Author | Jia Weizhong
Source | Car selection network
In late April, when FAW and SAIC resumed work and production in an orderly manner, GAC Honda and GAC Toyota sent news of suspension of production. According to the 2021 financial report, the net cash of Geely, Great Wall and BYD reached the highest level in history, while the cash balance of GAC Group at the end of the period fell to the lowest value in the past five years.
This year, the Russian-Ukrainian war has promoted the rise in commodity prices, while the domestic epidemic has risen in some areas, which will be a major test for the development of Chinese brands and new energy vehicle brands under GAC Group.
GAC ceased production
Recently, some media reported that "in Shanghai and Changchun, where there is 'silence', automobile-related enterprises have begun to resume work and production in an orderly manner. However, the news from the GAC Group has brought up the heart that people have just put down.
China News Network reported: "On April 21, the reporter learned from the online media briefing of the Guangzhou Municipal Bureau of Industry and Information Technology that the epidemic situation in the mainland and the rise in raw material prices had a significant impact on Guangzhou's industrial production, and some major vehicle production enterprises such as Gazc Honda, GAC Toyota, and Dongfeng Nissan stopped production and semi-production. ”
At the meeting, the relevant person in charge of GAC Group introduced: "Since March, shanghai, Jiangsu, Zhejiang and Guangdong have successively seen local infection cases, resulting in the suspension of work and production of many parts suppliers and the suspension of sales stores, which has brought great challenges to the production and operation of GAC Group and its investment enterprises. ”
Judging from the market performance in the first quarter, the sales growth rate of the four main enterprises under GAC Group - GAC Honda, GAC Toyota, GAC Trumpchi and GAC New Energy - is more than double digits, which is significantly better than the industry average. So, can the good performance of GAC Group in the first quarter alleviate the cash flow pressure last year?
Five-year minimum
Judging from the 2021 financial report recently released by GAC Group, although the revenue and profit double growth, the cash balance at the end of the period is the lowest value in the past five years.
According to the 2021 annual report of GAC Group, "The group achieved a total operating income of 75.676 billion yuan for the whole year, up 19.82% year-on-year. The net profit attributable to shareholders of listed companies was 7.335 billion yuan, up 22.95% year-on-year. Net profit after deduction of non-net profit was 5.977 billion yuan, up 24.33% year-on-year. At the same time, as of December 31, 2021, GAC Group's cash and cash equivalents were approximately RMB22.34 billion, an increase of -15.03% year-on-year. ”
Looking at the financial report of the past five years, the balance of cash and cash equivalents at the end of the period of GAC Group showed a decreasing trend year by year, with a decrease of 24.97 billion yuan in 2021 compared with 2017, a shrinkage of more than half. In contrast, BYD, as a private enterprise, at the end of 2021, the monetary funds were about 50.46 billion yuan, an increase of 349% year-on-year; the balance of cash and cash equivalents at the end of the Great Wall was 27.91 billion yuan, an increase of 105.33% year-on-year; Geely's total cash reached 28 billion yuan, a record high.
Geely, Great Wall, BYD and other private vehicle manufacturing enterprises have increased in total cash, why has the cash of GAC Group, a state-owned enterprise, shrunk? An important issue reflected in the Group's earnings report is that operating cash flow has been negative for many years and has been expanding year by year.
According to the financial report: "Since 2018, the net cash flow generated by gac group operating activities has been negative (-1.27 billion yuan in the current year). Although it has improved significantly in 2019, it is still -380 million yuan. It will be expanded to -2.89 billion yuan in 2020 and to -5.59 billion yuan in 2021. ”
As for the reasons for the expansion of operating cash flow in 2021, the explanation given in the financial report of GAC Group is: "The net deposits of non-consolidated enterprises in GAC Finance decreased year-on-year, and the increase in the purchase of goods for financial leasing business was a combination of the results." ”
As for the reason for the expansion of operating cash flow in 2021, some media explained: "Due to the increase in inventory and accounts receivable, it eventually led to a significant decrease in cash flow. ”
On the whole, even if the cash balance of GAC Group, as a state-owned enterprise, falls to the lowest level in five years, it is also comparable to the historical best level of private enterprises such as Geely and Great Wall, but the trend of the advanced level of GAC Group in the past five years will make the development of GAC Trumpchi and GAC Eian brands face a severe test.
Put to the test
Whether looking at the first quarter of this year or looking back at last year's performance, within the GAC Group, the new energy vehicle brand - Aian is the fastest growing rate. From the perspective of corporate development strategy, GAC Group's intention to rely on the development of new energy vehicles to drive the comprehensive development of Chinese brands is very clear.
Last year, GAC Group launched the "GLASS Green Net Plan", which aims to achieve carbon neutrality of the entire life cycle of its products by 2050. In 2025, the sales volume of independent brand new energy vehicles will account for 50%, and in 2030, new energy vehicles will account for 50%.
Objectively speaking, in the case of huge investment in the development of intelligent electrification of automobiles, coupled with the gross profit margin of GAC Group is only 5.15%, there is a huge gap with Geely (gross profit margin of 17.1%) and Great Wall (gross profit margin of 16.1%), and the grand goal of the development of new energy vehicles depends more on the profits contributed by its foreign brands to achieve. According to the 2021 financial report, "GAC Group's investment income from associates and joint ventures was 11.403 billion yuan, an increase of 19% year-on-year." ”
Therefore, although gak trumpchi sales increased by 21.80% in the first quarter, the growth rate of GAC Aean was as high as 154.85%, which was better than the industry average. However, GAC Group's operating cash flow has been negative for four consecutive years, and the decline has shown a trend of expanding year by year, the cash balance at the end of last year fell to the lowest in the past five years, and this year it is facing huge pressure on the decline of subsidies for new energy vehicles, rising costs and so on... Affected by the epidemic this time, GUANGC Honda and GAC Toyota have stopped production of some production lines and semi-suspended production, and the development of GAC Group's Chinese brands this year may face major challenges.
(Image source: Internet)