Author: He Leyi
Editor: Li Jing
Wind product: Shen Heche one
Source: Rhodium Finance - Rhodium Finance Research Institute
The clouds are raining, and the market is so magical.
In July 2020, the day of the 30th anniversary, when the family Wei Jianjun actually used "danger" to describe the state of great wall motors, a sentence of "life hanging on the line" can be described as a shock.
In October 2021, Great Wall Motor's stock price stood at a high of 69.8 yuan. Wei Jianjun, who holds 34.5% of the shares, became the new richest man in Hebei. On April 21, 2022, Great Wall Motor closed at 24.23 yuan, a cumulative drop of more than 60% compared with the above highs.
What is the market worried about in the midst of ups and downs? What has Great Wall Motors changed? What are the old pains and new ones?
01 Production and marketing double drop Wei brand lost How urgent is the strong chain replenishment chain?
Objective data speaks.
According to the March 2022 production and sales report, Great Wall Motor produced 104,000 units, a year-on-year decrease of 5.54%, and the cumulative production of 286,000 vehicles this year, a cumulative decrease of 14.16% year-on-year; the monthly sales of 100,900 units, a year-on-year decrease of 8.86%, this year's cumulative sales of 283,500 units, a cumulative decrease of 16.32%.
Why is production and sales falling?
Great Wall Motors said, "At present, due to the impact of the epidemic in Shanghai, Jiangsu, Jilin and other places, many parts suppliers of Great Wall Motors have been affected, resulting in limited production capacity of factories."
The epidemic has been repeated, everyone's life is not good, and there is force majeure in the double drop. However, looking at yourself, can the external environment fully carry the pot?
Stretching the dimension, in August, September and November 2021, Great Wall Motor's main brands Haval, pickup truck and WEY also experienced sales declines.
In particular, Haval and WEY, the highest monthly sales fell by nearly 50% year-on-year. Fortunately, the growth rate in the first half of the year was strong enough, coupled with the increase in sales of new products such as Euler and tanks, the great wall sold 1.281 million vehicles in the whole year, an increase of 15.24% year-on-year.
Entering 2022, the market is more complicated.
On April 12, 2022, "WEY" Weipai issued a price adjustment note, affected by comprehensive factors such as the sharp increase in the prices of raw materials, chips and core components, some models of the coffee series were raised by 5,000-12,000 yuan.
It can be said that Wei Pai is an important starting point for the exploration of the high-end of the Great Wall. It is named after Wei Jianjun's surname "Wei", which can be seen to have high hopes.
At the press conference at the end of 2016, Wei Jianjun, founder of Great Wall Motors, once said bluntly, "The WEY brand has bet on my surname, and can only succeed and not fail."
However, after more than 5 years of going around, "WEY" did not perform satisfactorily.
In 2021, Weipai's sales fell by 25.65% year-on-year, from 78,500 units to 58,400 units, the only one of the five sub-brands of Great Wall Motor that declined in annual sales.
In 2022, sales were only 4,755 units, compared with 5,098 units in January and 4,432 units in February.
Wei Pai has a moment of scenery. Sales in 2017 reached 86,000 units. With the help of the WEY VV6 in 2018, the family product expanded and its annual sales jumped to 139,000 units. However, from 2019 onwards, Shen Yong is no longer there. Annual sales declined by 28.28% to 100,000 units, and by 21.53% to 78,500 units in 2020, with sales of all models declining.
High and low, falling into the path of development, there are causes inside and outside.
On the one hand, the high-end of independent brands is the trend of the times, and a number of emerging brands represented by Geely Lynk & Co have developed rapidly and eaten many markets.
On the one hand, there are shortcomings in its own product strength. VV7, VV5, VV6, new energy P8 and other new efforts are not small, but the sense of difference, innovation and characteristics brought to users need to be improved; at the same time, some quality problems and quality control defects have also caused users to complain and damage their reputation.
Browsing the car quality network, black cat complaints, etc., there are complaints such as transmission noise, burning oil, engine shaking and so on.
Industry analyst Li Chen said that high-end positioning must first match the strength of high-quality products, and the foundation is not solid and unfavorable for long-distance running. With the decline in sales, the price of individual Models of Weipai has loosened, which is not conducive to high-end confidence. At the same time, strategic swing is not a plus, such as the independence of the tank as a new sub-brand; the three new models of Mocha, Macchiato and Latte are named with coffee, naming, and the appearance is feminine; the overall brand positioning has changed from "China Luxury SUV" to "New Generation Smart Car". These are almost subversions to the accumulation of the previous brand, which is no different from a brand reengineering. It is necessary to bring cost and time consumption, user cognitive confusion, etc.
