Cialis can't help himself: Huawei's "no car" hit the stock price and pushed new brands to get rid of dependence

Source: Time Weekly Author: Yang Lingling

Huawei partner Cialis (601127. SH), somewhat of a bit of a sadness that can't help but die.

On April 3, after Huawei released a series of news about not building cars, Cialis' stock price was hit. On the same day, Cialis opened down more than 5%, and as of the close, it was 36.13 yuan, down 4.54%, and the latest market value was 54.1 billion yuan.

In February, a news about "a large number of Huawei technicians withdrawing from Cialis" caused heated discussions, and Cialis' stock price also fell by 5%. Immediately, both Cialis and Huawei quickly responded that the news was fake.

On the afternoon of April 3, the Times reporter called the Cialis Securities Department as an investor, and the relevant staff frankly said that the stock price fluctuation that day may be related to Huawei's reiteration that it will not build cars and remove promotional materials containing the words "Huawei" and "HUAWEI" in stores.

However, the person said that there has been no change in the cooperation between Huawei and Cialis, and subsequent new cars are advancing in an orderly manner. "We do what we have to do and are still very confident in ourselves." The above-mentioned staff member said.

Source: Figureworm Creative

In the past two years, Cialis has relied on Huawei's rapid rise and become a dark horse in the new energy vehicle market, and Cialis has been ridiculed as "Huawei's asset-light car foundry", although Zhang Xinghai, chairman of Cialis Group, has repeatedly stressed that "we are not a foundry and do not do foundry".

Chen Hong, chairman of SAIC, previously said: "It is unacceptable for SAIC to cooperate with a third-party company such as Huawei for autonomous driving. In this way, it becomes the soul, and SAIC becomes the body. SAIC wants to take the soul into its own hands. ”

For car companies, cooperation with Huawei may lose its "soul" or even become a "foundry"; If you do not cooperate, you will not be able to leverage Huawei's brand effect to achieve a breakthrough in sales. How does Cialis break the game? Can it continue to create sales miracles in 2023?

Sales are up, profits are down

On April 2, Cialis announced that the Cialis brand sold a total of 3,679 vehicles in March, and a total of 11,674 cars were sold in the first quarter of this year, a year-on-year increase of 131.44%.

Previously, in 2022, AITO, a subsidiary of Cialis, took only 9 months from the launch of the product to the monthly risk volume (real sales) exceeding 10,000, making it the fastest new energy vehicle brand in China to break through (monthly) 10,000 risk volume.

In contrast, it took 24 months for Li Auto to achieve this goal, 34 months for Xpeng Motors, and 40 months for NIO.

At the same time, the production and sales express report shows that the production and sales volume of "Cialis Automobile" (including Qianjie series brands) in 2022 will be 83,701 units and 80,041 units, respectively, an increase of 660.37% and 626.39% year-on-year, making it the company's fastest growing brand. During the same period, the sales volume of other Cialis models fell by 41.29%, and the production also fell by 46.08%.

Source: Photo by a reporter from Time Weekly

However, soaring sales did not bring profits to Cialis, but some "loss money".

According to the performance forecast disclosed by Cialis, Cialis expects revenue of 33.5-35 billion yuan in 2022, a year-on-year increase of 100.38% to 109.36%; However, the net profit loss was 3.95 billion yuan to 3.5 billion yuan, down 116.57% to 91.90% year-on-year, the largest loss in history.

In this regard, Cialis said that in 2022, the price of raw materials such as chips and power batteries will rise sharply, resulting in an increase in production costs. Although the first three quarters of 2022 achieved continuous positive sales growth, due to the multi-point outbreak of the new crown epidemic, the flow of customers into stores and the development of marketing activities were affected, and many links such as supply, logistics and production were affected.

According to media reports, in Huawei's smart selection mode, the sharing ratio between Huawei and Cialis is 1:9. Of Huawei's 10% share, 8% is Huawei's channel marketing expenses, and 2% is technology licensing fees.

