On April 29, Xiaokang Co., Ltd. (601127.SH) announced the 2021 and 2022 first quarter performance reports, as an important value embodiment of China's auto market in 2021, the report has attracted widespread attention from the market as soon as it was issued.
For the target of this new energy vehicle, Huawei automobile and many other popular concepts, investors are more looking forward to the dynamics and results of the strategic transformation of Xiaokang shares, including the technology and product adaptation of the two after holding hands with Huawei, and will use this as the basis for continued investment.
First, the revenue returned to growth, and the strategic loss was generally controllable
Judging from the performance data that has been made public, the revenue of Xiaokang shares will return to the growth track in 2021. During the year, the company's main business income was 16.718 billion yuan, an increase of 16.89% year-on-year, and the company's new energy vehicle sales maintained a doubling growth, especially in the case of high-end new energy vehicles began to exert strength, the new energy business revenue covered a slight decline in vehicle sales.
In addition, according to the official production and sales data, the production and sales of new energy vehicles in the first three months of 2022 are more prosperous than before. During the period, the cumulative production and sales of new energy vehicles of the company were 17391 units and 14200 units, respectively, with a year-on-year growth rate of 296.87% and 207.43% respectively. Among them, the main brand Xilisi produced 3465 units in March, an increase of 1667.86% year-on-year, and sales reached 3160 units, a year-on-year surge of 1310.71%, and the monthly sales volume was close to 40% of the total sales of Xilis in 2021.
The eye-catching performance of the new energy business formed a strong support for the company's first quarter performance, and the revenue of Xiaokang shares in the first quarter of 2022 was 5.131 billion yuan, a year-on-year increase of 56.03%, laying a good foundation for the steady growth of the annual performance.
In terms of profits, although the company still has strategic losses in 2021, it is not surprising for Xiaokang shares, which are in a critical stage of transformation.
On the one hand, in addition to luxury brands, in recent years, the consumption of various types of traditional fuel vehicles has shown a rapid downward trend, especially the rise in raw material prices and the lack of "core" dilemma, so that the main engine factory gives priority to the supply of more promising new energy models, further increasing the pressure on the traditional fuel vehicle market. According to the data of the Association of Automobile Associations, the traditional fuel vehicle market for passenger cars will decline by 8%, 8% and 6% respectively from 2019 to 2021, and the traditional fuel vehicle business of Xiaokang Shares will be under pressure in the above context. In fact, it is precisely because of the foresight of the future trend of traditional fuel vehicles that Xiaokang shares are earlier and more determined than other similar companies to move towards the direction of new energy.
On the other hand, the market generally expects new energy vehicles to maintain rapid growth, but the ability to burn money on the new energy vehicle track is also obvious to all. Whether it is the 20 billion car-making threshold proposed by the head of Weilai before, or the 100 billion-billion-yuan car-making plan of "recruits" Xiaomi, or Tesla's 16-year-long profitability before and after Tesla, all illustrate the same fact, and the construction of new energy vehicles should be prepared for large-scale investment in the early stage.
Compared with the annual losses of billions of new entrants who are truly "self-made", Xiaokang Shares, which has a certain industrial chain foundation and technical reserves, has only lost 940 million yuan, 1.2 billion yuan and 1.4 billion yuan in its new energy automobile business in the past three years, which is still within a reasonable and controllable range.
According to Xiaokang Shares, the company's construction costs in the fields of new energy vehicle sales, research and development, marketing channels and other fields will continue to increase in 2021. We can evaluate the company's new energy vehicle sales, product development, supply chain assurance and other dimensions.
Second, the product strength of new energy vehicles has been comprehensively improved, and huawei has cooperated with Huawei to create a diversified product matrix
According to public data, in 2021, the output of new energy vehicles of Xiaokang Co., Ltd. was 41,701 units, an increase of 115.43% year-on-year; sales volume was 41,440 units, an increase of 104.39% year-on-year, showing a strong growth momentum. Among them, the company cooperated with Huawei to create a cross-border work between vehicle companies and ICT companies, Cyrus SF5, once launched, sales soared, although in the chip problem and more electronic materials from the United States under the influence, Cyrus SF5 annual sales were suppressed at about 8100 vehicles, but compared with 2020 still achieved 677% growth.
