Wuling Hongguang, which has the first sales volume, cannot support SAIC's new energy dream

On May 5, SAIC Motor Corporation, the controlling shareholder of SAIC Motor Group, spent 311 million yuan to increase its holding of 19.035 million A-share shares of SAIC Motor Group.

This is only the first step in SAIC's plan to increase its shareholding, and within six months from May 5, 2022, SAIC plans to increase its stake in SAIC Group with its own funds, with an increase of 1.6 billion yuan to 3.2 billion yuan. Before the implementation of the shareholding increase plan, SAIC Motor Held SAIC Group shares accounted for 67.66% of the company's total share capital.

In September last year, SAIC Motor just said that it intends to invest 1.6-3 billion yuan to repurchase shares in the next 12 months, and the repurchase price will not exceed 28.91 yuan per share. Now that the repurchase has not been completed, the controlling shareholder has begun to increase its holdings again. Recently, SAIC Motor can be described as a continuous action of guarding the plate.

The repurchase of shares by listed companies is generally when the management feels that the company's stock price is seriously undervalued and buys back to increase investor confidence. Since the company announced the repurchase, SAIC's stock price has indeed rebounded, and after the announcement of the increase in holdings, SAIC Motor group also rose 4 points yesterday. But in the long run, the stimulus effect on stock prices is not large. SAIC's stock price fell from a high of 33 yuan in 2018 to 16 yuan today.

In recent years, the concept of new energy vehicles has been hot, and the stock prices of BYD and Great Wall have soared. BYD's stock price has doubled 4 times since the beginning of 2020, and the stock price of Great Wall Motors has also doubled, so why is SAIC Motor, which claims to be the first sales of new energy vehicles, so unsatisfactory?

01

Sales and revenue have declined year after year

According to the annual report data just released in April, SAIC Motor achieved a double increase in revenue and net profit in 2021, achieving revenue of 779.85 billion yuan, an increase of 5.1% year-on-year; Net profit was 24.53 billion yuan, an increase of 20.1% year-on-year.

Looking at sales, SAIC Motor's annual vehicle terminal retail sales reached 5.811 million units, an increase of 5.5% year-on-year, ranking first in the country for 16 consecutive years. Among them, new energy vehicles sold 733,000 units, an increase of 128.9% year-on-year, and the sales volume ranked first in the country and third in the world.

On the surface, the increase is really good, but this is based on the low base affected by the epidemic in 2020, if you exclude the data of 2020, directly compared with the pre-epidemic period, revenue and profit are not increasing but falling. SAIC's revenue scale in 2021 is lower than the same period in 2019, and it is nearly 100 billion yuan less than the same period in 2017.

In terms of net profit, it has not returned to pre-epidemic levels. The net profit attributable to the mother in 2021 is about 1.1 billion less than in 2019, and 10 billion less than in 2018 and 2017!

It is clear that SAIC's performance in 2021 seems to have risen sharply, but in fact it has not returned to pre-epidemic levels, and there is a big gap between the performance in 2018 and the peak of the stock price.

But the skinny camel is bigger than the horse, and the total revenue looks like BYD makes money; Vehicle sales have remained the first in the country for 16 consecutive years.

So why is the stock price and market value inferior to BYD?

02

The old era of fuel vehicles VS the new era of new energy

The times are different, the stories are different.

SAIC Motor is the king of the era of fuel vehicles, with joint venture brands and independent brands. The joint venture brand is its cash cow, and the existence of Volkswagen and GM has made SAIC group profitable for many years, and in recent years, its own brand Roewe has also performed well.

However, the general trend of replacing fuel vehicles with new energy vehicles is beyond doubt: global automakers are all working in the direction of new energy vehicles, new forces in new energy vehicles are rising, and BYD has stopped the production of fuel vehicles in March this year.

Fuel vehicles are gradually lonely, new energy vehicles are the future, who can occupy the high ground on the track of new energy vehicles, who is the king of the future.

The stock market looks at the future, if you can't make achievements in the new era of new energy, the decline in stock prices is naturally unstoppable.

For a long time, SAIC Motor's sales volume has mainly relied on SAIC Volkswagen, SAIC-GM, SAIC-GM and SAIC-GM Wuling, and its net profit mainly depends on the two joint ventures of SAIC Volkswagen and SAIC-GM.

After 2018, the main reason for the year-on-year decline in the Group's performance is also the decline in fuel vehicle sales: the production and sales volume of SAIC Volkswagen and SAIC-GM, which contribute the most revenue and profit to SAIC, have declined to varying degrees from 2019 to 2021.

In 2021, SAIC Volkswagen's sales fell by 17.5% year-on-year, and SAIC-GM's sales fell by 9% year-on-year.

Of course, the current shortage of automotive chips in the world is part of the reason for the decline in SAIC's production and sales, but it cannot be used as an excuse. Moreover, there is still a risk of uncertainty in the recovery of global chip supply, which will continue to have a lasting impact on SAIC.

