Produced | Visitor travel
Author | Liao Hongjie
Edit | Egg total
American editor | Qianqian
Audit | Ode
On the evening of April 11, as soon as the news of Buffett reducing his holdings in BYD again came out, BYD shares (01211. HK) shares fell in response, falling 2.28% in a single day, and BYD's shares closed at HK$222.6 per share on the day.
This is the 10th time that Buffett's Berkshire Hathaway has announced the reduction of BYD's H-share shares, as an international capital celebrity who continues to be optimistic and invested in BYD in the early years, Buffett's every position adjustment to BYD can trigger a lot of market reaction.
According to data disclosed by the Hong Kong Stock Exchange on the evening of April 11, on March 31, BYD shares were again reduced by 2.4805 million shares by Buffett's Berkshire Hathaway, with an average price of HK$217.67 per share, with a total value of about HK$540 million, and the shareholding ratio fell from 19.92% on August 24, 2022 (the first reduction) to 10.9% today.
In the past year, BYD has achieved good results, but why is it no longer favored by the capital giants? Although it has enjoyed the early dividends of the rise of the new energy vehicle track, how far is BYD from the real "lying earning"?
1. One year to stop selling fuel vehicles
April 2023 marks the first anniversary of BYD's suspension of sales of fuel vehicles.
In the past year, BYD has handed over a good report card: the 2022 annual report released on March 28 shows that BYD achieved revenue of 424.061 billion yuan in 2022, a year-on-year increase of 96.2%; Net profit after deduction of non-attributable parent reached 15.638 billion yuan, a year-on-year increase of more than 11 times.
Specifically, in the automobile sales business, in 2022, BYD has set annual sales targets of 1.5 million units and 1.8 million units, and exceeded the sales target. Data show that in 2022, BYD will achieve automobile sales of about 1.8025 million units, a year-on-year increase of 149.88%.
According to data from the China Association of Automobile Manufacturers, the market share of BYD's new energy vehicles in 2022 will reach 27%, a year-on-year increase of nearly 10 percentage points. At the same time, from the sales ranking of domestic automobile manufacturers in 2022 released by the Passenger Association of China, whether it is wholesale sales or retail sales, BYD has surpassed FAW-Volkswagen to top the list of domestic automobile manufacturers.
Since September 2022, BYD has separately listed sales figures for passenger car exports when announcing monthly production and sales data.
"Visitor Travel" noted that according to the 2022 financial report data, BYD's total exports in 2022 will be about 45,300 units, accounting for about 2.51% of the export volume.
Photo / BYD's 2022 annual report
For a new energy vehicle leader like BYD, which sells 1,802,500 units a year, the export volume of 45,300 units is obviously not enough.
Especially in the past 2022, after BYD stopped selling fuel vehicles in a high-profile manner, it spent billions to purchase a fleet of ships going to sea. At the end of the year, with the help of the Paris International Motor Show, it entered the overseas market with a high profile of Porsche's product pricing, and even cooperated with Shell to improve the charging infrastructure in the European market.
"Visitor Travel" found from the data of the China Association of Automobile Manufacturers that BYD, which has a high profile going overseas, has not even been able to rank among the top 10 vehicle exports in 2022.
Photo / China Association of Automobile Manufacturers
If we look at it from another perspective, the annual export sales of 42,300 units are already a very good result in terms of new automakers or new brands of traditional automakers, but as BYD, which has an absolute market advantage, the 2.51% export ratio is indeed a bit embarrassing.
If 2022 is BYD's first year to go overseas, then 2023 should be a year of rapid growth for climbing. According to the Q1 data in 2023, BYD's passenger car sales in the first quarter were about 547,900 units, of which about 38,700 units were exported, accounting for only 7.07% of exports.
On the other hand, the performance of exports is not only in the sales data, but also in combination with the selling price of the product.
According to public information, BYD's main model in overseas markets is ATTO 3 (domestic yuan Plus), although the overseas price is significantly higher than the domestic price, but it is undeniable that the current export growth is still following the "low-end impulse" strategy without brand premium.