With the cooperation with Huawei gradually entering a better state, the pace of new car research and development of Xiaokang Co., Ltd. has accelerated significantly, and in 2021, the company has newly launched a high-end smart car brand - AITO, and the first intelligent luxury electric drive SUV model AITO Q&I M5. Compared with the Xilix SF5, the cooperation between Xiaokang and Huawei is more in-depth in the M5 product that has both a sense of sportiness and a sense of stability in the SUV. The new car is based on the Xelis pure electric drive extended range platform (DE-i), equipped with Huawei Hongmeng system, with the supply chain advantages of Xiaokang shares, and Huawei's channel advantages and brand prestige, only three months of Q&I M5 has achieved batch delivery, and the complementary advantages of the two sides have been transformed into more powerful comprehensive strength.
Through the run-in of the two products, the cooperation method between Xiaokang Co., Ltd. and Huawei is clearly defined as follows: Xiaokang Co., Ltd. is responsible for research and development, manufacturing, delivery, service, and creating a user experience throughout the life cycle, and Huawei is deeply involved in product definition, quality control, and channel sales. The ability of the two sides to continue to cooperate and quickly launch new models also proves the high adaptability of the two.
In fact, while seeking external cooperation, in order to meet the increasingly diversified consumer needs of consumers, Xiaokang shares have also formulated a more clear new product plan. It is expected that in 2022, the company will launch a medium and large electric SUV, and in 2023, it will launch a full-size electric SUV, and the above two models will have two versions of range extender and pure electric at the same time, continuing to enhance the market discourse. In addition, in 2023, Xiaokang will also launch a compact pure electric SUV to adapt to a wider range of travel scenarios.
Behind the fast-paced new product iteration plan of Xiaokang shares, it is actually a manifestation of technical strength and supply chain capabilities. As an early company to pay attention to the potential of the new energy track, Xiaokang Co., Ltd. is the ninth domestic oem to obtain the "double certification" new energy production qualification of the Ministry of Industry and Information Technology and the National Development and Reform Commission, and has carried out active technical reserves. Specifically, Xiaokang shares will invest more than 10% of sales revenue into technology research and development every year, cultivate and form core technologies such as electronic control and electric drive with independent intellectual property rights, as well as intelligent range extended range technology in line with China's national conditions, at present, the company reserves nearly 3,000 core technology patents, of which 157 are invention patents, in the field of new energy, the company continues its down-to-earth pragmatic style.
At the level of ensuring production and delivery, on the one hand, the company signed a long-term cooperation agreement with supply chain enterprises to ensure the stable supply of raw materials. For example, Xiaokang has signed a 5-year battery supply agreement with CATL, solving the worries of building high-end intelligent electric vehicles. On the other hand, the company has laid out intelligent manufacturing factories in many places, and its Xilisi Liangjiang Intelligent Factory is designed in accordance with Industry 4.0 intelligent manufacturing standards, with a design capacity of 100,000 vehicles / year and more than 1,000 robots. With the help of the "digital brain" of the intelligent collaboration system, the factory has fully automated the key manufacturing process, with an intelligent rate of more than 90%, and has been prepared for fast-paced high-quality production after the training of various links in the early stage. In addition, in 2022, the Cilis Phoenix Smart Factory is also expected to be put into operation, adding another 100,000 production capacity to the company.
Even with Huawei's channel support, Xiaokang is also actively adapting to changes in marketing trends, gradually building more than 500 experience centers and 150 user centers nationwide, and it is expected that in 2022, AITO will also achieve a total of 1,000 experience centers and about 300 user centers, through online digital marketing and powerful offline store resources, more truly and extensively reach consumers, and continuously improve user experience.
From firmly seeking external top technical cooperation with an open and inclusive mindset, to the in-depth changes at different levels such as its own technology, production capacity, and user experience, Xiaokang Shares, which is not confused, is rapidly adapting to the new consumer market and spending every penny on creating competitive high-quality electric vehicle products with consumers as the core. Through the company's various business layouts and brand tone improvement, the market should also be able to clearly perceive the desire and determination of Xiaokang to stand in the center of the domestic automobile market.
Third, in the innovation and entrepreneurship of continuous successful transformation, "hockey strategy" reveals the company's growth connotation
Companies that truly go through the cycle never expect it once and for all, but are more aware that only "change" is eternal. Looking back at the development history of Xiaokang in the past 40 years, it is a true portrayal of not being confined to the safety zone, continuing innovation and entrepreneurship, and then successfully transforming.