Taking the third quarter report of 2022 as an example, the sales expenses of Cialis in the first three quarters reached 3.083 billion yuan, the R&D investment was only 906 million yuan, and the sales expenses were 3.40 times the R&D expenses, while the R&D expenses of NIO, Xiaopeng and Ideal in the same period were 6.856 billion yuan, 3.985 billion yuan and 4.010 billion yuan respectively.

Cialis, which is mired in losses, is naturally difficult to obtain the recognition of the capital market. Since June 2022, Cialis' share price has fluctuated and fallen, from a peak of 90.5 yuan / share to 36.13 yuan / share on April 3, and the stock price has plummeted by 60% in less than a year, and the market value has shrunk by more than 80 billion yuan. As things stand, the downward trend doesn't seem to be over.

Can Huawei Dependency be solved?

Founded in 1986, Cialis, formerly known as Chongqing Ba County Phoenix Electric Spring Factory, after the expansion of spring business, in 1996 cut into the shock absorber market, and in 2003 established a joint venture with Dongfeng Company, officially entered the automobile industry.

In 2012, Cialis spun off the motorcycle shock absorber and motorcycle business, concentrated resources on micro-vehicles and micro-vehicle parts, established the New Energy Vehicle Research Institute in 2014, cut into the field of pure electric vehicles, and carried out the research and development of new energy vehicle related technologies and the layout of core three electric systems on a global scale.

At that time, the main new energy models of Cialis were Ruich EC series pure electric commercial vehicles, Dongfeng Fengguang, Dongfeng Xiaokang and other brands, because of the market popularity, sales exceeded one million in only 8 years, walking in the forefront of the mini vehicle industry, landed in the capital market in 2016, and listed on the main board of the Shanghai Stock Exchange.

The turning point occurred in 2019, when the first new energy model Cialis SF5 had to seek external cooperation due to slow delivery and dismal sales, and Huawei was also considering the layout of new energy vehicles.

In April 2021, Cialis announced that it had reached an in-depth cooperation with Huawei, and launched the AITO brand in December of the same year, and has launched three models: M5, M7, and M5EV.

In 2022, Zhang Xinghai will also change the name of the listed company from Xiaokang shares to Cialis. It can be seen that he attaches great importance to Cialis and its new energy vehicles.

Even though earnings were poor, Cialis was still motivated. The Zhang family, which is at the helm of Cialis, hopes to fight a turnaround battle by bringing about an increase in profits through "rising sales - increasing scale - diminishing marginal costs".

In 2023, the new energy vehicle market will usher in a key watershed: the growth rate will slow down and the market will become more rational; At the same time, the new drive accelerates the restructuring of the entire car market.

According to information released by the China Association of Automobile Manufacturers, from January to February this year, among the top ten domestic sales of domestic automobiles, only BYD's sales growth rate achieved positive growth, and other companies showed varying degrees of decline. When the subsidy policy withdrew and the vitality of terminal consumption has not fully recovered, the automotive industry has set off an unprecedented price war.

Source: Figureworm Creative

At the same time, while new energy vehicle companies have emphasized "full-stack self-research" and "high R&D investment", Cialis is increasing marketing expenses and reducing R&D expenses, so it is labeled as a "foundry" and "highly dependent on Huawei".

Cialis may also be aware of the dangers of this approach. On March 30, Cialis released a new new energy vehicle brand - Blue Electric, and the first hybrid model Blue Electric E5 was also launched on the same day, with a starting price of 139,900 yuan.

Cialis said that the model uses BYD (002594. SZ) Verdy Power Hybrid System, equipped with Huawei's Hi car vehicle system, but Blue Power is an independent brand and will build an independent sales network.

The above-mentioned person from the securities department told the Times reporter: "Blue power is another independent brand under Cialis, and it can be seen from the price that there is no competition with the world." ”