Introduction: Great Wall Motors' sales and revenue have hit a record high, and net profits have also increased significantly, while many institutions are optimistic, its stock price has been constantly exploring from a high level; on the other hand, the goal of Great Wall Motor's equity incentives, is there still a play?
Affected by the epidemic, lack of core and lack of electricity and the international situation, the stock price of Great Wall Motors has continued to decline, especially with the disclosure of sales in the 2021 annual report and the first quarter of 2022, Great Wall Motor's stock price has refreshed a new low since 2021.
It is not difficult to understand that the second day of Great Wall Motor's disclosure of sales in the first quarter, the stock price of both great wall motors fell sharply. According to the announcement, the cumulative sales of Great Wall Motor in the first quarter of this year were 283,500 units, down 16.32% year-on-year.
Surprisingly, the day after Great Wall Motor disclosed its earnings report, its dual-share stock price also fell sharply. It should be known that last year, Great Wall Motors' revenue, profits, and sales have achieved a lot of increases, and its revenue has hit a record high.
So, what was the performance of Great Wall Motors last year? In the face of seemingly good performance, why doesn't the capital market buy it? Will this "K-type" trend of polarization between performance and stock price performance continue?
1) Revenue is at a record high, and profitability is nowhere near what it was five years ago
On March 30, Great Wall Motor disclosed its 2021 financial report showing that last year, it sold 1.281 million new cars, an increase of 14.79% year-on-year; total operating income was 136.405 billion yuan, an increase of 32.04% year-on-year; net profit attributable to shareholders of listed companies was 6.726 billion yuan, an increase of 25.43% year-on-year; basic earnings per share was 0.73 yuan.
At the same time, Great Wall Motor disclosed its 2021 annual profit distribution plan, distributing a cash dividend of 0.07 yuan (including tax) per share, and intends to pay a dividend of about 650 million yuan at the end of 2021. In the middle of 2021, Great Wall Motor has paid a dividend of 2.77 billion yuan and a dividend of 3.42 billion yuan for the whole year, accounting for 50.81% of its net profit attributable to the company's shareholders in 2021; at the end of 2020, Great Wall Motor did not distribute profits.
It is worth mentioning that last year, Great Wall Motor's sales and revenue hit a record high, and its net profit reached the highest level in the past five years. Despite this, Great Wall Motors' earning power is far from the level of 2013-2016, or even far from the level.
From 2013 to 2016, Great Wall Motor's net profit was 8.232 billion, 8.041 billion, 8.06 billion and 10.554 billion yuan, respectively, while the revenue at that time was 56.784 billion, 62.599 billion, 76.033 billion and 98.616 billion yuan, respectively.
Of course, in the face of electrification, Great Wall Motors needs to invest high costs (such as research and development, procurement), and the market competition environment is more complex, with small profits and quick sales, grabbing market share, becoming the choice of most car companies.
Last year, Great Wall Motor's gross profit margin was 16.16%, down 1.05 percentage points from the same period in 2020.
From the perspective of financial reports, the reason why the revenue growth rate of Great Wall Motors is higher than the growth rate of profits is mainly that while the revenue has increased, the cost has also shown a substantial increase.
2) Spending money like flowing water, cost control problems?
According to the financial report, the total operating cost of Great Wall Motors last year was as high as 131.878 billion yuan, an increase of 33.42% year-on-year, which was significantly higher than the growth rate of Great Wall Motors' revenue.
Specifically, in addition to the year-on-year increase in sales expenses, the year-on-year increase in the main expenses is lower than that of revenue, and the year-on-year increase in the rest of the expenses is almost higher than that of revenue.
Among them, management expenses rose by 58.39% to 4.043 billion yuan due to the increase in the number of management personnel and equity incentive expenses, while research and development expenses increased due to the increase in research and development investment in intelligent, electrified and new model projects, resulting in a year-on-year increase of 46.36% to 4.49 billion yuan.
However, I am also happy to see the increase in these two expenses. After all, this has positive implications for retaining talent and increasing the strength of the enterprise.
Under the background of the trend of intelligence and electrification, it is logical to increase the investment in research and development of this part. What's more, to some extent, the strength of a car company's R & D capabilities and the amount of R & D investment are not only related to the development of enterprises, but also the competitiveness of enterprises.
Nevertheless, it is difficult to hide the fact that Great Wall Motors' cost control capabilities need to be improved. After all, the operating cost that occupies the majority of spending is as high as 114.367 billion yuan, accounting for 83.84% of the total revenue, while the highest net profit in 2016, the proportion is 75.4%. This is also one of the important reasons why the profit level of Great Wall Motors is not as good as before.
For traditional automakers, the ability to recruit people is still dwarfed by the ability to recruit people compared with the new forces of "burning money".
Overall, Great Wall Motor's operation in 2021 is not bad, sales and revenue are new highs, although the profit is not as good as five years ago, but in the difficult 2021 still achieved substantial growth, especially valuable.
3) The net profit of bicycles reached the highest in five years
As we all know, in the past two years, the automobile industry has been hampered by the epidemic, "lack of core and less electricity", coupled with the rising cost of raw materials and the shortage of core component resources, the automobile industry is almost "belly and back". In this context, how does Great Wall Motors achieve sales, revenue and profit growth?
