On October 29, Huayu automobile released its financial report for the third quarter of 2020. According to the report, in the first three quarters, the operating revenue of Huayu automobile was 91.726 billion yuan, a year-on-year decrease of 13.14%, and the net profit attributable to the shareholders of the listed company was 3.102 billion yuan, a year-on-year decrease of 37.03%. Among them, in the third quarter, the company’s operating revenue was 38.104 billion yuan, an increase of 8.76% over the same period last year, and the net profit attributable to the shareholders of the listed company was 1.796 billion yuan, an increase of 14.9% over the same period last year.
The performance improved quarter by quarter due to the superposition of multiple factors
From the above data, we can see that the revenue and net profit of Huayu Auto in the first three quarters are still in a declining situation. However, combined with previous data, under the influence of multiple factors, the performance of Huayu automobile is improving quarter by quarter.
Specifically, novel coronavirus pneumonia outbreak hit the domestic market in the first quarter, and domestic auto sales fell by 42.4%. In this case, the performance of Huayu automobile was deeply affected. According to the company’s financial report, in the first quarter of the severe epidemic situation in China, its operating revenue was 23.973 billion yuan, a year-on-year decrease of 32.6%, and its net profit was 135 million yuan, a year-on-year decrease of 92.7%.
In the second quarter, due to the continuous spread of the epidemic overseas, overseas performance of Huayu automobile made a loss. However, in view of the effective control of the domestic epidemic, and the introduction of government policies to promote automobile consumption, such as purchase subsidies, automobile going to the countryside, and relaxation of restrictions on purchase in cities, the cumulative decline of domestic automobile sales narrowed, and the domestic business of Huayu automobile recovered well. According to the company’s financial report, in the second quarter, its operating income was 29.65 billion yuan, a year-on-year decrease of 15%, and its net profit attributable to the parent was 1.17 billion yuan, a year-on-year decrease of 23%. Although it did not turn negative into positive, the decline rate was significantly narrowed compared with the first quarter.
Entering the third quarter, the situation further improved. According to the financial report of Huayu automobile, in the third quarter, the company’s operating revenue was 38.104 billion yuan, up 8.76% year on year, and the net profit attributable to the shareholders of the listed company was 1.796 billion yuan, up 14.9% year on year, ending the negative growth trend of the first two quarters. This also eventually made the first three quarters of revenue and net profit of Huayu auto show a considerable narrowing compared with the first half of the year.
In fact, the good performance of Huayu automobile in the third quarter can be traced. As early as Huayu automobile released its financial report for the first half of the year, there was no lack of prediction from relevant analysis institutions that the business performance of Huayu automobile would usher in an inflection point in the third quarter, and the profit would gradually recover.
The reason is not hard to understand. On the one hand, domestic automobile sales continue to grow. According to the data of China Automobile Association, by the end of the third quarter, this year’s automobile sales have increased for six consecutive months, with a growth rate of more than 10% for five consecutive months. On the other hand, with the gradual control of the overseas epidemic, overseas automobile enterprises have gradually returned to work and production. At the end of the second quarter and the beginning of the third quarter, the world’s major automobile enterprises have gradually resumed normal production activities, and the overseas automobile enterprises have gradually recovered Regional market or sales decline narrowed, or has been realized. All these boosted the recovery of the third quarter performance of Huayu automobile.
According to the novel coronavirus pneumonia, the company has taken positive measures to overcome the adverse effects of the new crown pneumonia epidemic on the domestic and international automobile market and the normal production and operation of the company in the 1-9 quarter of this year, according to the three quarter’s performance. On the one hand, we should seize the opportunity of sales recovery in domestic automobile market, reasonably arrange production and operation, and fully meet the needs of vehicle customers. On the other hand, we should actively respond to the changes of global epidemic prevention and control, prevent international operational risks, and steadily promote the resumption of overseas business. Based on this, the company’s production operation and operating performance in the first three quarters showed a trend of gradual stabilization and improvement.
The business has been promoted step by step, and the follow-up growth momentum is strong
It is not difficult for those who pay attention to Huayu Auto to find that behind the quarterly improvement of its performance, Huayu auto moves frequently. What is more obvious is that since the beginning of this year, Huayu auto has been constantly adjusting its business structure and expanding its customers.
According to the understanding of Gaishi automobile, this year, Huayu automobile continued to integrate its business and improve its management efficiency. For example, in August this year, Yanfeng automotive, a subsidiary of Huayu automobile, acquired 30% of the equity of Yanfeng automotive. After the acquisition, the company realized 100% holding and accelerated the process of globalization. In addition, the foreign subsidiary Industrial Communications Electric Co., Ltd. plans to sell its 45% equity of Lear industrial communications, withdraw from the automotive wiring harness assembly business, and focus on functional parts.
