\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 25 Chongqing Changan Automobile Company Limited(000625) )
Event overview
The company released the annual report of 2021 and the first quarterly report of 2022: the total revenue of the company in 2021 was 105.14 billion yuan, a year-on-year increase of + 24.3%; The net profit attributable to the parent company was 3.55 billion yuan, a year-on-year increase of + 6.9%; The net profit deducted from non parent company was 1.65 billion yuan, a year-on-year increase of + 150.9%. In 2022q1, the company’s total revenue was 34.58 billion yuan, a year-on-year increase of + 8.0%; The net profit attributable to the parent company was 4.54 billion yuan, a year-on-year increase of + 431.5%; The net profit deducted from non parent company was 2.27 billion yuan, a year-on-year increase of + 215.2%.
Analysis and judgment:
Bright performance in the first quarter, double boost of scale + structure
The company’s outstanding performance in 2022q1 is mainly due to the double boost of scale and structure. In 2022q1, the net profit attributable to the parent company was 4.54 billion yuan, a year-on-year increase of + 431.5%, and the net profit deducted from non attributable to the parent company was 2.27 billion yuan, a year-on-year increase of + 215.2%. Among them, the investment income of associates and joint ventures was 110 million yuan, a year-on-year increase of – 60.8%, and the net profit attributable to the parent (deducting the net profit not attributable to the parent – income from joint venture investment) was 2.16 billion yuan, a year-on-year increase of + 391.2%. Among the non recurring profits and losses, the subsidiary avita obtained a net profit of 2.13 billion yuan from equity transfer.
The gross profit margin is boosted by high value models, and the amortization of single vehicle cost is reduced under the scale effect. In 2022q1, the company sold 400000 vehicles independently, with a year-on-year increase of + 1.6% and a month on month increase of + 14.6%. The gross profit margin of 2022q1 was 18.2%, with a year-on-year increase of + 4.1pct and a month on month increase of -0.7pct, mainly due to the scale effect and the improvement of structure. The proportion of models with high gross profit margin continued to increase, cs75p continued to sell well, and uni-t and uni-k relay increased. With the boost of production and marketing scale, the scale effect is accelerated. The amortization of single vehicle R & D expenses is – 2600 yuan month on month. We expect that the depreciation and amortization of single vehicle will also show a rapid downward trend and the release of profits will be accelerated.
The sustainability of independent profit is constantly verified, and the profit elasticity of single vehicle is highlighted. The net profit of the company’s independent single vehicle in 2022q1 reached 5700 yuan, a year-on-year increase of + 4300 yuan and a month on month increase of + 4900 yuan. The company’s independent profit has been continuously verified, and the impairment factor has been added back. The company has achieved profit for 8 consecutive quarters (considering subsidies, etc.). According to our calculation, compared with 2021q4, the marginal profit of the company’s independent bicycle reaches 12000 yuan. We expect that with the independent sales stabilizing above the breakeven point, the bicycle profit is expected to show greater flexibility with the increase of sales.
The performance of the joint venture is stable and optimistic about Lincoln’s new products to drive profits. The income from joint venture and joint venture investment was 110 million yuan, a year-on-year increase of – 60.8%. We judge that it is mainly due to the loss of Chang’an new energy, and Chang’an Mazda and Chang’an Ford are expected to contribute profits. This year, Lincoln Z, a heavy new product of Lincoln, was launched on March 12, priced at 255000342000 yuan. We expect to become a strong competitor for 300000 Yuan passenger cars, driving the gradual rise of investment income. The expenses are properly controlled, and the double point expenses have decreased. The company’s 2022q1 sales / management / Finance / R & D expense rates were 3.5% / 2.3% / – 0.6% / 2.8% respectively, with an overall decline. Among them, 2022q1 management fee was – 34.8% year-on-year, mainly due to the decline of double point fee. We expect that with the increase of the proportion of new energy, there will be no point gap for the company this year.
Changan dark blue releases new energy platform to accelerate output
On April 13, 2022, the 2022 Chongqing Changan Automobile Company Limited(000625) global partnership conference was held online. At the meeting, the brand-new digital electric brand was officially named “Chang’an dark blue”. The new energy target was announced at the meeting. By 2025, the total sales volume of Chongqing Changan Automobile Company Limited(000625) will reach 4 million, including 3 million of Chang’an brand and 1.05 million of new energy, accounting for 35%.
The new EPA platform and high-end CHN platform accelerate the introduction of new energy products. We expect that the small car Changan Lumin and compact car c385 based on EPA platform will be listed in q2-q3, c673 is expected to be listed in the second half of the year, and avita 11 based on high-end CHN platform will also realize the first batch of mass production and user delivery in Q3. In addition, the company’s blue whale IDD hybrid system will also be gradually installed on existing fuel models, and the uni series will be equipped with PHEV version.
Investment advice
The profitability sustainability of the company’s own brand is constantly verified. Uni series continues the popular gene and drives the average price of single car to continue to rise. It is expected that as the independent sales volume stabilizes above the breakeven point, the single vehicle profit is expected to show greater flexibility with the increase of sales volume. With the decline of the impact of impairment and purchase points expense, we believe that independent profit is expected to increase steadily. In addition, avita’s new car delivery is imminent, the profit of the joint venture brand has increased steadily, and the introduction of new energy products has accelerated. It is optimistic that the company will usher in the rapid release of profit under the new product cycle, and the superposition of high-end electrification transformation will reshape the valuation. We raised our previous profit forecast and adjusted the revenue from 2022 to 2023 from 114.49/125.94 billion yuan to 124.49/150.33 billion yuan, the net profit attributable to the parent from 56.6/6.95 billion yuan to 69.3/8.18 billion yuan, and EPS from 0.74/0.91 yuan to 0.91/1.07 yuan. It is expected that the company’s revenue in 2024 will be 187.03 billion yuan, the net profit attributable to the parent will be 10.26 billion yuan, and EPS will be 1.34 yuan, corresponding to the closing price of 9.52 yuan / share on April 28, 2022. PE will be 10 / 9 / 7 times respectively, maintaining the buy rating.
Risk tips
The iteration of independent brand models is not as expected; Ford’s strategic adjustment is less than expected; Mazda’s integration is not as expected; Avita brand development is not as expected.
