscillating up and down like its performance.
Lao Li has mentioned in the past that in the domestic market, the key to determining the market value trend of an underlying is the opinion of the institution, that is, the view of the researchers on it. In the past few years of roadshows, the opinions of the institution on Changan Automobile are also clear: a small number of researchers look at Changan Automobile, and the view of this part of the people is that Changan Automobile's performance in its own brands is remarkable, ranking in the top three, so some fund managers have repositioned Changan Automobile.
However, there are more researchers who are bearish on Changan Automobile, and these researchers are not bearish on the fundamentals of the company, but on the system and mechanism of the company. In the secondary market, state-owned enterprises and central enterprises do not perform well, even those with monopoly positions, the market will not give a high rate of valuation, and the automotive industry as one of the most competitive industries, so that the performance of state-owned enterprises and central enterprises is even more general.
From the perspective of the industry, Changan Automobile is one of the few state-owned enterprises in the automotive industry with excellent market performance, in the independent brand, Changan Automobile has long been at the top of the sales list, although the current performance of the joint venture plate is average, but it has also reached its peak, and Changan Automobile's development strategy has also been adjusted many times and opened many "internal entrepreneurship".
Under such a system, many researchers and fund managers have shown concerns, Lao Li and friends have gone to a number of institutional roadshows and anti-roadshows Changan Automobile, and the worries come from two aspects:
First, changan automobile, as one of the leaders of its own brand, is not distinctive enough in the secondary market. When everyone mentioned Changan Automobile, they couldn't think of a unique symbol. Therefore, although its industrial status is higher, it has not obtained the same status as the industry in the secondary market. All in all, Changan Automobile's "packaging" in the capital market is not enough.
Second, everyone is conservative about the innovation and entrepreneurship capabilities of state-owned vehicle enterprises. In the stage of the new four modernizations, the vehicle enterprises are not "defending the country" but "fighting the country", and we are cautious about whether state-owned enterprises such as Changan Automobile can show sufficiently strong combat effectiveness and strategic determination. In the past few years, Changan Automobile's new four modernization strategy is basically "thunder is loud, rain is small", the industrial volume is larger, but the landing performance is flat.
At the same time, several major private competitors, in the secondary market performance active, "Wei Xiaoli" is the industry and capital performance of the best new forces, whether it is innovation ability or institutional mechanism, are relatively good, BYD, Great Wall Motor also found the right track for the development of their own brands, GAC Eian, SAIC Zhiji, Feifan Automobile and other enterprises are also exploring new ways of developing state-owned enterprises, in this context, Changan Automobile's next step has received widespread attention from the market.
Multi-brand, good financing?
Two years ago, many researchers asked Lao Li what changes Changan Automobile will have in the next few years.
At that time, Changan Automobile was in a reversal period of the trough, 2017 to 2019 was the three years of changan automobile trough, sales fell for three consecutive years, the performance of the joint venture brand made the industry stunned, when the trough came, the peak was not far away.
From 2020 to the present, Changan Automobile has ushered in two major reversals, one is the reversal of sales and the other is the reversal of concept.
The so-called reversal of sales is to say that after 2019, Changan Automobile ushered in a growth cycle under the new round of product offensive, and sales bottomed out. Changan Automobile through the "PLUS" plan and "UNI" plan, driving sales back to the first echelon of independent brands, in 2021, Changan Automobile's annual sales of each brand reached 2.3 million vehicles, an increase of 14.8% year-on-year, corporate sales exceeded the 2 million mark for two consecutive years, of which the sales of Changan brand is even more outstanding. This wave of performance also promoted the market value performance of Changan Automobile, and the fund managers of Changan Automobile, who were heavily positioned, tasted the "sweetness" for the first time, and several fund managers also received extremely high attention because of the heavy position of Changan Automobile.
The so-called concept reversal is that Changan Automobile has opened the development of innovative ideas after ushering in the peak of sales. Old Li just said that the past development of Changan Automobile is ups and downs, after reaching the peak of sales, many fund managers fell into the bag and sold Changan Automobile, the reason is that many people believe that under a good sales base, Changan is likely to have no big strategic changes, but this time everyone thinks wrong.
At the 2022 Changan Automobile Global Partner Conference, Changan Automobile put forward a series of new development goals:
By 2025, the total sales of automobiles will reach 4 million, of which 3 million will be under the Changan brand and 1.05 million will be sold in new energy, accounting for 35%;
By 2030, Changan Automobile will sell 5.5 million vehicles, of which 4.5 million will be under the Changan brand, 2.7 million new energy vehicles will be sold, accounting for 60% of the total, and overseas sales will account for 30%.