Xiaokang co., Ltd. started with the business of electrical springs and automotive springs, and took the lead in breaking the monopoly of foreign companies in the 1980s, and then Xiaokang Co., Ltd. seized the opportunity of the rise of the domestic automobile industry, extended its business to motorcycles, micro-vans and moped shock absorbers, and naturally stepped into the vehicle manufacturing industry. In 2003, Xiaokang co., Ltd. cooperated with Dongfeng Group to establish the first state-owned and private car enterprise in the domestic automotive industry, and thus created the top three brands of domestic mini cars - Dongfeng Xiaokang, and the market reputation can be compared with only Wuling Hongguang and Changan Star.
The success of the mini-car business directly sent Xiaokang shares to the A-share main board, and in 2016, Xiaokang shares ushered in 18 ups and downs as soon as they were listed, which is a veritable "popular fried chicken". After the successful listing, Xiaokang shares can temporarily enjoy the fruits of development, but they choose to march into the new energy field that was not conspicuous at the time, and make resources and technical reserves in advance. Finally, in 2021, with its technological and industrial advantages in the field of new energy vehicles, we established in-depth cooperation with Huawei, creating a good foundation for the next outbreak. Counting up, rushing to new energy can be regarded as the third venture of Xiaokang shares.
It must be admitted that it is difficult to maintain a sustainable foundation. Just think, if Xiaokang shares are content with the spring business, I am afraid that it has long been submerged in the vast sea of commerce, and why is it going side by side with China's first-class technology companies today?
The growth path of Xiaokang shares, which continues to be on the road of entrepreneurship, actually coincides with the "hockey strategy". In the book "Breaking Through the Dilemma of Reality: Trends, Endowments and Entrepreneurs' Grand Strategy", co-authored by three partners of McKinsey's strategic business, the specific practice and landing method of hockey strategy are summarized as: choosing to intervene in industries with super trends will drive enterprises to move up the right along the "economic profit curve". Because the profit curve of the new business is often like the racket part of the hockey club, it must go down before it goes up, hence the name. Studies have shown that extraordinary stocks, including Tenbegger (ten times bull stocks), have mostly adopted hockey strategies.
The downside of a hockey strategy is that to endure (at least in the short term) unattainable returns, the biggest cost is zeroing out efforts for the future, while losing short-term returns within reach. The advantage is that there is an opportunity to find new sources of profit growth and inject strong new vitality into the company. At the financial level, the company's revenue will usually remain stable and then accelerate, and a short-term increase in certain costs and expenses will slowly fall, resulting in profits that fall first and then rise sharply.
Before the performance officially enters the upward "club", the company's stock price will often experience a short-term downward "digging hole", which contains the best investment opportunities.
brief summary
Some people may worry that the success or failure of the strategy after the implementation of the strategy is unpredictable, but what is certain is that if a company remains indifferent under the rolling torrent of the times, it is doomed to gradually mediocrity and marginalization.
As far as Xiaokang shares are concerned, it is a company that has grown up in continuous innovation and entrepreneurship, and it is also constantly improving its winning rate in the new energy track. For example, breaking through market cognition and comprehensively betting on new energy, or holding hands with Huawei to strengthen the scientific and technological performance, scarcity attributes and even international vision of Huawei's products... These are the deep logic of why the stock price of Xiaokang shares can be ten times a year.
From another point of view, the financial model and valuation of the entrepreneurial Xiaokang shares are highly similar to those of the early Tesla, and now Tesla has opened a Double Double-Click on The double increase in performance and valuation, and the Xiaokang shares are also expected to go out of the same trajectory as the performance inflection point approaches.
At the recent investor relations event, Xiaokang made it clear that it "hopes to achieve the sales scale achieved by others in five or six years or even many years in two years." Judging from the various layouts of the company, this is obviously not an empty phrase. Coupled with Huawei's consumer business CEO and smart car solution BU CEO Yu Chengdong also said on different occasions that in 5 years to build the AITO brand into the global new energy brand TOP 3, it is foreseeable that under the continuous improvement of the external environment, the time required for the company's new energy business to make a profit will be greatly shortened, and the future of Xiaokang shares has become more and more sexy.