As the "most low-key" existence among the new car-making forces, Leapmotor has "quietly" handed over a financial report that dazzles the capital market.
Whenever it comes to China's new car-making brands, the first thing that comes to people's minds is often "Wei Xiaoli", as well as Huawei's question, which came to the top, and even the high-profile release of the first model Xiaomi SU7 Xiaomi car. Compared with their high-profile marketing, Leapmotor lacks a sense of "presence".
Looking back on the whole 2023, there are only two things that can attract the attention of the industry.
First, in September last year, Leapmotor unveiled its first global model, the C10, and the centrally integrated electronic and electrical architecture known as "Clover", at the Munich Motor Show in Germany;
The two things seem to be unrelated, but in fact, they have paved the way for Leapmotor to expand overseas markets in the future. However, this is by no means all there is to Leapmotor 2023.
Judging from the 2023 financial report released by Leapmotor on March 25, compared with Weilai and Xiaopeng, although the last Leapmotor to release its financial report in "Wei Xiaoli Zero" is low-key, it has a bit of a taste of "making a fortune quietly".
Sales increased steadily, and losses narrowed
In 2023, Leapmotor has made significant changes in both product strategy and corporate operation.
On the one hand, by launching the extended-range versions of the C11 and C01, Leapmotor has successfully expanded from pure electric to "pure electric + extended" dual-power layout.
[Image source: Leapmotor official website]
This strategy has enabled Leapmotor to achieve 144,000 new car deliveries in 2023, ranking third in the list of new power deliveries of "Auto K-line", with a year-on-year increase of nearly 30%.
Although it failed to meet the annual sales target of 200,000 units, it is still a positive achievement in the highly competitive automotive market. Moreover, the annual target completion rate of Leapmotor reached 72.08%, which is second only to the ideal car in "Kaihang".
Entering 2024, Leapmotor continues the momentum of last year. In the just-concluded March, Leapmotor delivered 14,600 vehicles, a year-on-year increase of more than 136%, and the cumulative delivery in the first quarter reached 33,400 units. Whether it is a single month or a quarterly data, Leapmotor ranks among the top 3 in the delivery of new forces.
In addition, Leapmotor's product structure has undergone significant changes in 2023.
According to Leapmotor, the delivery volume of the C01 and C11 models reached 25,000 and 80,700 respectively last year, a significant increase, and accounted for more than 73% of the overall sales.
The main sales model has changed from the T03 with a price of 50,000~90,000 yuan to the C11 with a price of 150,000~210,000 yuan, and the average price of a single car of Leapmotor has increased by about 5,000 yuan.
The introduction of range extender technology not only meets consumers' demand for cruising range, but also brings new opportunities for business operations.
Although Leapmotor has not yet achieved profitability, its operating income in 2023 increased by 35.2% year-on-year to 16.75 billion yuan, a record high.
At the same time, after three consecutive years of increasing losses, Leapmotor's net loss in 2023 narrowed by 17.47%, from 5.109 billion yuan in 2022 to 4.216 billion yuan.
"Automobile K-line" believes that this shows that Leapmotor has made positive progress in adjusting and optimizing its own business model.
Overall, in 2023, by adjusting its product strategy and expanding the market, Leapmotor not only enhanced its competitiveness in the new energy vehicle market, but also laid a solid foundation for the company's future development.
The last to come, the gross profit to the positive
Recently, Zhu Jiangming, chairman of Leapmotor, said in an interview that because he is an engineer, Leapmotor's corporate culture is "more down-to-earth and more down-to-earth", "Leapmotor seems to be slow in the early stage, but we are going faster and faster, catching up with or even surpassing our competitors".
In the view of "Auto K-line", it is this low-key and pragmatic style that makes Leapmotor the second new car-making force to run out of the "life and death line" after Li Auto in the fiercely competitive 2023.
The author still clearly remembers that at the interim results call of Leapmotor in August last year, the company's management, including Zhu Jiangming, repeatedly stated that they would strive to achieve a positive gross profit margin in the second half of the year.
