BYD invested nearly 40 billion yuan in R&D last year, surpassing Tesla, and this year took out 60 billion yuan for investment and financial management

Tencent Auto "High Beam" Author Guo Yifei

After surpassing Tesla to become the world's largest electric vehicle manufacturer, BYD's scale dividend is being reflected.

On March 26, BYD (2594. According to the 2023 financial report disclosed by SZ / 1211.HK), the operating income was 602.32 billion yuan, an increase of 42% year-on-year, and the net profit attributable to the parent company was 30.04 billion yuan, an increase of 80.7% year-on-year, both of which reached a record high.

Looking at Chinese car companies, SAIC Group, the largest sales volume last year, has not yet disclosed last year's performance, considering its revenue of 523.3 billion yuan in the first three quarters, BYD is still inferior, but in terms of profits, in the context of the difficult transformation of SAIC Volkswagen and SAIC-GM's two major joint venture brands, BYD's net profit of 30 billion yuan has been far ahead. After calculation, BYD earns an average of about 82.3 million yuan per day.

In 2023, with a sprint sales of 340,000 units in a single month in December, BYD will sell a total of 3.024 million vehicles. In the case of peers generally "selling one at a loss", roughly calculated, the average price of BYD's bicycle is 159,800 yuan, and the net profit is about 8,600 yuan for each car sold.

However, under the alarm of the industry knockout competition, BYD is difficult to relax.

In the first two months of 2024, BYD's sales volume was only 320,000 units, a year-on-year decrease of 6.14%, surpassed by Changan and Geely. Not long ago, Geely ambitiously put forward the goal of "returning to the first national brand in China" for the first time, aiming at the leading BYD.

In the first half of electrification, BYD was undoubtedly the winner. At present, the second half of the intelligent begins, BYD not only has to face the practical dilemma of the slowdown in the penetration rate and sales growth of new energy vehicles, but also to resist the continuous impact of opponents in various market segments.

The sales target for 2024 is 3.6 million units, and gross profit margin is under pressure

Soon after the start of 2024, BYD shouted the slogan of "electricity is lower than oil", and a number of main models were reduced in the name of "Glory Edition", and the first round of price war this year began.

In this regard, at the performance meeting on March 27, BYD Chairman Wang Chuanfu responded that the sales volume of the Glory Edition increased greatly after the launch, and the order demand in March far exceeded the production capacity, and the monthly sales volume has reached 300,000 units, and as the price war deepens, the gross profit of the single car will decline, and the company will strive to maintain the overall profitability by increasing the scale, and it is expected that the sales volume in 2024 will increase by at least 20% in 2023.

This growth guidance was lower than market expectations. Previously, it was rumored in the market that BYD's full-year sales target for 2024 was set at 4 million to 4.5 million units, an increase of 32.5% to 49% year-on-year. At the beginning of the year, Galaxy Securities predicted that BYD's new energy passenger car sales are expected to reach 3.8 million, of which 500,000 are exported.

Of course, BYD has enough confidence to take the initiative to launch a price war, but if it only relies on a price war similar to the "Glory Edition", it can only be exchanged for a short-term rebound in sales, and it is difficult to take into account the gross profit margin, which has been shown from some financial indicators in the fourth quarter of 2023.

According to the financial report, year-on-year, the revenue growth rate in the four quarters of 2023 is growing, but it is declining quarter-on-quarter, and the quarter-on-quarter growth rate in the fourth quarter narrowed to 11%. In terms of non-net profit attributable to the parent company, in the first three quarters of the quarter-on-quarter growth, the fourth quarter fell by nearly 6% quarter-on-quarter.

Correspondingly, a research report by Soochow Securities said that BYD's net profit in the fourth quarter was 8,700 yuan, down 25% from the previous quarter, "mainly for the promotion of price reduction impulses at the end of the year, in November, Song, Qin, Han and Tang and other models reduced prices by about 1-15,000, corvette 07, dolphin, destroyer 05 and other models decreased by 0.5-18,000, a decrease of 5-10%, and sales and management expenses at the end of the year were higher."

