After the power plant was cut off, BYD had to fight a hard battle

Reporter Yan Liting

Edited by Gao Yulei

On the 25th day of the announcement of a total fuel outage, BYD handed over the last quarterly report of the fuel car era.

On the evening of April 27, BYD announced its performance report for the first quarter of 2022. According to the financial report data, in Q1 2022, BYD's total revenue was 66.83 billion yuan, an increase of 63% year-on-year. Attributable net profit was 810 million yuan, an increase of 240.6% year-on-year, after BYD's performance guidelines were 650 million yuan to 950 million yuan in single-quarter net profit, an increase of 174% to 300% year-on-year.

Overall, BYD achieved the expected high growth, and the two key messages hidden behind this growth trend are 1. From mobile phones to cars, BYD's growth momentum has switched. 2. Resisting the upstream pressure, BYD's profitability is stabilizing and rebounding.

Behind the 63% growth: electric vehicles take off smartphones peak

From the perspective of revenue structure, BYD's main business has three categories: 1. automobiles and related products; 2. mobile phone components, assembly and other products; 3. rechargeable batteries and photovoltaics. In 2021, the revenue of these three will account for 51.9%, 40.5%, and 7.3%, respectively.

In Q1 2022, BYD's auto business is still riding the dust, and the sales volume and market share of new energy vehicles continue to rise. During the reporting period, BYD's sales of new energy vehicles reached 286,000 units, once again setting a record high, according to data from the Association of Passenger Vehicles, BYD's share in the new energy passenger car market has reached 26.7%, ranking first for four consecutive quarters.

In addition, BYD has completely stopped producing fuel vehicles since March, but before that, BYD's fuel vehicle sales have been sluggish for many years. In Q1 2022, BYD's fuel vehicle sales were 5,049 units, down 89.8% year-on-year. In contrast, BYD has made great progress in the new energy market under the support of the two technical routes of DM plug-in hybrid and EV pure electricity.

In Q1 2022, BYD's plug-in hybrid passenger car sales reached 141,500 units, up 857% year-on-year, and sales of pure electric passenger cars reached 143,200 units, up 271% year-on-year. From the perspective of models, BYD has two main forces, the main young marine series and the main high-end Dynasty series, in April, the blockbuster model Han revised version of the listing only half a month to win 120,000 orders.

In 2022, BYD expects to sell 1.5 million vehicles, and in Q1 20221, the total sales volume will be 291,000 units, completing about 20%, but compared with the sales level, today, IT is more tested by production capacity. According to the information revealed by the management at the April annual report analysis meeting, BYD's current cumulative undelivered orders have reached 500,000 units, and it is still increasing month by month.

In 2021, in order to enlarge production capacity, IND in addition to crazy expansion and reconstruction, but also continue to buy and buy, and even, there is news that the oil cut is actually to free up production capacity for trams. Up to now, BYD has 9 vehicle bases, after all put into production, the total production capacity will reach 3.55 million units, in the second half of 2022, will be BYD's production capacity release period, is expected to reach 3.05 million vehicles per year.

In stark contrast to the new energy vehicle business is the mobile phone business line. As the mainstay of BYD's entire market, the mobile phone business has continued to slump in recent years, and the overall performance in 2021 has not met expectations, and the net profit attributable to the mother fell 57.6% year-on-year to 2.31 billion yuan.

According to the latest data released by BYD Electronics, in Q1 2022, mobile phone components and assembly business contributed 20.93 billion yuan in revenue, an increase of 5.2% year-on-year. For the weakness of the business, BYD has pointed out the reasons in the previously disclosed performance forecast.

First of all, the background is the slowdown in the growth of global smartphones. According to IDC data, global smartphone shipments in 2021 increased by 5.7% year-on-year to 1.35 billion units, an overall slowdown from the growth rate of 19.4% in the first half of the year, and the decline in the proportion of demand for high-end Android models and the tight supply of chips, BYD is facing the problem of insufficient production capacity of large customers.

Secondly, affected by the weak downstream demand for mobile phones, the capacity utilization rate of mobile phone business lines was originally low, and the impact of the epidemic was even worse. According to BYD's disclosure, due to the escalation of the epidemic prevention and control in Xi'an, Shenzhen, Huizhou and other major production bases, BYD's production and operation, employee resumption and recruitment, raw material supply and logistics have been affected.

As the third pillar of the battery and photovoltaic business, from January to March 2022, the total installed capacity of BYD power batteries and energy storage batteries was 4.77GWh, 4.615GWh and 5.353 GWh, respectively, and the cumulative installed capacity in the first quarter reached 14.738 GWh.

Not only that, BYD is still expanding its capacity, and its power battery production bases in Xiangyang and Changchun have begun construction. According to the financial report, as of the end of the Q1 quarter of 2022, BYD's construction projects reached 27.96 billion yuan, an increase of 37.9% year-on-year.