Not only that, the source of customers of Huayu automobile is constantly expanding. According to Huang Hanxu of Shanghai Securities Research Institute, Huayu automobile’s interior, lamp, seat, bumper, transmission shaft, drive shaft, lightweight cast aluminum, chassis structural parts and module assembly business has won the fixed points of Mercedes Benz, BMW, Audi, Cadillac and other luxury brands, and its interior, car lamp, exterior parts, electric steering gear, drive shaft, fuel tank, generator business has won the fixed points of Honda, Phoenix Japanese brands such as Tian, Nissan, etc. have been designated, and the businesses of interior decoration, seat, bumper, battery box and body assembly, stabilizer bar, suspension spring, etc. have been matched to Tesla China, while the businesses of interior decoration, shock absorber, electric steering gear, etc. have been matched to Weilai.
At the same time, the new business of Huayu auto has been gradually promoted. In the aspect of intelligent cockpit, Yanfeng released the technology platform Yanfeng xim21, and cooperated with Volkswagen, Audi, BMW and SAIC to develop the next generation of intelligent cockpit system; in the aspect of electric drive system of new energy vehicles, the drive motor, power electronic box and other products of Huayu automobile are supplied, and the Q4 electric drive assembly products will be supplied to Volkswagen global electric vehicle platform, and the new GM global electric vehicle platform will be won In terms of intelligent driving, the 24GHz backward millimeter wave radar, 77GHz angle radar and 77GHz forward millimeter wave radar of Huayu automobile have been supplied, and the 1r1v technical scheme has been industrialized.
It should be noted that in 2019, with its seat business accounting for about 33% of the domestic market, Huayu automobile won orders for domestic Tesla seats and bumpers. Later, Huayu automobile established a joint project team with Magna, and successfully obtained the fixed-point letter of intent of SAIC Volkswagen and FAW Volkswagen on the electric drive system assembly related products of Volkswagen MEB platform. At present, the capacity construction of Tesla (Shanghai) and Volkswagen MEB plants has been steadily improved. With the launch of Tesla and MEB models in the second half of the year, Huayu automobile is expected to benefit directly.
Shi Jinman, a researcher at Guohai Securities, pointed out that under the promotion of policies such as slowing down subsidies and new energy vehicles going to the countryside, the sales of new energy vehicles have improved, and the sales volume in the second half of the year is expected to reach 700000 vehicles. Many new energy projects designated by Huayu auto will usher in large volume, including mass production of Volkswagen MEB, Tesla modely and incremental model 3, which will promote the double improvement of performance valuation.
The trend of overseas epidemic is still an uncertain factor affecting performance
As far as China Automotive is concerned, the proportion of its overseas business is not low, and the overseas epidemic is still an uncertain factor affecting its performance.
According to the understanding of Gaishi automobile, in recent years, while developing the domestic market, Huayu automobile has continuously promoted the international development of its core business. Yanfeng automotive interior system Co., Ltd. has a high share in the global automotive interior market. Its main production bases are distributed in China, North America, Europe, South Africa, Southeast Asia and other regions, mainly covering Mercedes Benz, BMW, Ford, Volkswagen, general motors and other global vehicle enterprises. In addition, some advantageous businesses and products such as light-weight cast aluminum, fuel tank system and automotive electronics have entered the markets of Europe, the United States, South Korea, Australia and Southeast Asia.
Specifically, since 2015, the business of Huayu automobile has been accelerating from domestic market to international market. Relevant data show that before 2015, the business of Huayu automobile was mainly domestic business, and the overseas business income accounted for less than 2%. In recent years, the overseas income of Huayu automobile was about 30 billion, accounting for about 20% of the total revenue.
It is undeniable that the development of overseas market in recent years has brought a lot of benefits to Huayu automobile. However, due to the impact of overseas epidemic, overseas business has become its risk to a certain extent. From the first half of this year, the continuation of the overseas epidemic affected the normal development and expansion of overseas business of Huayu automobile, which further hindered the overall performance of Huayu automobile in the first half of this year.
Now, with the advent of autumn and winter, the epidemic situation in some countries has rebounded, and the overseas automobile market, which has already seen signs of recovery, may be adversely affected. Some people in the industry said that in view of the possibility of a second outbreak of the epidemic and the blockade measures related to it, the risk of the overseas car market going down in the next few months is still not small. This also means that overseas performance of Huayu automobile may fluctuate as a result.
In its financial report, Huayu automobile clearly pointed out that since the beginning of 2020, affected by the global spread of the epidemic, the demand fluctuation of domestic and foreign automobile market has intensified, which has a certain impact on the company’s production and operation. The subsequent impact will depend on the global epidemic situation, duration, response measures taken by governments and global cooperation.
Editor in charge: yyx