The total annual sales increased by 1.7 million vehicles in the first four years, and the total annual sales in the next five years increased by 1.5 million vehicles, which is obviously a relatively "pragmatic" plan. In addition, in the strategic development blueprint of Changan Automobile's "new car and new ecology", Changan Automobile put forward six strategic actions, namely, "to create a new image with a new brand, to create a new product with a new platform, to create a new life with a new car, to create new value with new marketing, to add new experience with new services, and to build a new pattern with a new ecology", moving towards a world-class automobile brand, Changan Automobile also released a new pure electric brand - Deep Blue.
In the secondary market, BYD, Great Wall Motors and even "Wei Xiaoli" are systematic market value marketing. BYD has branded new energy, Great Wall Motors has taken technology and brand as the starting point, and Wei Xiaoli has been breaking through the new height of the track. However, in the past few years, Changan Automobile has not played too good cards in the field of electrification and intelligence, and Lao Li believes that Changan has played well this time.
In the valuation of electrification and intelligence, there are two reference laws: electrification looks at the brand, intelligent looks at the product, as long as the two are done well, the capital market will give a good valuation. Frankly speaking, at present, the gap between major brands in the field of intelligence is not large, and the large gap lies in electrification. The most important element of electrification is the brand, only to create a brand, the primary market and the secondary market will give a corresponding valuation, Changan Automobile's brand play is to see this.
At present, Changan Automobile will operate the UNI series independently as a brand, build Deep Blue into a new energy brand, and build Avita into a high-end brand jointly invested with Ningde Times and Huawei, and the creation of the three major brands will bring a new direction to Changan's market value.
Can Changan Automobile become the new favorite of the market?
In the past, Lao Li talked about market value planning mostly about the secondary market, and any turbulence in the industry will cause changes in market value, but the future development of Changan Automobile not only involves the secondary market, but also involves the primary market, and the flexible play around multiple brands will bring different pricing to Changan.
At present, Changan Automobile has many high-quality assets and brands such as its traditional passenger cars (V standard, UNI, etc.), digital pure electric brand (deep blue), joint venture pure electric high-end brand (Avita), etc., while in the capital market, Changan Automobile only has a financing window for A-share Changan Automobile, and the combination of Changan Automobile's multi-brand and financing window is worth studying.
Recently, GAC Aean intends to go public independently, creating a new way for state-owned brands, in its pre-listing financing, despite the cold capital market, the financing effect is still immediate, due to its more assets and brands, Changan Automobile is more likely to play a combination of punches in the primary and secondary markets.
Let's first look at the deep blue brand, the deep blue brand is essentially based on Changan New Energy as the main body of operation, this year will launch C385EV, C673EV two models, in the planning of a total of five models, product strength is beyond doubt. In January this year, Changan New Energy completed the B round of financing, the amount of capital increased as high as 4.977 billion yuan, after the completion of this capital increase, Changan Automobile's shareholding ratio was diluted from 48.95% to 40.66%, with a valuation of 50-100 billion yuan, and its valuation will continue to rise after Changan New Energy released the Deep Blue brand.
This is followed by the Avita brand. As a brand jointly built by well-known shareholders such as Changan Automobile, CATL and Huawei, after the completion of the latest round of capital increase, Avita has become the second largest shareholder of Avita with 23.99% of the shares, and Changan Automobile has held 39% of the shares, making it the largest shareholder, but the company mechanism has undergone major changes: Avita has changed from a holding subsidiary of Changan Automobile to an associated enterprise and is no longer included in the scope of the consolidated statements.
From the perspective of financing, Changan Automobile's next financing method in the primary market is likely to be the independent development of the Deep Blue brand and the Avita brand, relying on the resources of the shareholders to carry out financing in the primary market, and then obtain a more ideal market value through spin-off and listing, bringing excess returns to their respective shareholders and forming a virtuous circle.
In this case, the financing window of the new Changan Automobile in the capital market is Changan Shares + Changan Deep Blue + Avita Technology, which is positioned as a fuel vehicle company + a traditional high-end new energy vehicle company + a high-end joint venture company.
Changan Automobile is quite clever, Lao Li mentioned before, last year, the secondary market was only happy to see the spin-off of Avita Technology, not to have too much hope for the spin-off of Changan New Energy, this situation appeared, the biggest damage is Changan Automobile. However, after the launch of the deep blue brand, Changan New Energy has transformed into a digital high-end brand, and from the perspective of the capital market, if the sales volume of deep blue can achieve monthly sales of 10,000 units, its valuation will naturally rise.
As a joint venture company, Avita will embark on the track of "automobile + energy + technology", and once the product has a good market reaction after the listing, then its valuation reference is Tesla or BYD. Of course, Avita certainly cannot become Tesla or BYD from the business, but from the perspective of storytelling, the capital market is highly recognized, and the total market value of the new Changan Automobile will be very imaginative.