In 2021, SAIC-GM-Wuling Automobile sold more than 1.66 million vehicles, and SAIC-GM-Wuling Automobile has both fuel vehicles and new energy vehicles.

SAIC Motor announced that in 2021, the sales of new energy vehicles will be 733,000 units, an increase of 128.9% year-on-year, ranking first in China and the top three in the world, and the vast majority of this first sales volume is contributed by small new energy vehicles such as Hongguang MINIEV, Wuling NanoEV and KiWi EV under SAIC-GM Wuling, of which Wuling Hongguang MINIEV single-handedly picked the new energy beam and sold about 420,000 units.

However, SAIC-GM-Wuling focuses on the low-end market, and the first-selling Wuling Hongguang MINIEV is only priced at 28,800-43,600, which means that it sells more but does not earn much. According to data, Wuling Hongguang knows that the cost of parts is 15,000-23,000 yuan, if you add research and development, management, sales and other expenses, a simple calculation will know that basically can not make any money.

SAIC's 2021 annual report also confirms that it is indeed not profitable:

SAIC-GM-Wuling only contributed 78.9 billion yuan of revenue to the group, but the profit was only 1.1 billion yuan; while SAIC Volkswagen and SAIC-GM contributed more than 17 billion yuan of profits, it can be seen that the performance of SAIC Volkswagen and SAIC-GM is still driven by saicuté Volkswagen and SAIC-GM, two traditional fuel vehicle brands, and new energy vehicles only see sales without money, which is a huge contrast with the data of SAIC new energy vehicle sales.

03

Can independent brands be the savior

SAIC Motor actually began to enter the new energy vehicle track as early as 2012, and SAIC Volkswagen, SAIC-GM-Wuling, SAIC Passenger Vehicles and SAIC Maxus all carried out new energy vehicle business.

But from the perspective of sales, over the years, its biggest splash in the new energy vehicle market is the Wuling Hongguang brand, covering the low-end market.

In the mid-to-high-end and high-end new energy vehicle market, joint venture brands such as SAIC Volkswagen and independent brands such as Roewe are also trying.

From the perspective of R&D investment, SAIC Motor's R&D scale has ranked first in domestic OEMs for many years, and its R&D investment will reach 19.3 billion yuan in 2021. The money was spent, but SAIC motor group achieved little success in the field of mid-to-high-end new energy vehicles.

In the face of the general trend of new energy vehicles, improving the high-end layout of new energy vehicles and creating a new engine for transformation is an urgent matter for SAIC, in fact, SAIC is also accelerating this layout.

In January 2021, SAIC Motor, together with Shanghai Pudong New Area and Alibaba, invested 10 billion yuan to build a high-end intelligent pure electric vehicle project Zhiji Automobile, which has launched the star model Zhiji L7, which is expected to be mass-produced this year; The Zhiji brand is positioned as a high-end + luxury for the market of more than 300,000 yuan.

In October 2021, Feifan Automobile was established to separate the R brand originally belonging to saic motor passenger car branch, and to be operated by Feifan as an asset-light party. Extraordinary Automobile mainly focuses on high-end new energy intelligent models with a price of 200,000-400,000. As of March this year, Feifan Automobile Experience Center has reached 188 in the country.

So far, SAIC Motor has laid out the two major independent brands of Zhiji Automobile and Feifan Automobile in terms of impacting the high-end of new energy.

But it's not just SAIC that's accelerating on this track, and competitors seem to be running faster. The high-end market is led by BYD and Tesla, and the new car-making forces are not far behind.

In particular, BYD,000 sales in April this year bucked the current and outperformed the industry: new energy passenger car sales reached 105,500 units, an increase of 321.33% year-on-year, significantly surpassing the market; the cumulative sales volume from January to April has reached 390,200 units, if you work hard, it is estimated that the first half of the year will be able to surpass the sales of 590,000 units last year.

Can the two independent brands of Zhiji and Extraordinary help SAIC to occupy a place in the middle and high-end new energy vehicles? The earliest will not be known until the new model is on the market.

However, this year's unexpected Shanghai epidemic has led to production restrictions, and SAIC Motor's plan to rely on Feifan and Zhiji Heavy Tree Automobile's prestige in the field of new energy vehicles has to be postponed again, and it is not known whether it can be realized this year.

But regardless of success or not, new energy vehicles are the fortress that SAIC Must Take down, otherwise the former king may be a hero in the future, in the era of rapid technological change, there are not a few giants that are slapped on the beach by the back wave, such as Kodak, such as Nokia.

From the perspective of SAIC's real money and silver investment and trends, it is naturally not willing to be a hero of the past, but the blue ocean of new energy is vast but also crowded, and it is not easy for the giant ship to turn, and if SAIC wants to become the hegemon of this sea, it also needs to increase the horsepower.

The future is difficult, and the task is heavy and the road is long.