Another brand, Euler, is also difficult to say.
In mid-February 2022, black cats and white cats stopped taking orders. "After the sharp rise in raw material prices in 2022, the loss of black cats alone exceeded 10,000 yuan," Euler said.
At present, the only models on sale are good cats and good cat GT. And after the price adjustment, the price of the new car will rise by 6000-7000 yuan after subsidies.
On April 11, Euler CEO Dong Yudong said: Affected by the epidemic, the suppliers have not yet resumed, and it is expected that the production of black cat vehicles will continue to be suspended this week.
Industry analyst Hao Rui said that with the rise in raw material prices and the interference of the epidemic, "ensuring supply and stable prices" has been the key point of the car companies in 2022, and the more solid the industrial chain and supply chain, the more prominent the core competitiveness and core value.
Yes, scale is the core of the performance of car companies, behind which is the industrial chain and supply chain wrestling. The epidemic is a touchstone, the industry with this cold and warm, look at Chery Automobile, BYD, and even Xiaopeng, the ideal sales increase, how is the development resilience of Great Wall Motors? What is the urgency of strong chain repair?
02 Profit has no "moisture" Gross profit margin 9 years lowest need to be more stable
Asking questions is not harsh.
It should be known that there are brokerage research reports that will lower the net profit expectations of Great Wall Motors in 22-23 years.
For example, Soochow Securities was raised from 11,171 billion yuan to 9,147 billion yuan; Tianfeng Securities was lowered from 12.030 billion yuan and 15.592 billion yuan to 8.361 billion yuan and 10.952 billion yuan.
In 2021, Great Wall Motor's revenue was 136.4 billion yuan, an increase of 32.04% year-on-year, and its net profit was 6.73 billion yuan, an increase of 25.41% year-on-year.
The annual sales volume was 1.281 million units, an increase of 14.79% year-on-year; the average bicycle price exceeded 106,000 yuan, an increase of 15.02%; the sales of its five major brands except Weipai increased across the board.
On the surface, whether it is revenue, profit, or total assets, Great Wall Motor's 2021 data has reached the best level in the past five years.
In the words of Great Wall Motors: In 2021, the transformation of Great Wall Motors will accelerate, the growth of enterprises will be steadily improved, and the core financial indicators will continue to improve.
From this point of view, Wei Jianjun's thirty years of reflection and thinking of danger in times of peace have achieved remarkable results, and the "crisis-ridden" Great Wall Motors has stabilized.
However, when you look deeply, it seems that this is not the case.
First of all, whether the net profit has "moisture" considerations. Looking at the net profit of 6.7 billion yuan, the amount of government subsidies included in the profit and loss of the current period is close to 2.2 billion yuan, compared with 1.26 billion yuan in 2020. Among them, the new energy subsidy was 1.626 billion yuan, an increase of 722 million yuan year-on-year.
If the above subsidies are removed, the deduction of non-net profit will be much reduced.
You know, according to the current policy, 2022 will be the last year of new energy vehicle replenishment.
At the same time, Great Wall Motor's non-operating income reached 1.161 billion yuan, a year-on-year increase of 135.04%, and also contributed a lot of net profit.
Secondly, the use of R&D investment to capitalize "optimize" net profit is also a consideration.
The so-called capitalization of R&D investment is to include R&D investment in the balance sheet development expenditure, which can reduce the cost of enterprises and thus increase net profit. As an important part of the cost expenditure, when the R&D input cost of the enterprise is calculated, it is divided into two types: capitalization and expense, and different algorithms can change the net profit of a car company.
In 2021, Great Wall Motor invested a total of about RMB9.1 billion in R&D, accounting for 6.65% of the Group's revenue. The capitalization amount of R&D investment is about 5.8 billion yuan, and the capitalization rate is about 64%.
That's not a low number. Taking BYD as an example, the total investment in research and development is about 10.6 billion yuan, the capitalization amount is about 2.6 billion, and the capitalization rate is only 25%.
In other words, BYD's total R&D investment is 1.5 billion yuan more than Great Wall Motors, but the amount of capitalization is 3.2 billion yuan less.
