On the evening of October 23, Great Wall Motor released its third quarter 2020 financial report. Financial report data show that Great Wall Motors' total operating income was 26.21 billion yuan, up 23.6% year-on-year and 11.5% month-on-month. Net profit attributable to the parent company was 1.44 billion yuan, a year-on-year increase of 2.9%. The gross profit margin was 19%, an increase of 0.5% year-on-year.
Affected by Great Wall Motor’s third-quarter financial report, Great Wall Motor’s A-share share price fell on October 26. As of press time, Great Wall Motor’s share price fell 3.97% to 23.97 Hong Kong dollars, with a total market value of 219.948 billion yuan.
It can be seen that the capital market is not very satisfied with the report card submitted by Great Wall Motor this time. Based on the analysis of Great Wall Motor's third-quarter financial report data, how did Great Wall Motor perform in this quarter? What valuable information can we unearth from the financial report?
The rapid growth of sales volume is a catalyst for increasing total revenue?
Judging from the disclosed data, Great Wall Motors sold 286,000 vehicles this quarter, a surge of 23.9% year-on-year. This performance was significantly higher than the average level of the same industry, and it was also due to the rapid growth in sales, which drove a 23.6% growth in Great Wall Motor's total revenue.
Judging from the third quarter sales data of the four major brands of Haval, WEY, Euler, and Great Wall Pickup under Great Wall Motors, the Haval brand sold 183,000 vehicles in the third quarter, an increase of 8.5% year-on-year; the WEY brand sold 24,000 vehicles, an increase of 3% year-on-year. Euler and Great Wall pickups gained strong momentum, with year-on-year increases of 179.9% and 93.2% respectively in the third quarter.
Although the sales of the four major brands are all positive growth, it can be seen that Great Wall Motor's new energy brand and Great Wall pickup are still the killer features of Great Wall Motor.
Pickup trucks have always been the main product of Great Wall Motors. However, the growth rate of the new energy Euler brand cannot be underestimated. Although there is still a gap compared with the star brand of new energy vehicles, the sales of Great Wall Motors’ new energy have nearly quadrupled, which shows the development. Swift.
The reason for the rapid growth of the new energy vehicle Euler is that the sales of low unit price types such as white cats and black cats in the Euler brand are increasing. As the latest masterpiece of Great Wall Euler, the Euler White Cat was released on July 15. It will be officially listed on Japan and will be sold at a unified national price of 75,800 to 88,800 after subsidies. Even during this year's Tmall 618 period, Great Wall Motors entered the top three sales list, and Great Wall Euler had 2,668 orders that day, which was the most popular in its class.
In addition to the price advantage of its products, Great Wall has also increased its promotional power. Thanks to various efforts, Great Wall's new energy vehicle Euler brand has achieved good sales. Moreover, the Great Wall Euler brand was also launched as a new product. The sales volume of the same period last year is only the initial data, so it is not surprising that it can achieve nearly twice the growth.
In addition to the good sales of existing models, Great Wall Motors will display a number of new cars at the 2020 Beijing Auto Show, such as the new H6 and Haval Dog, which have just begun to climb the hill. The Euler Good Cat and the Tank 300 will start pre-sales during the auto show. It will be launched in November and December. The small SUV Haval debuted at the auto show and is expected to be launched in February next year. In the foreseeable future, Great Wall Motor's sales are likely to continue to maintain rapid growth, which is also expected to drive revenue to maintain rapid growth.
The cost remains high, how does Great Wall Motor break the game?
In addition to Great Wall Motor's total revenue and sales of major products, net profit is also an important indicator worthy of attention. According to the Great Wall Motor’s financial report data report, the third quarter’s net profit was nearly 1.717 billion yuan, an increase of nearly 7.3% year-on-year. This is the first time that Great Wall Motor’s net profit has shown positive growth after the epidemic.
As Great Wall Motor's production and sales scale and the proportion of sales of high-margin models increase, Great Wall Motor's total revenue increases, but the high cost is worth discussing.
