Changan Automobile's revenue in 2021 exceeded 100 billion, and the revenue growth rate slowed down in the first quarter of 2022

Economic Observation Network reporter Gao Feichang Recently, Changan Automobile announced its 2021 annual report and the first quarter report of 2022. According to the data, in 2021, Changan Automobile achieved operating income of 105.142 billion yuan, an increase of 24.33% year-on-year; net profit attributable to the mother of 3.552 billion yuan, an increase of 6.87% year-on-year; net profit after deduction of non-profit of 1.653 billion yuan, an increase of 150.85%.

Among them, changan automobile has hit a new high in the past five years, with operating income of 80.012 billion yuan, 66.298 billion yuan, 70.595 billion yuan and 84.566 billion yuan in 2017-2020, respectively. In contrast, in 2021, the revenue will exceed 100 billion, and Changan Automobile will "achieve a bumper harvest".

However, the first quarter report of 2022 shows that Changan Automobile achieved operating income of 34.576 billion yuan, an increase of 7.96% year-on-year. Although the absolute number of revenue still increased, and at the same time increased by 33.28% from the fourth quarter of last year, the growth rate fell sharply year-on-year. In the first quarter of 2021, its operating income was 332.027 billion yuan, an increase of 176.96% year-on-year. In addition, the revenue growth rate in the first quarter of this year is also lower than the revenue growth rate in 2021.

In terms of net profit, in the first quarter of 2022, Changan Automobile achieved a net profit attributable to the mother of 4.536 billion yuan, an increase of 431.45% year-on-year; the net profit after deduction of non-attributable to the mother is expected to be 2.270 billion yuan, an increase of 215.24% year-on-year.

Changan Automobile's revenue growth is mainly related to changes in automobile sales. In 2021, Changan Automobile's sales grew rapidly, with batch sales of 2.301 million units, an increase of 14.8% year-on-year, achieving stable growth for three consecutive years; the market share reached 8.8%, an increase of 0.8 percentage points year-on-year, ranking fourth in the industry. Among them, Changan's autonomous sector grew strongly, with Changan passenger car brand sales of 966,000 units, an increase of 20% year-on-year; Auchan brand scale returned to 200,000 units, an increase of 49% year-on-year; new energy vehicle sales exceeded 100,000 units for the first time, an increase of more than 200% year-on-year; overseas market wholesale sales of 104,000 units, an increase of 114%.

In terms of joint venture brands, benefiting from the improvement of product structure and sales volume, Changan Ford's operating income in 2021 reached 61.765 billion yuan and net profit of 2.2833 billion yuan; Changan Mazda's operating income in 2021 was 17.459 billion yuan and net profit was 859 million yuan.

In the first quarter of this year, according to the monthly data released by the Association of Automobile Manufacturers, Changan Automobile's overall sales in the first quarter were 650,000 units, an increase of 1.6% year-on-year; Changan's Chinese brand cars sold 529,000 units in the first quarter, an increase of 1.3%; in the first quarter sales statistics of Chinese brand passenger cars, Changan Automobile sold 375,000 units. Compared with the sales growth rate in 2021, the sales growth rate in the first quarter of this year is in a state of slowdown.

At the same time, Changan Automobile faced greater cash flow pressure in the first quarter of this year. According to the first quarter report of 2022, the net cash flow generated by Changan Automobile's operating activities was 769 million yuan, compared with 7.2336 billion yuan in the same period of 2021, a sharp contraction of about 90% year-on-year.

Changan Automobile pointed out the reasons for the pressure on operations in the first quarter of this year: in the first quarter of 2022, due to the global epidemic and external factors, there were sharp fluctuations in bulk raw materials and precious metals, resulting in an increase in the purchase price of related parts and raw materials of the company. The rise of new energy vehicle consumption has led to a sharp rise in the price of lithium hydroxide, electrolyte and other related raw materials, and the above factors have put the main engine factory under greater cost pressure. In addition, the epidemic in some areas in the first quarter had a greater impact on the production and operation of enterprises, and the epidemic led to limited production of some suppliers, logistics obstruction, and a shortage of parts such as enterprise chips, resulting in a certain degree of decline in enterprises.

In the face of difficulties such as the shortage of chips and other materials, Changan Automobile said that meeting the market demand is the priority, starting the company's high-level on-site squatting and grabbing mechanism, arranging for the company's leaders to ensure on-site office supply, and coordinating the shortage of chip supply. At the same time, we will actively carry out material reserves, quickly carry out chip replacement research and development work, and make every effort to minimize the impact of supply chain fluctuations on production.

From the perspective of business structure, Changan Automobile's independent fuel business and joint venture business have performed stably, but they still need to make up for their shortcomings in the field of new energy. According to the 2021 annual report, Chongqing Changan Automobile Technology Co., Ltd. (Changan New Energy) expanded its loss in 2021, with operating income of 5.631 billion yuan and net profit of -2.772 billion yuan. Changan Automobile pointed out that it was mainly due to the decline in new energy subsidies and the increase in sales resource investment, resulting in a decrease in net profit.

Regarding the development of new energy, Changan Automobile completed the brand echelon construction this year, and has launched a new high-end brand Avita, and recently released a new digital pure electric brand Changan Deep Blue. In the future, Changan will further optimize the brand strategy and positioning of UNI sequence, Changan passenger car, Auchan and Kaicheng, and comprehensively transform to electrification and electrification.

In terms of new energy products, changan automobile will launch 8 new energy products with high frequency this year, including C385, C673, Avita E11, LUMIN and UNI sequence hybrid models. By 2025, Changan will launch at least 26 new energy products.

It is worth mentioning that in 2022, Changan Automobile's net profit attributable to the mother increased significantly in the first quarter, an important reason is that its Avita Technology equity completed a capital increase and share expansion in the first quarter. Avita Technology Company changed from a holding subsidiary to an associated enterprise, which is no longer included in the scope of consolidated statements, and adopts the equity method for subsequent accounting. Based on Avita Technologies' assessment results as of March 11, 2022, the company's net profit for the first quarter of 2022 was increased by approximately $2.13 billion.

Despite the impact of external uncertainties, Changan Automobile is generally in the stage of steady operation compared with the past few years. In 2021, Changan Automobile's R&D investment increased by 24.3% year-on-year, of which new energy investment increased by 60% year-on-year, and software + intelligent investment increased by 89% year-on-year. At the same time, Changan Automobile implemented the equity incentive for core employees, covering more than 1,600 people, granting nearly 100 million shares of shares, and employees contributing nearly 700 million yuan, tying the interests of employees and the development of the company.

Changan Automobile has also set a grand goal, by 2025, the total sales volume will reach 4 million vehicles, of which 3 million are Changan brand vehicles, and new energy sales will reach 1.05 million vehicles, accounting for 35%; by 2030, Changan Automobile sales will reach 5.5 million vehicles, of which 4.5 million will be Changan brand, new energy sales will reach 2.7 million, accounting for 60%, and overseas sales will account for 30%; and Changan will achieve carbon peaking in 2027 and carbon neutrality in 2045.

In order to achieve its medium- and long-term goals, Changan Automobile said that it will take the new energy track as an opportunity to comprehensively accelerate its transformation into an intelligent and low-carbon travel technology company. By 2025, Changan is expected to invest more than 80 billion yuan in key areas such as new energy, intelligence, scientific and technological innovation, and digital transformation, and accelerate the construction of core capabilities in the field of transformation.