To achieve such results, mainly due to the performance of many models launched by many brands of Great Wall Motors, especially the tank brand, last year, relying on a tank 300 alone, greatly improved the overall performance of Great Wall Motors. Great Wall Motor's vehicle sales revenue soared 31.3% year-on-year to 121.307 billion yuan.
Not only that, Haval H6, Haval Big Dog, Euler Good Cat, Mocha and Great Wall Cannon and other products are hot, but also the average selling price of Great Wall Motors products has risen steadily, last year, The price of Great Wall Motors' bicycles reached 106,500 yuan, compared with only 92,900 yuan in the same period in 2020.
At the same time, Great Wall Motor's profitability level has risen steadily, and last year, its net profit per bicycle reached 5250.69 yuan, the highest level in the past five years.
It is worth noting that with the launch of Wei brand DHT products, tank 500 and mech dragon, the average bicycle price and net profit of Great Wall Motors are expected to further increase. However, judging from the performance of Great Wall Motors in the first quarter, it seems to be under considerable pressure at present.
4) Performance is under pressure, is there still a drama in the equity incentive plan?
According to the announcement issued by Great Wall Motors, in the first quarter of this year, the company's cumulative sales volume was 283,500 units, down 16.32% year-on-year, outperforming the market. According to the China Association of Automobile Manufacturers, in the first quarter, China's automobile sales were 6.509 million units, an increase of 0.2% year-on-year. Not only that, Great Wall Motor's sales in the first quarter were less than one-fifth of the assessment target of the equity incentive plan.
In July last year, Great Wall Motor released the 2021 Stock Option Incentive Plan and Restricted Stock Incentive Plan, which intends to grant nearly 400 million stock options and more than 430 million restricted shares to nearly 9,400 core employees, which is also the largest equity incentive plan in the history of the automotive industry.
According to the incentive plan, in the three fiscal years from 2021 to 2023, its sales assessment targets were 1.49 million, 1.9 million and 2.8 million vehicles, and the net profit assessment targets were 6.8 billion yuan, 8.2 billion yuan and 11.5 billion yuan, respectively.
Can't help but worry, is there any possibility of completion of the equity incentive plan set by Great Wall Motors? Or will the assessment goals be adjusted? After all, today's market situation is not friendly, and the main brand of Great Wall Motors is facing a sharp decline.
According to the sales volume in the first quarter, the Haval brand and the Great Wall pickup truck, which are the main base of Great Wall Motors, both declined in the first quarter, with 166,800 and 43,000 units respectively, down 25.13% and 27.68% year-on-year, respectively. As the brands that contributed the most to the sales of Great Wall Motors, the two brands contributed 58.82% and 15.15% to the sales of Great Wall Motors, respectively.
As for the WEY brand, Euler and tank brands, although they still maintain positive growth, their sales contribution is obviously at a low level, with sales of 14,300, 33,800 and 25,800 vehicles in the first quarter, respectively, contributing only 5.04%, 11.91% and 9.08% to total sales, respectively.
This situation can't help but worry about whether Great Wall Motors' product marketing strategy can be successfully sustained.
It is gratifying that Great Wall Motors' financial situation is quite healthy, and even if sales are temporarily hit, there is no need to worry about pulling back financially.
According to the financial report, in 2021, the total assets of Great Wall Motor were 175.408 billion yuan, an increase of 13.89% year-on-year; the total liabilities were 113.28 billion yuan, an increase of 17.18%; the asset-liability ratio was 64.58%, an increase of 2.89 percentage points over 62.77% in the same period of 2020, but the overall level was at a normal level.
Among them, current assets were 108.366 billion yuan, an increase of 9.02% year-on-year; current liabilities were 95.597 billion yuan, an increase of 17.78% year-on-year. Further, as of December 31 last year, Great Wall Motor's monetary funds and trading financial assets reached 39.094 billion yuan, an increase of 101.35% year-on-year, while short-term borrowings were 5.204 billion yuan, down 34.13% year-on-year.
Judging from the data, Great Wall Motors has no debt repayment pressure in the short term, and the overall financial level is also very healthy.
Views of Autoskline：
After the sales volume disclosure in the first quarter, Dongxing Securities, Galaxy Securities, Founder Securities, Minsheng Securities, etc. all gave Great Wall Motors a "recommended" rating. Not only that, after the disclosure of Great Wall Motor's 2021 annual financial report, it also received a lot of "buy" and even "highly recommended" ratings.
Interestingly, judging from the feedback from the capital market, the performance of The two shares of Great Wall Motors is not so positive.
As of the close of trading on April 20, Great Wall Motor's A-share price closed at 25.46 yuan per share, compared with 69.8 yuan per share at its highest last year, and H-shares closed at HK$11.6 per share, compared with HK$39 per share last year.
It is worth mentioning that in recent days, due to the tense epidemic situation, the contradiction between automobile production and parts supply has further intensified, and the automobile industry has also encountered huge challenges, affected by this, Weilai, Tesla and other companies have also been forced to stop work and production, and it is difficult to say that the impact of the epidemic will not affect Great Wall Motors.
Although the national conference on ensuring the smooth flow of goods to promote the stability of the industrial chain supply chain shows that it will stabilize the industrial chain supply chain problem, whether it can help the automobile industry get rid of the current predicament remains to be verified by the market.