BYD (002594.SZ) released its 2022 first quarterly report on the evening of April 27, Beijing time, with the following points:
1. The overall performance is in line with expectations. The company's revenue in the first quarter was 66.8 billion yuan, completing 19% of the expected annual performance, which was in line with expectations; the net profit attributable to the mother in the first quarter was 800 million yuan, falling within the scope of the performance forecast (650-950 million yuan)
2, still do not change the temperament of not making money, but the structure returns to the automobile business. Car sales led to a sharp increase in the company's revenue, but the company's gross profit margin was still declining in the quarter and record low; net profit margin of 1.2%, still on the verge of breakeven. In terms of business segments, the profitability of the automotive and electronics pillars has not improved, but the strong sales volume of the automotive business has compensated for the cliff-like decline in profits at the highlight of the end of the electronics business. The profit structure has been increasingly since the automotive business, and the profitability of the automotive business has stabilized.
3, car sales are the strongest logic supporting the company's valuation, ASP and gross margin continue to decline. This quarter, BYD stopped production of fuel vehicles, while relying on blade batteries, DM hybrid platform, e3.0 pure electric platform three brushes, the company's new energy vehicle sales off-season is not weak, outperforming peers, the market share continues to increase, in 2022 to maintain 1.5 million vehicles, impact 2 million vehicles target. However, from sales volume to revenue to profit, layer by layer discount, the decline in ASP is mainly due to more aggressive pricing strategies and changes in model structure, and the decline in gross profit margin is directly negative by the decline in ASP, and at the same time squeezed by the high cost of raw materials. However, the company made a price increase in the first quarter, the price increase did not inhibit the company's vehicle demand, and the gross profit margin in the second quarter was expected to stabilize or repair.
4, electronics: the highlight moment is over, can keep the revenue can not keep the profit. After experiencing the highlight of the epidemic in 2020, BYD Electronics pioneered successfully, retaining revenue, while profitability was returned to its original shape. The first quarter of revenue to maintain a slight increase, and the profit is almost meaningless, gross margin fell to 5.5%, a record low, net profit margin of less than 1%, breakeven edge, although BYD Electronics itself is a thin profit business, but the profitability of the first quarter still has room for repair.
Overall view: The first quarter report card is in line with expectations, is still the market habit of not making money temperament, but the market for the new energy automobile industry under the pressure, BYD electronic performance decline is expected, the first quarterly report as a whole is relatively stable, in addition to the profit resilience has highlighted the signs.
Sales volume is still the first driving factor of valuation, and the company's sales are not weak in the off-season, which is the direct reason for the company's relatively better resistance under the overall valuation of new energy vehicles. However, the current factors affecting the company's stock price trend mainly come from the industry level, and it may be a better opportunity after the speed of penetration rate increases, cost pressure squeezes profitability and other concerns are alleviated.
For BYD's quarterly report, what does Dolphin Jun focus on?
For BYD's first quarterly report, because the company does not disclose the situation of sub-business, but BYD's performance sources mainly come from the automobile business and mobile phone components and assembly business (operated by the listed entity BYD Electronics), and the contribution of mobile phone components and assembly to the performance is large, which will cover up the true performance of the automobile business that we are focusing on. Therefore, Longbridge Dolphin Jun regards the company's data after removing BYD Electronics as BYD's automotive business data, and under the above split logic, we are corely concerned about the following issues:
1, the growth rate of automobile business: BYD automobile business model structure is complex, including oil vehicles also include new energy vehicles, including passenger cars also include passenger cars, even if the sales volume is on the basis of the clear brand, the automobile business revenue generation situation is also uncertain, so we pay attention to the change in the revenue growth rate of the automobile business;
2, automobile business profitability: removing mobile phone parts and assembly business (operated by the listed entity BYD Electronics), BYD's performance is mainly the contribution of the automobile business, so Dolphin Jun deducts the corresponding data of BYD Electronics from BYD's overall financial statements to see the profitability of BYD's automobile business, including gross profit margin, net profit margin, etc.;
3, mobile phone parts and assembly: mobile phone parts and assembly business is not the core of BYD's valuation, but the proportion of revenue is relatively high, although the decline in profits is more serious, but the disturbance of the company's overall profit is more obvious, so we understand the performance of the business from the perspective of BYD Electronics;
4. Overall situation: There are many factors affecting BYD's overall performance, so we pay attention to the overall performance growth rate and changes in profitability.
With the above questions in mind, let's analyze BYD's 2022 quarterly report in detail:
First, the business performance after excluding BYD Electronics: similar to the automobile business
[1] Automobile sales: explosive growth, 1.5 million vehicles in 2022, impact 2 million vehicles: external drive (rapid increase in the penetration rate of new energy vehicles) and internal drive (blade batteries in the whole series of new energy vehicles, hybrid platform DM4.0 model listing, marine series new products listed) under the resonance, the first quarter of 2022 new energy vehicle sales off-season is not weak.
The company officially announced the suspension of fuel vehicles, as a leading brand of new energy vehicles, such boldness is in line with the company's slogan and positioning.