In this way, the export strategy with only low price advantages may not help the profit growth of enterprises too much.
However, it is not only export models that are "not very profitable", but also slightly "tired" Ocean Net models.
2. A slightly "tired" marine network
On April 7, BYD Seal models started a new round of price reduction activities, that is, purchasing seal models from April 7 to 30 can enjoy a comprehensive discount of up to 31,000 yuan. This is also the "another price reduction" after Seal launched the "88 yuan deduction 8888 yuan" promotion in March.
On the same day, at the third "China Auto Festival" held by CCTV, as the "flagship" model of BYD Ocean Network, the seal, won the highest award of the event, the "Jury Award".
The Ocean Net Seal model, born on the basis of the dynasty net Han model, has newer product technology, lower product price, and younger product design... However, the seal that combines many advantages, from the beginning of the listing, a car is difficult to find, to a large price reduction of more than 30,000 yuan, it is only a year.
Such a two-level "jump" market performance is undoubtedly a blow to Ocean Net, which is in the climbing stage and needs to establish a new brand benchmark image.
Of course, as the most representative member of BYD's marine network, the cold market of seals is also a microcosm of the slightly "fatigue" of the ocean network.
"Tanke Travel" learned from BYD's official website that in addition to the e6 model for the ride-hailing market, there are five models on sale on BYD Ocean Network. These include the Dolphin, Destroyer 05 and Song Plus (including DM-i and EV), which are on sale throughout the year, as well as the SEAL and Frigate 07 models that will start deliveries in the middle and end of the year.
From the perspective of the product layout of the ocean network, the most puzzling thing is probably why Song Plus appears in the ocean network?
"Exploring Travel" learned from the sales channels of BYD Ocean Network: First, the product layout and offline channels of Ocean Network are just beginning, and the models displayed are not enough, and a heavyweight model is also needed to support the market; Of the two, Song Plus is the earliest model equipped with DiLink 3.0 intelligent network system in the dynasty network, and this is also the standard equipment of future ocean network models.
Therefore, Song Plus is a model "seconded" by Ocean Network from Dynasty Network, and it is also a "round-up" model that supports the façade of the new brand.
If we look at the sales data of the past year (April 2022 to March 2023), only the dolphin model priced at 100,000 to 130,000 can barely achieve the monthly sales trend of BYD's passenger car sales.
Although the Song Plus model, which is a supporting scene, has experienced explosive growth in the second half of 2022, once setting a good result of monthly sales of more than 60,000 units, it seems to be somewhat weak from the sales performance in recent months.
As for other models, it is even more embarrassing. For example, the seal model launched in the second half of 2022, although it reached the monthly delivery of more than 10,000 units in a short period of time, it has been declining all the way since the beginning of 2023, falling to just over 5,000 units in March; The destroyer 05 has never been able to stand at the 10,000-unit pass last month.
From the overall performance, BYD is still very good, after all, for the vast majority of manufacturers or brands, not to mention the height of achieving a single monthly sales of tens of thousands of units, it is already very good to have a few thousand.
But the ocean network, which sells thousands of units a month, is different, because it is a brand of BYD, which cannot make it stay in the embarrassing situation of selling thousands of units a month.
Seal is the benchmark flagship of Ocean Network, Song Plus is BYD's sales champion, why are the two cars in the same Ocean Network so "separated" market contrast? The good point is that the new brand of Ocean Network still needs time to hit the popularity, and the difficult point is that the product differentiation is not reflected.
In this way, in the face of the sales pressure of the dynasty network Qin, Han and Tang, the ocean network not only cannot slack, but also has to continue to increase its full power. Because it has shouldered the burden of monthly sales of tens of thousands since its birth, it has drawn a new curve for BYD's revenue growth.
3. How far is it from "lying down"?
Under the glamorous annual report, if BYD's overseas expansion fails to show a significant increase in volume and price, and if the ocean network fails to reverse the trend of "fatigue", when it will enter the era of "lying and earning", there is still a big question mark.
When it comes to "lying to earn", profitability is a point worth paying attention to.