According to the financial report, the gross profit margin of Leapmotor will reach 0.5% in 2023, successfully completing the target. This may be due to the cost reduction and efficiency increase achieved by Leapmotor's insistence on global self-development, otherwise Stellantis Group would not have taken a fancy to this new car-making force.
In the annual results conference call held on March 25, Wu Qiang, co-president of Leapmotor, introduced that in the past five years, Leapmotor has invested about 4.7 billion yuan in R&D.
In addition, it is worth noting that Leapmotor's financial report mentions that due to the increase in the cost of raw materials and consumables due to the increase in sales of electric vehicles, the cost of sales in 2023 will increase by 16.6% compared with 2022, reaching 16.666 billion yuan.
If this year, with the increase in product scale and the third round of cost reduction mentioned by Wu Qiang in the annual results conference call is successfully achieved this year, then the annual gross profit margin in 2024 is likely to reach 5%~10% expected by Zerorun.
"Image source: Leapmotor 2023 results announcement"
In addition to the gross profit margin turning positive for the first time, Leapmotor also achieved positive operating cash flow for the first time, from -2.4 billion yuan in 2022 to 1.082 billion yuan last year, an increase of more than 145% year-on-year. By the end of 2023, Leapmotor has abundant funds in hand, reaching 19.39 billion yuan.
In addition, the asset-liability ratio of Leapmotor has been maintained in a reasonable range of 40%~60% since 2021 (42.28% in 2021, 57.14% in 2022, and 56.07% in 2023).
Global self-development has become the cornerstone of globalization strategy
When reviewing the road to car manufacturing, Zhu Jiangming said that once it enters the mass production stage, there is no way back, and there is no regret.
The failure of the S01 made him deeply realize the importance of product strategy, so Leapmotor began to focus on the "price-to-price ratio" and was committed to providing high-quality products in the price range of 100,000~200,000 yuan.
In order to achieve this goal, Leapmotor actively promoted "cost reduction" and "global self-development", which were reflected in last year's performance improvement and laid the foundation for its globalization strategy.
In the annual results call, Zhu Jiangming revealed that the cooperation between Leapmotor and Stellantis Group will accelerate its globalization process.
Through the asset-light model, Leapmotor is able to rapidly advance its layout in major markets in Europe and around the world.
The sales network and after-sales channels of Stellantis Group provide valuable overseas market resources for Leapmotor, and may even become an overseas production base of Leapmotor. This will help Leapmotor achieve local production and the global scale of production that Zhu Jiangming expects.
This is a historic step for Chinese car companies, which have always been accustomed to being the "foundries" of multinational car companies.
In addition, the core components of the three electric vehicles independently developed by Leapmotor have the ability to be supplied to external sources. The company is actively negotiating with other OEMs for external supply cooperation to further expand its business scope.
Industrial Securities is optimistic about the future development of Leapmotor in the research report, believing that hybrid and pure electric vehicles will coexist in the medium and long term, optimistic about the dual power layout of Leapmotor range extension and pure electric, and at the same time optimistic about its cooperation with Stellantis Group, Leapmotor C10 and T03 products have cost advantages compared with current European competitors.
Some institutional analysts believe that Leapmotor is expected to achieve 279,000 vehicle sales in 2024, including 5,000 overseas vehicles, and is expected to achieve 28.497 billion yuan in revenue, with a net profit attributable to the parent company of -3.961 billion yuan, giving an "overweight" rating.
Views of AutosKline
Coming out of the setback of the S01, Leapmotor seems to be growing rapidly "quietly". Despite the various doubts about product quality and battery life during the period, the financial data for 2023 shows that Leapmotor has successfully achieved the "last-mover first-come" in performance and strategy with a stable business strategy.
However, with the intensification of competition in the automobile market and the continuous improvement of consumers' requirements for product quality, Leapmotor needs to dig deep into its "internal strength" to meet the higher expectations of users while implementing its corporate strategy. I wonder if the all-new C16, which will be unveiled at the Beijing Auto Show this month, will be able to improve the quality of the Leap by one gear.
If this can be done, a year later, Leapmotor may bring more surprises to investors.
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