Assignment 1: Country/Product Selection Abstract
A news report from Sina News (one of China’s largest electronic news publishing houses) on June 3 showed that Xiaopeng, China’s largest new energy vehicle manufacturer, faces the risk of investors withdrawing capital.
The reason is Xiaopeng’s R&D investment has not yet been converted into revenue, the company’s gross profit margin in 2020 is only 4.6%, which is a significant gap between Weilai (11.5%) and ideal (16.4%). High operating expenses and low gross profit margins make Xiaopeng the company with the worst profitability and the highest bicycle operating loss among the new forces. The April sales list of new energy vehicles showed that the BMW iX3 ranked No. with 3552 vehicles. In the 15th place, Xiaopeng P7 and Weilai EC6 ranked 16th and 18th with 2,995 and 2,779 respectively.
One of the traditional auto giants: BMW, before it has officially launched its efforts, it has caught up with the flagship models EC6 and P7 of Weilai and Xiaopeng with its iX3, which is not mature. The counterattack capability of traditional auto giants It can be seen. In the future, once the Volkswagen ID series is on the right track, the new domestic car-making forces will probably face greater impact.
It is worth noting that Xiaopeng Motors sold 5,147 units in April, a month-on-month increase of only 0.9%. Weilai Automobile saw a year-on-year decline of 2.1%. Obviously, as competition intensifies and the base increases, the myth of high growth among new forces no longer exists.
Compared with the third-party car-building corps composed of high-tech Internet companies, the concepts, technologies, and first-mover advantages of the new car-building forces are no longer obvious. When Xiaopeng and other new forces have changed from challengers of traditional fuel vehicles to challengers in the current pattern of new energy vehicles, the change in roles has also accelerated the destruction of the valuation of new forces. This makes investors hesitate whether they will continue to invest a large amount of money into new energy automobile companies as they are now.
Xiaopeng’s financial statements showed：Xiaopeng Motor’s total revenue in the first quarter was 2.951 billion yuan, an increase of 616.1% over the same period last year. Among them, thanks to the increase in new car deliveries, Xiaopeng Motors’ sales revenue reached 2.81 billion yuan, an increase of 655.2% over the same period last year. In addition, the company confirmed the revenue of 80 million yuan from autonomous driving software for the first time.
However, despite the historical highs in revenue, vehicle delivery and other data, the “software fee” model was also highly publicized. Xiaopeng Motors still closed the next day with a -4.93% drop, with a closing price of 23.54 US dollars, which once again set a new low for the year. Although the share price of Xiaopeng Motors rebounded in the next few days, since 2021, the share price of Xiaopeng Motors has fallen by more than 50%.
In my opinion, in the case of a record high sales volume, the reason for the continued decline in the stock price is that it has not done a good job of cost control: Affected by the sharp increase in operating expenses, Xiaopeng Motors has a net loss of 787 million yuan, which is higher than the loss of 6.5 million in the same period last year. 100 million yuan. At the same time, R&D investment is another major expense. With the growth of R&D personnel and the increase in development expenses related to the new P5 model, Xiaopeng Automobile’s R&D expenditure in the first quarter reached 535 million yuan, a year-on-year increase of 72.2%.
Therefore, in summary, the reason for the decline in stock price is that although Xiaopeng Motors’ revenue has increased by more than 6 times, the company’s losses are still increasing, which has aggravated investors’ concerns that the company still has no hope of reaching the break-even point in the short term. , This has led to the constant pressure on Xiaopeng Motors’ investors because they get rid of this situation and recover their investment income as soon as possible.