In the first quarter, under the background of the weak sales season of peer sales, the company's new energy vehicle sales continued to grow explosively, of which new energy passenger car sales exceeded 280,000 units, an increase of 433% year-on-year, quarterly sales and year-on-year growth rate continued to reach a new high, and drove the company's overall sales to exceed 290,000 units.
In 2022, the company aims to sell 1.5 million vehicles, impacting 2 million vehicles, in terms of first-quarter data, 19% of 1.5 million vehicles and 15% of 2 million vehicles;
Data source: company announcement, Longbridge Dolphin Research
Data source: company announcement, Longbridge Dolphin Research
At the same time, Dolphin Jun also tracked the company's specific model retail data, Qin and Song monthly sales of more than 20,000 units, Han / Tang / Dolphin stable at the monthly sales of about 10,000 units, on the basis of blade batteries, DM-i hybrid platform and e3.0 pure electric platform, all models are explosive, but also continue to have destroyers and other new cars released, the company's new car cycle is still accelerating.
Data source: The Association of Passengers, Longbridge Dolphin Research
In the previous in-depth article, Longbridge Dolphin Jun had stripped away the cocoon to find the core of BYD, which mentioned BYD's revenue structure and gross profit structure, the core of the automobile business and mobile phone business contributed more than 90% of the revenue and gross profit, so in the case that the company did not directly disclose the revenue and gross profit of the automobile business, the Longbridge Dolphin Jun would deduct the data after the mobile phone business (with The Hong Kong-listed BYD Electronics as the main body of operation) as the data of the automobile business, do not entangle the specific absolute value, and mainly observe the trend.
[2] Volume increase and price reduction: After deducting BYD Electronics, the company achieved revenue of 45.9 billion yuan in the first quarter, an increase of 117% year-on-year, with no doubt high growth, but the revenue growth rate still did not outperform the sales growth rate (180%), which means that ASP is down.
The main reason for the decline in the company's ASP was the restructuring of the model structure and a more aggressive pricing strategy. The underpriced Qin Plus and Song Plus quickly became popular, and the company was very aggressive in the pricing of DM-i models in order to fulfill the slogan of oil and electricity parity.
Data source: company announcement, Longbridge Dolphin Research
[3] Profitability: The decline in gross profit margin is speculated to be due to the decline in ASP and the increase in the price of raw materials upstream of lithium batteries. In the first quarter of 2022, the gross profit margin of the business after deducting BYD Electronics was 15.6%, down 1 pct from the fourth quarter of last year, down nearly 3 pct year-on-year, the downward trend of the average price of bicycles is directly negative for the gross profit margin, but in addition, bydir's car parts self-sufficiency rate is relatively high, especially the battery self-supply, under the pressure of lithium battery upstream raw material price increases, the gross profit margin is squeezed is normal.
The company's vehicle price increases in the first quarter have been carried out, after the price increase did not inhibit the company's vehicle demand, the second quarter gross profit margin is expected to stabilize or rise;
Data source: company announcement, Longbridge Dolphin Research
[4] Profits improved significantly. Dolphin Jun deducted the net profit attributable to the mother of BYD Electronics from the company's net profit according to the shareholding ratio, and the net profit attributable to the mother after deduction was 690 million yuan, an increase of 20% from the fourth quarter of the previous quarter, and the year-on-year change was a qualitative change in the turnaround, and the surge in sales volume could eliminate any profit disturbance factors.
And as can be seen from the figure below, historically, bydir's automobile business profitability is unstable, after the outbreak of the epidemic, BYD electronic profits have increased significantly to the company's overall profits, but as BYD electronics benefited from the elimination of the impact of the epidemic, and BYD automobiles sold, the company's automobile business is stable and profitable and has become the company's first profit pillar.
Net margin of 1.5%, not high, sales-driven revenue growth has not yet reflected the leverage effect, the company's bad profit tone has not changed, but it is one step closer to improvement.
Data source: company announcement, Longbridge Dolphin Research
In addition, the main source of BYD's profit is government subsidies, which are recognized in the accounting account "other income". Other earnings of 200 million yuan in the quarter still contributed more than the company's net profit attributable to the mother of 800 million, but margins are getting rid of dependence on government subsidies.
Data source: company announcement, Longbridge Dolphin Research
Second, mobile phone components and assembly: growth and profitability have been returned to the prototype
Mobile phone components and assembly are not the core business of the company's valuation, but they are a major pillar of the company's revenue, so Longbridge Dolphin Jun makes a brief analysis here.
Under the disturbance of multiple factors, the revenue growth rate of BYD Electronics has declined. In the first quarter of 2022, the mobile phone components and assembly business with BYD Electronics as the main body of operation achieved revenue of 20.9 billion yuan, a slight increase of 5% year-on-year, and the performance growth rate completely ended the transient high growth brought about by the outbreak of the epidemic in 20 years and returned to a state of low speed and slow growth.
Data source: company announcement, Longbridge Dolphin Research
Keep your income and fly profitability. After the highlight of the outbreak of the epidemic in 2020, in addition to the revenue volume brought by the penetration rate of new customers and old customers can be maintained, the high profitability indicator is difficult to maintain. In the first quarter, BYD Electronics' gross profit margin was only 5.5%, a new low since 2019, and the net profit margin was less than 1%, on the verge of breakeven.