Perhaps, there is also helplessness and urgency.
Compared with the revenue of 100 billion, Great Wall Motor's net profit margin in 2021 was only 4.93%, and it decreased by 0.26% year-on-year.
In the case of rising sales and rising average bicycle prices, Great Wall Motor's gross profit margin fell to the lowest point in nearly 10 years.
In 2013, Great Wall Motor's gross profit margin continued to decline after reaching a high of 28.61%, falling to 16.83% in 2019, slightly rebounding to 17.21% in 2020, and sliding to 16.16% in 2021.
How did it come to this?
The disclosure revealed that the main reason was the recording of transportation costs in the reporting period in accordance with regulatory requirements.
However, personnel costs must not be ignored. In 2021, Great Wall Motor expanded its staff from 63,200 to 77,900, an increase of 23.3% year-on-year; under the promotion of equity incentives, the management fee was 4.043 billion yuan, an increase of 58.39% year-on-year.
Expansion increment is a good thing, especially R & D investment, but outside the volume, efficiency and benefits? Is there more refinement?
It is certain that the Great Wall Motors in 2021 has gratifying changes, and there is no shortage of hidden pain points, and there is still a long way to go from the lifting of the crisis and stability.
03 12.4 billion behind how to read the protective disk?
For large enterprises, big does not mean that strong, efficient and high quality is the main theme. In order to truly get rid of the "crisis" and "life hanging on the line", the 100 billion Great Wall has refined its main business, professional focus, and scale effect polishing without end.
Interestingly, on the same day as the annual report was disclosed, on March 29, Great Wall Motor announced that the Group could use no more than RMB12.4 billion of its own idle funds to purchase bank/securities company capital-protected risk controllable wealth management products within the validity period of the authorization, and the funds could be used on a rolling basis within the above amount.
The purpose is to "improve the efficiency of the use of funds, increase the income of idle funds, and seek to maximize the interests of the Group and shareholders".
In 2021, Great Wall Motor's net cash flow was 35.316 billion yuan, plus 27.908 billion yuan in cash and cash equivalents, holding 63.2 billion yuan, the above investment is confident.
However, 12.4 billion is not a small amount, equivalent to its net profit in the past two years.
From the perspective of development, this move has also caused some shareholders to be dissatisfied. E interactive platform, some investors sharply expressed their "shock" at this move, as a domestic automobile manufacturer, in the face of a number of core technology shells, Great Wall Motors should face the difficulties and focus more energy and funds on research and development breakthroughs.
Indeed, the more cold the winter, the more we must cultivate internal skills. Looking at Yanghe and Yunnan Baiyao, there are not many cases of investment folding. There is no eternal stock god in the world, but there is no shortage of professional masters who continue to grow. The performance is fundamentally improved and the growth is improved, and ultimately it depends on the opening of the main business and the forward-looking layout of the strategy.
In the case of incomplete stability, is such a large-scale financial management a bit short-sighted and short-sighted?
Don't forget, looking at the expected dish is the capital norm. Although Great Wall Motor's net profit in 2021 is more than twice that of BYD, the price-to-earnings ratio of the two is in stark contrast.
As of the close of trading on April 20, Great Wall Motor's earnings (TTM) were 34.96, while BYD was 231.14.
In the face of shrinking stock prices and falling production and marketing, how to read the Protection Plate Sutra well and boost internal and external confidence? Great Wall Motors and Wei Jianjun, who are thinking of danger in times of peace, need to use their financial resources and energy on the blade, and need more accurate and high-quality development "strong needles".
04 New energy is left behind, only poor marketing?
Look at the performance of new energy, or have a deep understanding.
As early as 2012, Great Wall Motor's Power Battery Division (the predecessor of Hive Energy) has carried out pre-research work on batteries. However, until the net profit of Great Wall Motors exceeded 10 billion yuan in 2016, Wei Jianjun still said, "Now is not a good time to get on electric vehicles."
Under the delay, in 2018, the Great Wall launched the real electric brand Euler. At that time, the new energy field had long been in full swing and the pattern was initially determined, and BYD sold 247,000 new energy vehicles a year, which was basically on an equal footing with its fuel vehicles. Tesla is even more effective in scale, selling 245,240 cars throughout the year, equivalent to its 2003 founding to 2017 combined.
