Analysis of Geely’s top ten car companies’ financial reports in China.
At present, the car companies that mainly rely on the profits of joint ventures are not the "Li Mubai" we are looking for, because in the medium and long term, the weak independent business sector will put enterprises at a disadvantage in the long term, and the helm needs to actively adjust the business direction. Are the remaining Great Wall Motor and Geely Automobile what we are looking for?
From the above table, we can see that Geely and Great Wall Motor have performed well in all indicators, and they are also the head enterprises in the China brand passenger car camp. But in contrast, Geely Automobile’s performance is even better, because in the case of little difference in operating income and gross profit margin, Geely Automobile’s non-net profit deduction is almost twice that of Great Wall Motor.
In addition, due to the downturn of the automobile market and the epidemic situation, Great Wall Motor lowered its sales target in 2020 from 1.11 million to 1.02 million, while Geely Automobile announced at the 2019 performance conference that it would stick to the sales target of 1.41 million vehicles in 2020 (including Geely, Lectra and Geometry).
In terms of R&D investment intensity, Great Wall Motor increased its R&D expenses by 55.82% to 2.72 billion yuan in 2019 when its revenue, gross profit and net profit all declined. The total R&D investment of Geely Automobile is 5.45 billion yuan, accounting for 5.6% of the revenue, which is higher than Geely’s average R&D investment of 5.4% in recent five years. However, Geely Automobile said that the R&D expenses will be appropriately reduced to about 4.5 billion yuan in 2020, which is consistent with its goal of trying to keep cash.
■Don’t just focus on making money and speeding up, the tank is out of gas or finished.
Dell, a world-renowned enterprise, once reflected when faced with serious losses in the first fiscal quarter of 1993, "Like many companies, we have always focused on the figures in the income statement, but rarely discussed the issue of cash flow. It’s like driving a car, just watching the dashboard accelerate, but not noticing that there is no oil in the tank. " Therefore, after analyzing the net profit of each car company, let’s take a look at their "fuel tank", that is, cash flow.
In the first chapter, we found out Geely and Great Wall Motor, which have a good profit performance in their main business, through analysis. How did they perform in the investigation of cash flow? Is it in line with our expectation of "Li Mubai, a car company"? Geely Automobile said in the financial report that the company’s bank balance cash increased by 23% to 19.281 billion yuan at the end of the reporting period, of which 12.538 billion yuan came from operating cash inflow and 500 million US dollars (about 3.25 billion yuan) was obtained from new financing channels.
At present, Great Wall Motor mainly meets its daily business needs with its own cash and bank loans. As of December 31, 2019, the short-term loan of Great Wall Motor was 1.18 billion yuan, and the long-term loan was 4.35 billion yuan. The above loans were mainly used for overseas and factory construction. It can be seen that the above bank loans cannot be counted as cash flow.
However, we can see from the balance sheet that as of December 31, 2019, Great Wall Motor had 9.723 billion yuan of monetary funds (which can be converted into cash), an increase of 2.040 billion yuan over the previous year. However, the fact that money and cash increase cannot alleviate the pressure of Great Wall Motor, because its accounts payable within one year are as high as 25.33 billion yuan.
As far as 2020 is concerned, the cash flow of car companies will generally face challenges, because before, car companies could guarantee their own cash flow by crediting the supply chain and using the funds to the retailers before starting, but this year, upstream parts suppliers may require car companies to pay some cash in advance, and some downstream car dealers may find it difficult to pay the money first before taking the car. Affected by the epidemic situation and the downturn of the automobile market, car companies with little cash in hand may need to ease their pressure by opening up financing channels, otherwise they will be in business difficulties.
From the comparison of non-net profit and cash flow, we can see that Geely Automobile has the best performance, followed by Great Wall Motor. If there is only one "automobile enterprise Li Mubai", from the horizontal comparison of the above-mentioned enterprises, Geely Automobile can afford this title. Moreover, by comparing the total asset turnover rate and inventory turnover rate between car companies, Geely Automobile has relatively strong asset management and operation capabilities. (Note: The higher the total assets turnover rate and inventory turnover rate, the better. )
Summarize the full text:Through financial indicators, people call the enterprises whose net profit and net cash inflow from operating activities increase, cash from investment activities increases substantially, and long-term liabilities increase without cash capital increase (they are confident that the return on investment is higher than the interest on loans) as confident growth enterprises, which is the "Li Mubai" that can help investors achieve wealth growth.
Among the above-mentioned enterprises, the financial reports of Geely Automobile and Great Wall Motor all show certain vitality. For example, in 2019, in addition to making profits from their main businesses and obtaining cash flow, both of them maintained R&D investment and overseas market expansion under the pressure of sales volume and funds. However, whether Geely Automobile can stand out from many China automobile companies depends on the next financial reports of SAIC, Changan Automobile and BYD. The "financial resources" competition of China car companies and who can be better will be fully presented in the next financial report of China car companies. (Text/car home Song Aiju)