Financial report data showed that the cost of sales was 1.2 billion yuan, an increase of nearly 37% year-on-year. This year is a major turning point for Great Wall Motors. Great Wall Motors has made great adjustments this year. Great Wall Motors has been increasing its channel reforms. After Zhao Yuhui, VP of the original Weilai User Center of Great Wall Motors, joined, Great Wall has been more deeply involved in the creation of brand experience stores.
During the third quarter, we can learn that in addition to cooperating with Tmall to increase online subsidies; it is also the official strategic partner of the film "My Hometown and Me" to expand the influence of the Great Wall Motor brand; With the launch of the Dehaval series of cars, the promotion costs of related brands are also increasing.
Although the cost of sales continues to rise, its value is also reflected in the sales of automotive products. In addition to cost of sales as the top of the cost list, research and development costs are also the bulk of it.
Financial report data shows that R&D costs are 670 million yuan, an increase of nearly 21% year-on-year. Great Wall Motors is particularly interested in R&D this year. According to official data from Great Wall, the first three quarters of Great Wall Motor’s expenditures are mainly concentrated on the increase in R&D investment. From January to September this year, Great Wall Motor’s R&D expenses were 1.9 billion yuan, a year-on-year increase of 28.5%, of which R&D expenses in the third quarter were 670 million yuan, a year-on-year increase of 21.3%.
Great Wall Motors is in a stage of transformation. The three new technology platforms of lemon, tank and coffee launched last year are laying the foundation for the future development of Great Wall. At the same time, it has released the third-generation Haval H6, Haval Big Dog, WEY Tank 300 and other models. Data shows that Great Wall is expected to invest more than 20 billion yuan on these three platforms. The current Great Wall Motor is still in a state of making money while burning money.
In addition to the increase in sales costs and R&D costs, it is also affected by overseas markets.
From the change of Great Wall Motor's concept from "Chinese automobile manufacturing company" to "Global mobility technology company", we can see that Great Wall Motor has a heart for change. Great Wall Motors is also increasing overseas investment to open the door to overseas markets.
In the second half of this year, Great Wall Motor and General Motors signed an equity purchase agreement in Bangkok, Thailand, and the Thai plant will be handed over in November. In addition, Great Wall Motors has also become the first Chinese car company to receive the same treatment as a domestic car company in Russia. The company expects to increase its investment by about 3.7 billion yuan.
However, judging from the current situation, the progress of mergers in overseas factories has been slower than expected due to the impact of the epidemic. In addition, Great Wall Motor’s financial report data was deeply affected by the devaluation of the ruble. According to data from West China Securities, it is estimated that Great Wall Motor’s exchange loss in Q3 will be about 510 million yuan.
Although the cost of Great Wall Motors remains high, in the long run, the impact on Great Wall Motors is not significant, including the expenditures on R&D and sales projects are necessary inputs.
At last
Long before Great Wall Motor released its third-quarter financial report data, Bank of America Securities issued a report stating that Great Wall Motor’s sales in the third quarter of this year were strong, up 24% year-on-year, while sales in the first three quarters fell by 6% to 681,000 units, reaching the company's entire 68% of the annual target.
The bank believes that the strong sales momentum of Great Wall Motors will continue, driven by the company's launch of multiple new models from the second half of this year to next year; and it expects that its gross profit margin will continue to expand from 2021 to 2022, mainly due to new products and strengthening brand equity The average price rises driven by the downward trend; the increasing number of high-profile models of Haval H6; and the increase in the contribution of pickup trucks and off-road SUVs to the gross profit margin.
It seems that before the release of the financial report, it was mainly affected by the sales situation disclosed by Great Wall Motors and the upcoming new models, and most of them gave favorable comments.
After Great Wall Motor released its financial report, although the stock price fell due to the financial report, Huaxi Securities still maintained the "Buy" rating of Great Wall Motor with a target price of 28.00 yuan. The bank believes that Great Wall Motors has opened a new round of product cycle, and superimposed hardcore SUV segments to adapt to consumption upgrades, supply creates demand, and vehicle sales are expected to continue to increase, driving profit improvement. In the long run, the global strategic layout and the smooth progress of the beam car project, the independent leader can expect future growth.
Source of this article: Songguo Finance, please indicate the copyright