In addition, as the battery and automobile business continues to expand production, BYD is also accelerating the upstream raw material layout. On April 19, BYD, together with NINGD Times, Wending Investment and Kunlun Capital, injected 3 billion yuan into lithium battery giant Shanshan, of which BYD invested 150 million yuan.

"Banknote capacity" improved BYD's net income in a single quarter was 800 million

Driven by new energy vehicles, BYD has also re-embarked on the upward channel of profit repair.

According to the data, in Q1 2022, compared with the total revenue of 66.83 billion yuan, BYD recorded a gross profit of 8.29 billion yuan and a gross profit margin of 12.4%, although it is far from the gross profit level of 17.8% in 2020, but compared with the gross profit margin of 11.18% in 2021, it has been greatly improved.

However, it should be pointed out that the upstream cost pressure is still there, in Q1 2022, BYD's revenue cost increased by 63.4% year-on-year, and overall it is still higher than the revenue growth rate of 63%, which also led to BYD's gross profit margin falling slightly by 0.7% compared with the previous quarter.

Public data show that affected by the improvement of the prosperity of the new energy industry, as the core raw material of power batteries, the transaction prices of commodities such as lithium, nickel, and cobalt have continued to rise in the past few years, among which the price of battery-grade lithium carbonate has risen from 50,000 yuan / ton at the end of 2020 to about 480,000 yuan / ton, and even once exceeded the historical high of 510,000 yuan / ton in Q1 in 2022.

This is a lot of pressure for BYD, which makes batteries and cars. In 2021, affected by the price increase of upstream raw materials, the gross profit margin of BYD's three main businesses has declined to varying degrees in the automobile, mobile phone and photovoltaic sectors. Among them, the gross profit margin of the photovoltaic business directly decreased by 8.2 percentage points year-on-year to 11.9%, and the gross profit margin of the automobile business decreased by 7.8 percentage points year-on-year to 11.2%.

In 2022, the mobile phone business with lower gross profit margins continued to pull the crotch, which undoubtedly dragged down BYD's overall profitability. The data shows that in Q1 2022, the gross profit margin of the mobile phone business line decreased by 15 percentage points year-on-year to 5.5% on the basis of a 5.2% year-on-year decline in revenue.

At the same time, the impact of the decline in domestic new energy subsidies is also gradually reflected in BYD's financial report. In Q1 2022, BYD's other income related to government subsidies totaled 204 million yuan, compared with 442 million yuan in the previous year, a year-on-year decrease of 53.7%.

In the face of the dual pressure of upstream price increases and subsidy declines, BYD still shows excellent operating standards. In Q1 2022, BYD's operating expenses were 6 billion yuan and the operating rate was 8.9%, down 1.4 percentage points year-on-year. Among them, in addition to the increase in R&D rates, sales rates, management rates, and financial rates have declined to varying degrees, and the operational capacity can be seen.

In Q1 2022, BYD achieved a net profit attributable to the mother of 810 million yuan, an increase of 240.6% year-on-year, and a non-net profit attributable to the mother of 510 million yuan, an increase of 729.4% year-on-year, in addition to the improvement of BYD's platform operation capabilities, which is also largely due to the outbreak of the automobile business.

According to the calculation of CITIC Securities, in Q1 2022, BYD's total sales volume of automobiles is 291,000, if the profit of 120 million yuan of mobile phone business line is removed, the photovoltaic business is calculated to be clear, the deducted non-net profit of the automobile business is 400 million yuan, and the corresponding net profit of bicycles will reach 1356 yuan.

Among them, the price increase is undoubtedly also a very important factor. In Q1 2022, BYD has carried out two rounds of price adjustments, one on January 22, the price of new energy models increased by 1,000 to 7,000 yuan, and once on March 15, the price of new energy passenger vehicles was raised by 3,000 to 6,000 yuan. Recently, it is reported that BYD plans to carry out a new round of price adjustment for online ride-hailing cars.

Even so, compared with Tesla's profitability, BYD, as a domestic leader, still has a big gap. The latter's net profit for the Q1 quarter of 2022 was $3.3 billion, corresponding to a single quarterly delivery of 310,000 units, according to which the bicycle profit was more than $10,000.

To this end, BYD has also been continuously developing high-end models in recent years. In addition to the Ocean series and dynasty series widely distributed in the Red Sea at a price of 100,000 to 300,000, BYD and Daimler have jointly created a new brand Denza Automobile, aiming at the price band of 300,000 to 500,000, in addition, for the price band of 500,000 to 1 million, BYD will also launch an independent high-end brand, positioning hardcore off-road.

Among them, in December 2021, BYD and Daimler changed the equity of Denza Automobile, and now, the shareholding ratio of the two has been converted from 50:50 to 90:10, according to BYD, denza will carry out brand upgrades and a new MVP model in the near future.

However, for BYD, like nearly 20 years of electrification, high-end is also a long-term practice, and now, it has just started.