Behind the reservation or caution, is there a regret of getting up early and catching up late?
Yes, the wave of electrification and intelligence is unstoppable, but the "autonomous old cannon" unfortunately fell off the team. In 2021, Great Wall Motors sold 1.28 million units, of which only 139,000 were new energy vehicles, accounting for less than 11%.
Why? In Wei Jianjun's view, "after the transformation, it did not sell well, only because of the ability to engage in marketing and the whole concept, it is not as good as Wei Xiaoli."
Indeed, there is something to reflect on at the level of marketing momentum.
At present, Great Wall has three major products (SUVs, pickups, cars) and five major brands (Haval, WEY, Great Wall pickup trucks, tanks, euler).
Industry analyst Yu Shengmei said that the advantage of multi-brand operation is that it can attract customers with a variety of different needs, which is conducive to market segmentation. However, having more children may also have more fights, complex product lines, confusing naming, easy to blur brand positioning, more likely to bring internal friction to products, and even resource dispersion, thereby restricting sales.
For example, WEY's latte and Macchiato, Haval's Red Rabbit and H6, the core elements such as model size, power configuration, and price are similar, will they fight each other left and right?
In terms of segmentation, Haval is still the pillar of performance, with cumulative sales of about 770,000 vehicles in 2021, an increase of 2.64% year-on-year, accounting for 60% of the group's overall sales. Robust at the same time, single dependency geometry? How effective is the diversification strategy?
Can't help but ask, is the new energy gap really only marketing?
Look at Weilai's "unique" power exchange technology, Xiaopeng's full-stack self-research ability, and ideal range extender technology leadership are also very outstanding. The common point is the technical control of dead research and development, and the research and development expense rate of Wei Xiaoli in 2021 is 12.7%, 19.6% and 12.2% respectively.
In short, marketing is the appearance, and the characteristic competitiveness supported by innovation is the key to the breakthrough counterattack of the three strong.
Focusing on the new energy sector, SUV and pickup trucks started, and Great Wall Motors, which has always been tough in style and mainly focused on the tough guy market, has found another way to launch a new energy Euler that targets female users. As the most distinctive category innovation, it has also been given high hopes, and the expected sales volume will reach one million units in four years.
However, the reality is bone-chilling. On December 6, 2021, Euler Good Cat "car machine system chip does not match the propaganda". After CCTV financial reports, "Euler Automobile was exposed to suspected of defrauding consumers" on the hot search.
According to reports, a number of Euler good cat owners complained that the car is not equipped with the Qualcomm octa-core automotive chip claimed by the brand side, and actually uses the Intel chip produced in 2016, resulting in slow response speed, stuttering, and many mainstream apps cannot be installed and used.
Industry analyst Lin Yong said that for the automobile industry, which emphasizes experience and strong reputation, false publicity undoubtedly hurts the brand foundation. It seems that the integrity problem is still behind the comprehensive support of industrial strength and product strength to be improved.
Browsing the black cat complaints, as of 13:00 on April 21, Great Wall Motors had a total of 302 complaints, including quality doubts and delivery disputes of its new energy brands Euler and Weipai. There are also many complaints about similar problems in the car quality network.
The enterprise check APP shows that Great Wall Motors has a number of product recall information. For example, on July 16, 2021, some Euler IQ electric vehicles were recalled, totaling 16,216.
At the end of the day, playing iron also needs to be hard.
There is no doubt that new energy is the general direction of the automobile market. However, as an emerging track, the industry itself is not deep, technical maturity, experience accumulation, market inspection are short,How to do a more solid job in product quality and experience, and establish deeper trust is the basis for all enterprises, including Great Wall Motors, to eat good and stable new energy meals.
05 Decisive Battle 2025 Out of the division unfavorable and love to fight to win
Fortunately, Great Wall Motors is not short of self-examination.
In July 2020, standing at the node of the 30th anniversary of car building. Through a video, Wei Jianjun sent out, "Relying too much on the first thirty years, can Great Wall Motors survive next year?" Soul torture.
Not unfounded. In 2019, Great Wall Motors experienced a number of data declines, with total revenue falling by 3.04%, profit falling by 21.25%, and sales volume increasing by only 0.69%.
A series of unfavorable data means that in the nearly 30 years of long-distance running, Great Wall Motors has entered a critical period of product structure adjustment and strategic transformation and upgrading decisions.