The rapid decline in profits, coupled with the increase in the proportion of thin-margin assembly business, supply chain tensions led to an upward cost, and the decline in medical protection products that thickened last year's profits was serious.
The mobile phone industry chain is the whole machine brand power is very strong, parts and assembly business is a thin profit business, the company in the Android system to increase the share, the expansion of North American large customers, has been a good business performance.
Data source: company announcement, Longbridge Dolphin Research
In the case of poor growth and profitability, in the first quarter of 2022, BYD Electronics achieved a net profit attributable to the mother of 180 million yuan, a sharp decline of 78% year-on-year.
Data source: company announcement, dolphin investment research collation
Third, the overall performance: in line with expectations, it is difficult to say how good but the profitability of the automobile business is stable
[1] Revenue and net profit attributable to the mother: In the first quarter of 2022, the company achieved revenue of 66.8 billion yuan (19% of the expected revenue of 346.7 billion yuan in 2022, in line with expectations), an increase of 63% year-on-year, and the year-on-year rapid growth of the main series of automobile sales was not weak in the off-season, and continued to soar; the decline in the fourth quarter of the main series of automobiles ASP and the decline in byBYD Electronics;
Data source: company announcement, Longbridge Dolphin Research
Increase in revenue without increasing profits. In the first quarter of 2022, the company achieved a net profit attributable to the mother of 800 million yuan (in the range of 650-950 million yuan in the performance forecast), a year-on-year decline of 27%, according to the previous Dolphin Jun's split of the automobile business and electronics business, mainly due to the drag of BYD Electronics, the automobile business that has always been less profitable, the profit in the quarter is not bad.
Other income is basically government subsidies, the company's 800 million yuan attributable net profit of 200 million yuan of other benefits (government subsidies), but after excluding government subsidies, the company still has positive profits;
Data source: company announcement, dolphin investment research collation
[2] Revenue soared, and gross profit margin declined. In the first quarter, the company's overall gross profit margin was 12.4%, a new low since 2019, and the net profit margin was 1.2%, still on the verge of breakeven.
The automotive business is under pressure to make profits due to aggressive pricing strategies and soaring raw material costs;
BYD electronic highlight moment is over, and the state of low gross profit margin has lasted for one year,
Data source: company announcement, Longbridge Dolphin research collation
Expense ratios are at a new low, freeing up profit margins. The Company's expense ratio for the period was 8.9% during the quarter, and the decrease in expense ratio was mainly due to the decrease in the financial expense ratio after the company's cash flow was abundant.
Management expenses and sales expenses are relatively stable: in the first quarter, the company's sales expenses were 2 billion yuan, the sales expense ratio was 3%; the management expenses were 1.7 billion yuan, and the management expense ratio was 2.5%;
Battery, vehicle intelligence needs the company to maintain R & D investment to at least ensure that the company does not lag behind the industry, this quarter the company's R & D expenses of 2.36 billion yuan, R & D expenses rate of 3.5%;
BYD's business has been pursuing a vertical integration strategy before, the industrial chain covers a long and wide, and the core business adheres to self-research, requiring more financial support, so it bears a heavy burden of financial expenses. However, with the recognition of the company by the capital market and the improvement of the company's business, the company's capital cost is decreasing, the pressure on financial expenses has been significantly alleviated, and the company's financial expenses have been reversed to negative in the quarter, and the financial expense ratio is -0.1%, the first time in history.
Data source: company announcement, Longbridge Dolphin Research
Data source: company announcement, Longbridge Dolphin Research
[3] Cash flow: In 2021, the company bid farewell to the situation of tight funds, and monetary funds have risen to a higher level, and have now entered a virtuous circle. In the first quarter of 2022, the company's cash flow from operating activities fell a lot compared with the fourth quarter, but the main seasonal factors were disturbed, and the company often paid more cash in the first quarter to lock in the supply of upstream raw materials.
In addition, the company has repaid 7.2 billion yuan of liabilities, with 42.2 billion yuan of monetary funds in hand at the end of the first quarter, with abundant cash flow, and the rise of the automotive business is fundamentally improving a series of problems, including cash flow.
Data source: company announcement, Longbridge Dolphin Research
Data source: company announcement, Longbridge Dolphin Research
Longbridge Dolphin Jun historical article, can refer to:
July 23, 2021, Company Depth, "BYD: The Most Battery-Making Oem"
August 10, 2021, Company Depth, "BYD: After the Surge, Wealth and Stability"
On August 28, 2021, the financial report commented, "BYD: The performance has not fulfilled the imagination, and the investment logic has been discounted"
On October 28, 2021, the financial report commented, "Everything outside the sales volume is virtual, BYD is almost on fire"
March 30, 2022, earnings report review, "'Torn' BYD: Selling Cars Is Easy to Make Money"
March 30, 2022, conference minutes, "Black technology helps product upgrades, BYD's sales in 2022 are still strong (conference minutes)"