Revenue And Profit Fall To New Low In The Past Five Years In 2020

After the profit decline for the first time in a decade in 2019, the leader of domestic automobile group will encounter greater challenges in 2020.

After hours on March 25, SAIC Group (600104. SH) released its 2020 annual report. During the reporting period, the company realized a total operating revenue of 742.132 billion yuan, a year-on-year decrease of 12.52%; the net profit attributable to the shareholders of the listed company was 20.431 billion yuan, a year-on-year decrease of 20.2%; after deducting the non recurring profit and loss, the net profit attributable to the shareholders of the listed company was 17.74 billion yuan, a year-on-year decrease of 17.78%.

It is worth noting that in 2020, SAIC Group's revenue and profit have reached a new low in the past five years, and the revenue and profit are closely related to product sales.

Although SAIC still won the first place in domestic sales, the company sold 5.6 million vehicles, a year-on-year decrease of 10.2%, while the overall automobile market in China decreased by only 1.9%.

Among them, the financial data of the first quarter fluctuated greatly compared with other quarters, mainly due to the company's production and sales fluctuations affected by the epidemic situation. With the effective control of the epidemic situation, the company's sales volume increased by 7.6% in the second half of the year, and the year-on-year growth rate of the quarterly sales volume showed a rising trend quarter by quarter, and the quarter on quarter growth rate was significantly better than the industry average level.

Although the sales volume has recovered rapidly since the second quarter, SAIC Group's sales performance has not surpassed the overall market, and it has not fulfilled the previous business target of "achieving a total vehicle sales of about 6 million vehicles in 2020, the market share continues to maintain the leading position in China, with an estimated total operating revenue of 780 billion yuan and operating costs of 678.6 billion yuan".

Weak growth of joint venture brands

In fact, the decline of SAIC Group's revenue and profit is closely related to the performance of several joint venture companies and subsidiaries with large sales volume, especially the joint venture automobile enterprises that have brought sales and profits to SAIC in the past.

According to the financial report, in 2020, SAIC Group's net profit attributable to its parent company was 20.431 billion yuan, a decrease of 5.169 billion yuan compared with that in 2019. Among them, the long-term equity investment income of SAIC Group decreased by 8.7 billion yuan compared with that in 2019, with a year-on-year decrease of 37.8%.

This is also the biggest factor under pressure of SAIC Group's performance last year. According to the data, in 2020, the total sales volume of SAIC Volkswagen was 1.555 million, a year-on-year decrease of 24.79%; the annual sales volume of SAIC-GM was 1467500, a year-on-year decrease of 8.29%.

Among them, in 2020, SAIC Volkswagen's net profit attributable to SAIC Group was 15.489 billion yuan, which was about 20 billion yuan in 2019, a decrease of 4.511 billion yuan, a year-on-year decrease of 22.65%; while SAIC-GM's net profit contribution to SAIC Group in 2020 was 4.1 billion yuan, a decrease of 6.86 billion yuan compared with 10.96 billion yuan in 2019, a year-on-year decrease of 62.56%.

This also means that in 2020, the profits of SAIC Volkswagen and SAIC GM alone will decrease by nearly 11.4 billion yuan.

"On the one hand, SAIC's overall sales volume was affected by the epidemic situation in the first quarter of last year. On the other hand, for SAIC Volkswagen, it has not really come out of the collision results of SINOSURE research, and the reliability of its products is controversial. At the same time, SAIC GM is also facing the problem of differentiation between brands. Although the scale advantage and system advantage still exist, the three brands of Cadillac, general motors and Chevrolet compete with each other, and the products and brands need to be sorted out. " On March 29, an industry person familiar with SAIC told reporters.

"In fact, from the full scope, SAIC GM's net profit is better than that disclosed. This year, SAIC GM will also have a number of models to launch, and electric vehicles will also land in SAIC GM. these are the key elements for SAIC GM to grow better and stronger in the future." On March 26, Chen Xiaodong, Secretary of SAIC Group's board of directors, pointed out at the performance presentation meeting.

At the same time, although the Wuling Hongguang Mini eV of SAIC GM Wuling micro electric vehicle has been sold well, with a total sales volume of 1.6 million units in the year, it has become the group's highest sales brand, but there has also been a situation of increasing revenue but not increasing profits. Although the annual sales volume only fell by 3.61%, SAIC GM Wuling's profit contribution to SAIC Group fell by more than 90% year-on-year to only 140 million yuan, compared with 1.699 billion yuan in the same period in 2019.

However, according to the industry analysis, SAIC GM Wuling's revenue growth does not increase profits, which may be related to its product positioning. As Wuling products mainly focus on the low-end market, its profit margin is not large.

In addition, in the field of independent passenger cars, SAIC passenger cars have faced greater pressure in the past two years. In 2020, the annual sales of SAIC mingjue and SAIC Roewe will total 657800 vehicles, a year-on-year decrease of 2.29%.

"From the perspective of statement structure, investors have always preferred to use the net profit of the parent company to subtract the investment income to measure the profitability of independent brands. However, in the parent company's statement, it actually includes the R & D expenditures of the two technology centers of passenger cars and commercial vehicles. The increase of R & D expenses and the increase of accrued expenses will also affect the profit figures. Considering these factors, the loss of the whole independent brand in 2020 will actually be reduced year on year. " Chen Xiaodong said.