Indeed, the elephant turned around and did not dare to slacken off in the slightest. Looking at the automotive industry, the new and old gear shifts are in full swing, and the competition is getting hotter and hotter. Not to mention BYD, which is far ahead in the field of new energy, the spoiler catfish Tesla, Wei Xiaoli's charge in the second half is also very brave, and there are xiaomi, Baidu, Huawei, Ali and other crossovers are aggressive.
Sail against the current, and if you don't advance, you will retreat.
As an "old man" in the industry, Wei Jianjun's above-mentioned keen prejudgment and thinking of danger in times of peace reflect the vision of a mature entrepreneur's quality, which is worthy of recognition.
At the 30th anniversary celebration, Great Wall Motors released three major technology brands of "highly intelligent modular technology platform - lemon, intelligent professional off-road platform - tank, and new electronic and electrical architecture - coffee intelligence", covering the whole industry chain of automobile research and development, design, production and automobile life.
In June 2021, Great Wall Motor released the 2025 strategy and set assessment targets: from 2021 to 2023, Great Wall's sales assessment targets were 1.49 million, 1.9 million and 2.8 million, respectively.
What concept? In the next 4 years, its annual sales compound growth rate should remain above 33%, and the compound growth rate of revenue should be close to 50%.
Confidence and determination are worthy of recognition. However, in 2021, Great Wall Motor's five brands sold a total of 1.28 million new vehicles, an increase of 15.2% year-on-year, a difference of 210,000 units from the target of 1.49 million units.
According to the plan, Great Wall Motor will achieve global annual sales of 4 million vehicles in 2025, of which new energy vehicles account for 80%. In 2021, the proportion of new energy vehicles is only 11%, the gap is so large, can it be bridged in just 4 years?
Of course, having faith and having a goal is always good. The darkest hour is also the dawn horn. Such as 4 years of sharpening the sword, stepping over this hurdle, I believe that the Great Wall enterprises will usher in a magnificent reconstruction.
Wind objects should be looked at for a long time. The above strategy is not completely drawn, and it has its strength.
"In order to achieve this overall goal, we will continue to carry out 'large investment in product research and development', and in the next five years, the total investment in research and development will reach 100 billion yuan." Wei Jianjun revealed.
In 2021, Great Wall Motor sold nearly 140,000 units overseas, an increase of 102.98% year-on-year; overseas revenue reached 16.16 billion yuan, accounting for 11.85% of revenue, an increase of 142.24% year-on-year.
Looking forward to 2022, the most eye-catching thing is intelligence and new energy.
In terms of electrification, Dayu battery technology will be applied to its new energy series models; improve the power battery thermal runaway protection technology carrying rate, cobalt-free batteries will achieve larger-scale mounting; at the same time, will also focus on efficient fuel, hybrid, hydrogen energy and other multi-technology routes.
In terms of intelligence, we will continue to improve the depth of intelligence of its products, and the new electronic and electrical architecture of Great Wall Motors, based on central computing and regionalization, will be launched in China. IDC 3.0, an intelligent driver assistance computing platform, will also be installed on the intelligent driver assistance products released in 2022.
Great Wall Motor said that through the "zero carbon factory" at the manufacturing end and the accelerated launch of the product side, it is expected to launch more than 50 new energy models by 2025.
Needless to say, the 31-year-old Great Wall Motors still has full of vitality, toughness and tension. This is the most precious and valuable, and it is also the most important flipping code for the Great Wall and Wei Jianjun.
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. Stacking a large number of new products that cater to the market is expected to achieve a double harvest of sales volume and profitability.
In June 2021, at the 2025 strategy conference, Wei Jianjun said: "The window period is very short and fleeting. ”
"Chinese car brands, in order to achieve a real sense of transcendence, only in these three to five years, rapidly enlarge the advantages, it is possible to lead the new track of new energy and intelligence." Moreover, there is only one chance for Chinese car brands. ”
Nearly a year later, the words are careful, and the horn of the decisive battle 2025 is still deafening.
It can be predicted that in the remaining 3 years and more than 1,000 days and nights, the Great Wall and Wei Jianjun are at the key stalls.
Of course, big goals are also big challenges, how to seize the window period, valuable this time?
Time is running out, more "strong needles" and "amplification moves" are necessary things.
Love to fight to win! Can it be a miracle?
This article is original for Rhodium Cai
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