From BYD's 2022 annual report, "Exploring Travel" found that by industry, the transportation equipment manufacturing industry (divided by product, automobiles, automobile-related products and other products) achieved an operating income of 324.691 billion yuan, accounting for 76.57% of the total revenue, and the gross profit margin reached 20.39%.
As a result, BYD has also become a rare car company with high gross margin in the new energy automobile industry, second only to Tesla.
Photo / BYD's 2022 annual results announcement
Compared with BYD's beautiful performance income, the high gross profit disclosed this time is the basis for BYD's future "lying earnings".
Li Xiang, the founder of Ideal Auto, did not hesitate to praise BYD's high gross profit margin in a Weibo on March 29. Li Xiang believes that "BYD's gross profit margin of 22.8% in the fourth quarter is not even lower than Tesla's gross profit margin of 25.9% under the direct management system." ”
Photo / Sina Weibo
With the decline in the price of battery raw materials, BYD's factory production lines across the country have also entered a tight production link, product lines and brands have gradually improved, plus under the explosive growth of automobile sales, BYD has bid farewell to the era of "high input, low output".
"Exploring Travel" believes that in the near future, BYD may become the next new energy vehicle company that can "lie down" after Tesla.
For car companies, the premise of "lying and earning" is nothing more than two points: first, the product layout has basically been completed, and the sales market is hot, there is no need to do research and development from scratch, and there is no worry that the product cannot be sold; In the two, the production line is new enough, the production can be sufficient, and there is no need for extensive maintenance and depreciation when ensuring production.
Obviously, BYD is moving in the direction of these two points. From the perspective of BYD's sales performance, in the price range of 100,000 to 300,000, more than ten models on sale in BYD's dual-brand strategy are enough to cover the needs of various market segments.
As for the production capacity, in the past year, BYD has opened a large number of new production bases in Xi'an, Zhengzhou, Jinan and other cities.
Figure / Interface News
From BYD's 2022 performance report, BYD's new energy passenger vehicle production capacity will reach 1.25 million units in 2022, but sales have climbed to 1.782 million units, and the capacity utilization rate is as high as 149.68%, which shows that in 2022, when production capacity climbs, BYD is already overloaded.
It seems that it can also be seen from the side that under the target of 3 million sales in 2023, plus the landing of marine network models and high-end brands, BYD will have to continue to invest heavily in production line construction and team expansion.
Although BYD has a good profit performance and profit growth rate in 2022, this is far from reaching the height of "lying to earn", and it is also foreseeable that the era of BYD's "lying profit" may come later than expected.
At the same time, in 2022, BYD's new energy passenger vehicle business will directly generate revenue of 272.234 billion yuan, and the price of a single vehicle will be about 152,800 yuan per unit.
Comparing the data of the past three years, it is found that the production capacity of BYD's passenger cars has changed from serious overcapacity to serious tightness, and although the business income has increased significantly with the sharp increase in sales. The launch of high-priced new models such as the newly developed Seal and Frigate 07 is reflected in the average selling price of bicycles, but there is no significant increase.
In this way, with the increase of model agglomeration and the rapid expansion of production capacity, the new brand cannot keep up with the rhythm of the old brand, and the risk of production capacity mismatch will also rise with the scale of car companies, which is a problem that BYD needs to focus on avoiding in the next development. After all, the lessons of Japanese and French cars in the joint venture are still in my ears.
4. Conclusion
The fledgling Ocean Network, BYD, which has just entered overseas, is by no means easy for the brand to climb; When to lie down, the road is blocked and long.
In terms of technology, products and even cultural output, BYD has enough self-confidence and holds strong enough hole cards. However, the feedback from the capital market has not been able to keep up with BYD's forward steps, otherwise Buffett would not have reduced his holdings after the release of the annual report.
The overall performance is good, and the structural contradictions have increased, which is the current BYD. BYD, which has a history of twenty years of car manufacturing, is also a rare "meritorious veteran" in China's automobile industry, but whether it can lead its own brands to stand firmly in China and go global is not something that can be done by "brilliance" in one or two years.
*The title picture in the article is from: BYD official website.