Comments on the automotive industry: Tesla Q4 performance has reached a new level, and the scale effect has been significantly enhanced

Matters:

Tesla released the fourth quarter financial report of 2021. 4q21 achieved an operating revenue of US $17.7 billion, a year-on-year increase of 65%, and a net profit of US $2.3 billion, a year-on-year increase of 760%; Net operating cash flow was US $4.6 billion, a year-on-year increase of 179%. In 21 years, the revenue was USD 53.8 billion, with a year-on-year increase of 71%, and the net profit was USD 5.5 billion, with a year-on-year increase of 665%.

Ping An View:

The revenue of single vehicle increased month on month, and the net profit reached a new high. In terms of revenue, the revenue of 4q21 automobile business was US $15.967 billion, an increase of 71.4% year-on-year and 32.4% month on month; The average price of 4q21 single car was USD 51700, with a slight increase of 0.3% year-on-year and 3.6% month on month. The growth of single car revenue was mainly due to: 1) the sharp increase in the proportion of modely sales; 2) The price of raw materials rose sharply, and the company followed the rise in product prices. In 2021, the revenue of automobile business was 47.232 billion yuan, a year-on-year increase of 73%. In terms of gross profit, the gross profit margin of 4q21 automobile business was as high as 30.6%, with a year-on-year increase of 6.5pct and a month on month increase of 0.1pct. The gross profit margin of automobile business in 21 years was 29.3%, with a year-on-year increase of 3.7pct. The increase in gross profit margin is mainly due to the decline in manufacturing costs caused by the continuous improvement of factory capacity utilization and cost control ability; Although the price of raw materials fluctuates greatly, the company can control the profit at a reasonable and relatively high level through more flexible pricing strategy under the condition of continuous improvement of product demand; In the future, the mass production of 4680 batteries will also further reduce the production cost.

In terms of net profit, 4q21 made a profit of US $2.321 billion in a single quarter, with a year-on-year increase of 760% and a month on month increase of 43%, continuing to hit a new high in net profit in a single quarter; The net interest rate of Q4 exceeds 13% and 10% in the whole year, surpassing most traditional auto enterprises. Q4 R & D expenses were US $740 million, an increase of 21% month on month; marketing and administrative expenses were US $1.49 billion, an increase of 50% month on month; In the fourth quarter, the revenue of regulatory points reached US $314 million and remained stable; At the same time, $245 million CEO reward increased non cash SBC expenses. On the whole, with the substantial growth of delivery volume, the expenses increased in the fourth quarter, and the contribution of regulatory integral income to profits further decreased. Therefore, the gold content of profits in this quarter is relatively higher.

In terms of cash flow, the net operating cash flow of 4q21 was USD 4.585 billion, with a year-on-year increase of 179% and a month on month increase of 46%; Free cash flow was US $2.775 billion, a year-on-year increase of 49%; Cash reserves were sufficient, with cash and cash equivalents of US $17.576 billion in the fourth quarter. With the rapid growth of automobile sales, the company’s cash flow has improved significantly and the financial expenses have been effectively controlled.

The delivery volume reached a new high and the global market increased. 4q21 delivered 309000 vehicles, with a year-on-year increase of 71% and a month on month increase of 28%; Among them, the delivery volume of model 3 / y reached 297000, with a year-on-year increase of 84% and a month on month increase of 28%. The number of global inventory days in the fourth quarter was 4 days, falling to a new low level in the quarter; 936000 vehicles were delivered in 2021, a year-on-year increase of 87%. In terms of regions, it is estimated that the sales volume in the US / China / Europe market will reach 350000 / 32000 / 180000 respectively in 21 years, with a year-on-year growth of about double. In terms of American factories, Fremont factory has a design capacity of 600000 vehicles, and there is still potential to continue to expand production capacity in the future; The Austin plant in Texas is in the equipment testing stage, and the first batch of production model y is expected to be delivered at the end of the first quarter, followed by the production of cybertruck. In terms of Chinese factories, with a design capacity of more than 450000 vehicles, Shanghai will continue to be Tesla‘s largest export base. In terms of European factories, the equipment test of German factories has started at the end of 2021. The company is still finalizing the manufacturing license from local authorities, and the first batch of vehicles will use 2170 batteries. According to the rhythm of capacity release, we expect Tesla to sell 1.6-1.8 million vehicles worldwide in 2022, with a year-on-year increase of 70% – 90%.

