Great Wall Motor

As of 15:00 on July 5, 2023, Great Wall Motors has not released its production and sales bulletin for June 2023. However, on July 1st, the company immediately released its sales data of new energy passenger vehicles for June.

According to statistics, Great Wall Motors sold a total of 26,643 new energy passenger vehicles, a year-on-year increase of 110.1%—a new high.

Among them, Haval New Energy sold 10,026 vehicles, Euler New Energy sold 10,015 vehicles, and Wei Brand New Energy sold 6,602 vehicles.

In the first half of 2023, cumulative sales reached 93,069 vehicles, a year-on-year increase of 46.4%.

By the way, on July 1, Haval New Energy released official data: the sales volume of the new plug-in hybrid car, the Haval Xiaolong series, which has just been launched for one and a half months, reached 6,098 units in June, a month-on-month increase of 97%.

Great Wall Motor's road to transformation is about to be on the right track? In this week's "Leverage Viewing", let's talk about this topic.

1. The sales volume of Great Wall New Energy Passenger Vehicles in June did improve, but it was only qualified in the first half of the year.

First of all, in June 2023, Great Wall Motors sold 26,643 new energy passenger vehicles, a year-on-year increase of 110.1%. What kind of concept is this?

Just on July 4th, the Passenger Passenger Association released data, which comprehensively estimated that the wholesale sales of new energy passenger car manufacturers in the Passenger Passenger Association in June would be 740,000 units, a month-on-month increase of 10% and a year-on-year increase of 30%.

In this way, the sales performance of Great Wall's new energy passenger vehicles in June can be said to be very good.

However, the Federation of Passenger Passengers also analyzed that due to the impact of the low base last year, coupled with the recent promotion of China's continued strong export of new energy passenger vehicles, the new energy market at home and abroad has formed the characteristics of simultaneous strengthening.

Therefore, in June, the national new energy passenger car market maintained strong growth characteristics, and the overall auto market continued the strong trend in May, with sales reaching the highest level in history.

Then let's look at the entire first half of the year: it is estimated that the national passenger car manufacturers' new energy wholesales will reach 3.53 million units from January to June, a year-on-year increase of 44%.

As mentioned above in the leverage game, in the first half of 2023, Great Wall’s cumulative sales of new energy passenger vehicles reached 93,069 units, a year-on-year increase of 46.4%.

That is to say, in the first half of the year, the performance of Great Wall's new energy passenger vehicles can only be said to have just outperformed the market, slightly better.

Chart source | China Federation of Passengers (thanks hereby)

After talking about the year-on-year growth rate, let's look at its absolute sales figures and its ranking among mainstream new energy car companies.

As shown above, Great Wall New Energy Passenger Vehicles performed well in June, ranking ninth among mainstream manufacturers.

I went to compare it in May 2023 (about 23,000 vehicles), which is also the 9th. However, since May, the sales volume of Great Wall new energy passenger vehicles has exceeded 20,000, which was previously at the level of more than 10,000 per month.

It should be said that it was the improvement in May and June that made the overall performance of Great Wall New Energy Passenger Vehicles outperform the market in the first half of the year.

According to the latest news, the Xiaolong series of new energy vehicles under the Haval brand ushered in the 10,000th vehicle off the production line, and launched the OTA plan of Xiaolong MAX.

As mentioned above, in June, the sales volume of the Haval Xiaolong series reached 6,098 units, a month-on-month increase of 97%.

It is reported that Great Wall Motors and Inchina have formally entered into a global strategic partnership a few days ago, and the two parties have reached a cooperation intention on the Indonesian market. Great Wall Motors will take this opportunity to optimize its global layout and operating model, and accelerate the promotion of Great Wall Smart New Energy overseas.

When the Xiaolong series was launched, Li Ruifeng, Chief Growth Officer of Great Wall, once said that the goal of the Haval Xiaolong series is to become a popular star model and quickly bring sales scale.

Because the success of Haval's transformation depends on the scale of sales. Haval is the sales base of Great Wall Motors. Whether Haval's new energy transformation can be successful also determines whether Great Wall's new energy transformation can be successful.

Haval Xiaolong's current performance is passing. Whether it can continue to be popular, we will wait and see.

2. Great Wall Motor’s sales in the first five months stabilized, but its financial performance in the first quarter was not good

The production and sales bulletin for June has not yet been released. Judging from the data in May, in the first half of 2023, the total sales of Great Wall Motors have basically stabilized.

As shown in the picture below, the leverage game seems to have been written before. In May, the sales of Great Wall Motors exceeded 100,000, a year-on-year increase of 26.18%. 414,100 vehicles were sold in the first five months, and 417,400 vehicles were sold in the same period in 2022, a year-on-year decrease of 0.78%-7.18% in the first four months.

Judging from the good performance of new energy passenger vehicles in June, the entire group of Great Wall Motors should be stable.