It is worth noting that, in the case of unsatisfactory performance in 2020, SAIC Group has made a forecast that the sales volume of this year will rebound by more than 10%.

SAIC said in the financial report that the company strives to achieve 6.17 million vehicle sales in the whole year, with a year-on-year growth of 10.2%; it is estimated that the total operating revenue is 830 billion yuan, with a year-on-year growth of nearly 12%; the operating cost is 720 billion yuan, with a year-on-year increase of 11.6%.

Wei Yong, vice president and chief financial officer of SAIC, said at the performance presentation meeting on March 26 that it was based on two judgments: one is the general trend of domestic automobiles this year; the other is the good trend of SAIC Group in new energy vehicles and overseas markets.

SAIC forecasts that under the favorable conditions of global economic recovery growth, China's macro policy "no sharp turn" and relatively low year-on-year base of the automobile market, the domestic automobile market is expected to end the continuous decline since 2018. It is estimated that the domestic market demand for complete vehicles is 26.1 million, with a year-on-year growth of 3.1%; among them, 21.5 million passenger cars, with a year-on-year growth of 7.3%; and 4.6 million commercial vehicles, the same The sales volume of new energy vehicles is expected to be about 1.7 million, with a year-on-year increase of 34%.

However, with the gradual fading of the impact of the epidemic on the auto market, SAIC still faces severe challenges such as auto market adjustment, chip shortage and electrification transformation. How to find opportunities in crisis and reverse the market disadvantage in 2021 will also become the focus of SAIC Group's layout.

Accelerate the transformation to high-tech enterprises

"The competition in the whole automobile industry is completely different from that in the past. In addition to the original business of SAIC, new tracks are coming Chen Xiaodong pointed out at the performance presentation meeting that "first, the development of new kinetic energy characterized by electric intelligence is building up a new track for the next round of competition. This track not only gathers traditional cars, but also new forces of car making and cross-border competitors, so the new competition pattern is very fierce. "

In Chen Xiaodong's view, the new generation of vehicles will have a new industrial form and business model - in terms of product form, it will integrate innovative technologies such as new energy, new materials, big data, cloud computing, artificial intelligence and the Internet of things. In the future, vehicles will become mobile intelligent terminals and have the self-learning ability of cloud management and end integration, and will create new business models.

In the face of the arrival of a new competitive pattern, SAIC Group put forward in its financial report the goal of comprehensively transforming into a high-tech enterprise with technology upgrading, business globalization, high-end brand and extreme experience of mobile travel services and products.

In order to accelerate the pace of enterprise transformation, SAIC Group did not reduce its investment in R & D field in 2020 when the group's sales volume and revenue declined, and its R & D expenses remained at the same period in 2019, reaching 13.395 billion yuan. It also successively invested in Weima, Zhangjiang High Tech and Alibaba to set up Zhiji automobile and create high-end new energy brand r brand.

Regarding the positioning of SAIC Group's brands, Wei Yong said that SAIC has a very clear view of the new track of electric intelligent development. Zhiji automobile will take the high-end route and create a deep intelligent experience. Three models will be released in succession from this year. However, there will be differences between R standard and Zhiji automobile. The group defines r standard as "national team of new forces", mainly to meet the requirements of differentiation In addition, Roewe and mingjue focus on cost performance.

It is understood that at the "r-brand co founder ecological conference" on March 18 this year, some leading enterprises, such as luminar, ZF, NVIDIA, Tencent smart travel, Microsoft, Huawei, zebra smart travel, State Grid, China Southern Power Grid, special call, star charging, BOE, Aodong new energy, and other leading enterprises, participated in the r-tech high-energy smart body with a total investment of more than 20 billion yuan Based on this platform, the car is expected to achieve hardware pluggable, replaceable and upgradable, software can be bought, sold and defined, and battery can be charged, replaced and upgraded.

"Pure electric intelligent cars are blue ocean. Now there are many brands entering the market, but there are still too few brands. At the same time, we are in the layout of the traditional runway, and the innovative runway is also accelerating. R automobile can open a way for the transformation and innovation transformation of SAIC passenger car 2C. "

On March 18, Yang Xiaodong, general manager of SAIC passenger cars and chief co founding partner of R automobile, said in an interview with reporters that in terms of product positioning, user service and operation mode, R automobile is different from other traditional brands and there is enough differentiation.

At the same time, Yang Xiaodong believes that in the price range of 200000-300000, China has a huge market of 4 million sales.

In the field of new energy, with the rapid introduction of joint venture brand new energy products in 2021, SAIC's new energy business will also usher in rapid development.

"ID. series products will be the incremental booster of SAIC Volkswagen." In the view of industry insiders, SAIC Volkswagen's layout of pure electric vehicles in 2020 will have a great impact on the development of the brand.

It is understood that in 2021, SAIC Volkswagen has set a sales target of 150000 new energy vehicles, which will be completed by the three new ID. series electric vehicles, id.4, id.6 and id.3, which will be launched this year.

At present, SAIC Volkswagen's id.4x, the first electric vehicle of Id family based on MEB platform, has been officially put on the market.

"In 2021, in line with the development trend of the new four modernizations, SAIC Group will march into the market of medium and high-end intelligent electric vehicles with Roewe brand and r-standard respectively, and continue to explore overseas markets. At the same time, SAIC Volkswagen and SAIC GM are expected to see a bottom and stabilize." Soochow Securities pointed out in the research paper that at the same time, SAIC Group maintained an overweight rating.