Automatic driving moves towards pure vision scheme. Tesla released “Tesla vision” in May 2021, canceling millimeter wave radar and finally moving towards pure vision. On Tesla artificial intelligence day in 2021, Tesla released its first self-developed artificial intelligence training chip and the most powerful artificial intelligence computing cabinet Dojo pod. Tesla artificial intelligence Supercomputing Center Dojo will serve Tesla’s pure vision automatic driving scheme for large-scale data training. Musk said that Tesla’s Dojo does not rule out providing it to other companies in the future.

In terms of energy storage, the installed capacity of energy storage was 4gwh in 21 years, with a year-on-year increase of 32%. As demand is still much higher than production capacity, growth is limited by supply; The company is building a dedicated Megapack plant to meet the growing demand. Tesla’s continuous upgrading ability in key parts such as batteries, autonomous driving and software is an important factor in obtaining product premium and consumer stickiness. Once the new profit model is mature, the company’s profitability is expected to be greatly improved.

Investment suggestion: Tesla’s net profit reached a new high in the fourth quarter of the year. Despite the increase of electric vehicle models and intensified competition, Tesla still maintained strong customer stickiness, and maintained a stable high profit margin by relying on the continuous improvement of production and marketing, the continuous output and upgrading of high-quality products and the continuous optimization of costs; At the same time, it has a leading layout in the field of power battery and automatic driving software and hardware. At present, China’s mainstream automobile enterprises are also stepping up the layout of intelligent driving. Many brands will welcome the listing of high-end intelligent new cars based on the big computing platform in 2022. They are optimistic about the automobile enterprises with fast landing speed of intelligent products. They strongly recommend Great Wall Motor Company Limited(601633) (2333.. HK), Geely Automobile (0175. HK), Saic Motor Corporation Limited(600104) , and pay attention to the new power automobile enterprises Xiaopeng, ideal and Weilai, Pay attention to the industrial chain opportunities brought by the continuous and large-scale production of Tesla products, strongly recommend Contemporary Amperex Technology Co.Limited(300750) , Beijing Easpring Material Technology Co.Ltd(300073) , Ningbo Shanshan Co.Ltd(600884) , Shenzhen Inovance Technology Co.Ltd(300124) , recommend Shanghai Putailai New Energy Technology Co.Ltd(603659) , Shenzhen Capchem Technology.Ltd(300037) , Wolong Electric Group Co.Ltd(600580) , Huayu Automotive Systems Company Limited(600741) , Fuyao Glass Industry Group Co.Ltd(600660) , and pay attention to Guangzhou Tinci Materials Technology Co.Ltd(002709) , Shenzhen Senior Technology Material Co.Ltd(300568) , Yunnan Energy New Material Co.Ltd(002812) , Zhejiang Sanhua Intelligent Controls Co.Ltd(002050) .

Risk tips: 1) the risk that the policy strength is less than expected: if China’s foreign policies soften or change the support for the realization of new energy vehicles, resulting in the introduction of policies less than expected, it will significantly affect the overall scale of the new energy vehicle market; 2) Consumer trust risk caused by electric vehicle Spontaneous Combustion Accident: consumers pay more and more attention to the safety of electric vehicles. If the spontaneous combustion event is not effectively curbed, it may lead to a crisis of consumer trust and have a negative impact on product sales; 3) Risk of technical route change: new energy vehicles are still in the period of rapid technological change. If the industrialization process of the next generation technology exceeds expectations, it will have a significant impact on the existing industry pattern, and the early investment recovery capacity will be lower than expected.

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