The 2023 mid-year report has not yet been released. Judging from the 2023 first-quarter report of Great Wall Motors, it is not very good. The company’s revenue in the first quarter was 29.039 billion yuan, a year-on-year decrease of 13.63%.

Attributable net profit was 174 million yuan, a drop of 89.34%. The same period in 2022 will be 1.634 billion yuan. Note that it has fallen slightly by 0.34% at that time.

Great Wall Motors explained:

The main reason is that the reporting period is still in the period of product structure adjustment, and based on the pace of new product launches in 2023, it is due to increased investment in new energy brand building and research and development.

If you look at the deduction of non-net profit, it is directly negative, -217 million yuan, a year-on-year decrease of 116.65%.

By the way, in the first quarter of 2023, Great Wall Motors' gross profit rate will drop from over 19% in 2022 to around 16%. This number is certainly good in the industry, but it also shows some problems.

If you look at it on an annual basis, in the past many years, the gross profit margin of Great Wall Motors was rarely lower than this figure, and almost all of them were higher.

In the first quarter of 2023, Great Wall Motor’s government subsidies included in the current profit and loss (except for government subsidies that are closely related to the company’s normal business operations, comply with national policies and regulations, and continue to enjoy according to certain standards or quotas) are just over 300 million yuan—— Car companies are different, as the leverage game always says.

By the way, Great Wall Motors announced two days ago that from December 1, 2022 to May 31, 2023, Great Wall Motors and its subsidiaries received a total of 665,670,720.68 yuan of government subsidies related to income, accounting for the most recent period. 8.05% of the audited attributable net profit.

Count how much money, envy envy.

But good management is the core, and subsidies can only be said to be icing on the cake.

If you look at the net cash flow generated by operating activities in the first quarterly report, you will be shocked to the leverage game, directly exceeding -8.2 billion yuan.

The official financial report stated that the range of change compared with the same period last year was inappropriate.

In addition to the negative net cash flow from operating activities mentioned above in the leverage game, in the first quarter of 2023, the net cash flow from Great Wall Motor’s financing activities has also decreased a lot compared to before. As shown above.

The balance of cash and equivalents also decreased compared to the same period in 2022. Previously it exceeded 23.2 billion yuan, now it is 21.7 billion yuan, and by the end of 2022 it will be 26.9 billion yuan.

In any case, Great Wall Motor still has money in its bag. Temporarily encountering difficulties, transition pressure, and various criticisms and opinions, this company still has great opportunities at present, and it will also improve in May and June.

3. Decrease in total assets, increase in sales expenses, and share repurchase

Interestingly, the total assets of Great Wall Motors in the first quarter of 2023 have experienced a slight decline to about 178.1 billion yuan, and the same period in 2022 will be more than 185.3 billion yuan.

Although the decline was less than 4%, it is still quite regrettable.

Similarly, the owner's equity attributable to shareholders of listed companies also decreased slightly.

This situation rarely occurs when a company is in the procyclical and capacity expansion stage. We often see similar situations in the real estate industry in 2022.

As shown in the figure below, I noticed a very interesting phenomenon. Despite negative revenue growth, in the first quarter, Great Wall Motors' sales expenses increased by about 400 million yuan.

The sales expenses in the first quarter of 2022 will be more than 1 billion yuan, and will increase to more than 1.4 billion yuan in the first quarter of 2023.

As a result, it did not result in a good performance in revenue, and even a negative year-on-year growth.

At the same time, as shown in the figure above, Leverage Games noticed that financial expenses in the first quarter were much lower than those in the same period in 2022. At that time, it was 291 million yuan, but now it is only 11.99 million yuan.

In the first quarter of 2023, Great Wall Motor also disclosed a series of announcements such as equity incentives, stock repurchase and cancellation.

And on February 8, 2023, the 2023 First Extraordinary General Meeting, the 2023 First H Shareholder Class Meeting and the 2023 First A Shareholder Class Meeting were held to review and approve the "Renewal of the Company's Repurchase Proposal on General Authorization of H Shares".

Great Wall Motor repurchased 192,423,000 H shares on the Hong Kong Stock Exchange. The highest purchase price was HK$12.42 per share, and the lowest price was HK$10.1 per share. The total amount of funds used was HK$2,197,847,281 (excluding transaction costs).

The above repurchased shares were canceled on March 9.

Unfortunately, the stock price performance of Great Wall Motors so far is really not good enough. It shows that it will take some time for the sales to climb and the success of the transformation.

I just finished writing the article, and saw that Great Wall Motors’ online celebrity off-road brand Tank has released a new hybrid car—Tank 500 Hi4-T, priced at 335,000, hardcore off-road, with the same price for gasoline and electricity.

Great Wall Motors wants to make a comeback as soon as possible.

It is said that the Great Wall conference "hand in hand" taught BYD to do off-road. Some people say that Great Wall Motor "bombarded" BYD. This is urgent—in any case, the competition should be reflected in sales. I hope to see a fierce Great Wall Motor again in the field of new energy vehicles.