The above-mentioned research report predicts that considering the significant recovery of short-term orders after the price reduction of a number of Honor Edition models, the optimization of the model structure brought about by the increase in high-end and export models and the decline in the cost of vehicle parts, the price decline can be partially offset, and "it is expected that the profit of a single vehicle in 2024 will be about 0.7-08000 yuan".

In the short term, BYD still maintains a high gross profit margin. According to the financial report, the gross profit margin of its automobile business in 2023 will be 23.02%, a year-on-year increase of 2.63%, which is higher than that of Ideal (21.5%) and Tesla (17.6%).

In 2023, BYD's two major brands aiming to impact the high-end market - Yangwang and Equation Leopard will be launched one after another, and with Denza, BYD's high-end brand matrix will be settled. However, these three brands do not contribute much to the overall shipments at present, and the low-end market where Ocean and Dynasty Network are located is still the main sales force, with a price range of 100,000-250,000 yuan.

According to the statistics of Guolian Securities Research Report, in 2023, BYD's sales volume in the price band of more than 300,000 yuan will be 142,000 units, a year-on-year increase of 247.3%, accounting for 4.7% of the annual sales, an increase of 2.5 percentage points year-on-year.

The domestic stock market is becoming increasingly cramped, and overseas markets, which have both sales volume and profit prospects, have become a strategic focus for BYD, and it is accelerating the process of localized production. In 2023, its overseas sales of new energy passenger vehicles will be 242,000 units, a year-on-year increase of 334%.

Previously, in January, BYD's first car carrier was officially put into operation, with a maximum loading capacity of 7,000 cars, and the first stop of the ship was the European market.

According to the financial report, in March 2024, BYD's first overseas passenger car production base in Thailand will officially lay the foundation stone, and in July and December, two major manufacturing bases in Brazil and Hungary will also be launched, actively promoting the localization of production process.

R&D investment is nearly 40 billion, surpassing Tesla

Wang Chuanfu, who was born in technology, spares no expense and has always invested heavily in R&D investment.

In 2023, BYD's R&D investment will reach 39.92 billion yuan, a year-on-year increase of 97.4%. This not only exceeds the revenue and net profit of the same period in terms of growth rate, but also exceeds the competitor Tesla (28.39 billion yuan) in terms of scale.

Previously, it has successively released a number of core technologies such as Yi Sifang, Yunlin, and DMO super hybrid off-road platform. At the beginning of 2024, its vehicle intelligence strategy was released, and through the Xuanji architecture, it hopes to achieve the efficient integration of electrification and intelligence, lead the intelligent transformation of new energy vehicles, and plan to invest more than 100 billion yuan in this field.

For the fifth-generation DM system, Wang Chuanfu revealed at the performance meeting on the 26th that DM5 on the basis of DM4, the system and fuel consumption have been greatly improved, and the comprehensive experience has been improved, with a fuel consumption of 2.9 liters per 100 kilometers and a mileage of 2000 kilometers with full fuel and full power.

From the perspective of the expansion of R&D personnel, BYD is speeding up the implementation of crowd tactics to make up for the shortcomings of intelligent driving.

According to the financial report, the company's R&D personnel will increase from 69,697 in 2022 to 102844 in 2023, an increase of 47.56%. Among them, the number of master's students increased from 7,827 to 23,706, and the number of doctoral students increased from 590 to 1,587.

Previously, in mid-January, Wang Chuanfu said that the company's entire intelligent driving team currently has more than 4,000 people, including more than 1,000 algorithm and hardware engineers and more than 3,000 software engineers.

High investment in R&D is inseparable from abundant cash flow. It is worth mentioning that BYD's net cash flow from operating activities in 2023 will be 169.725 billion yuan, and the net increase in cash on hand will be 57.329 billion yuan.

Wang Chuanfu, who had plenty of food and grass, decided to use idle funds for financial management. According to the proposal deliberated and passed on March 26, the company's investment amount is as high as 60 billion yuan, and the investment varieties include, "banks, securities, funds, insurance and other financial institutions with high security, good liquidity, medium and low risk wealth management products or bond products".

Although this is not the first time BYD has invested in wealth management, the scale of the past three years has been 20 billion yuan.

As of the close of trading on March 27, BYD A shares fell 3.47% to 211.98 yuan per share, while Hong Kong stocks fell 6.48% to 201.2 Hong Kong dollars per share.