Recently, Changan Automobile (000625.SZ) has been moving frequently. After the dark blue G318 was launched in June, it has launched new products non-stop. The official account of Deep Blue Automobile said that the dark blue S07 was officially launched on July 25. Recently, Changan Qiyuan E07 has also been officially launched. It has opened blind ordering and plans to be officially launched within the year.
Securities Star noticed that the cumulative sales of Changan Automobile hit a new high in the first half of this year, of which the independent brand new energy increased by nearly 70% to 299,100 units year-on-year. But this is not without hidden worries. Since the "Shangri-La" plan was announced in 2017, Changan Automobile has been accelerating the pace of new energy transformation, planning to bid farewell to traditional fuel vehicles in 2025. But at present, fuel vehicles are still the keynote of Changan Automobile to maintain the market, and the sales of independent brand new energy only account for 20% of the total sales. Among the three independent new energy brands, Avita ranked last, with sales of only 29,000 units in half a year. In the face of the slow transformation, Changan Automobile has stepped up its offensive of new energy products.
Although the total sales are good, but the performance of Changan Automobile is disappointed. The company expects that the net profit attributable to the parent in the first half of this year will drop by 67.33%. What is puzzling is that the net profit after deducting non-profit in the same period last year in the performance forecast shows that it is 1.242 billion yuan, which is 267 million yuan less than the data reported in last year’s interim report. According to the data reported in last year’s interim report, the net profit of Changan Automobile after deducting non-profit in the first half of this year has declined properly.
The pace of transformation is slow
According to the data, Changan Automobile’s main business covers the R & D, manufacturing and sales of complete vehicles, as well as the R & D and production of engines. The company actively develops intelligent networked new energy vehicles, and builds five independent automobile brands: Avita, Deep Blue Automobile, Changan Qiyuan, Changan Attractive Force, and Changan Kacheng to promote the electrification transformation of independent brands. At the same time, it produces and sells joint venture brand models through joint ventures Changan Ford and Changan Mazda.
In order to better adapt to the wave of new energy, Changan Automobile announced the launch of the "Shangri-La" plan in October 2017, that is, to complete the creation of three new energy special platforms in 2020; to completely stop the sale of traditional fuel vehicles in 2025, to achieve the electrification of the whole spectrum of products, and to invest 100 billion yuan in the entire new energy vehicle field. With the acceleration of transformation, Changan Automobile has now deployed three smart electric brands: Avita, Deep Blue Automobile, and Changan Qiyuan.
In the first half of this year, Changan Automobile handed over a bright sales report card. The company’s cumulative sales in the first half of the year were 1.3341 million vehicles, an increase of 9.74% year-on-year, a new high in seven years. Among them, the cumulative sales of self-owned brand new energy in the first half of the year were 299,100 vehicles, an increase of 69.87% year-on-year.
Securities Star noticed that Changan Automobile has been developing in the field of fuel vehicles for many years, and its models are mainly fuel vehicles, and new energy vehicles have not yet formed a strong influence. According to the plan, Changan Automobile will stop selling traditional fuel vehicles next year, but the current sales of its own brand new energy account for only 22%. It can be seen that in the nearly 7 years since the "Shangri-La" plan was proposed, the development of new energy of Changan Automobile has been rather slow.
In terms of sub-brands, Changan Qiyuan delivered 73,000 vehicles in the first half of this year, Avita delivered 29,000 vehicles, and the delivery volume of dark blue vehicles increased by 96% year-on-year to 83,900 vehicles.
Avita and dark blue cars are brands built to cater to the mid-to-high-end market, but they are not as good as expected in terms of sales. In 2023, dark blue car sales will be 137,000. This year’s sales target is 280,000 domestic sales, and the global sword is 450,000. Looking at China alone, dark blue cars will double sales this year. But it has only completed about 30%, and about 33,000 cars will be sold every month in the second half of the year to complete the task.
Securities Star noticed that there were three products on sale before the dark blue car, namely the dark blue G318, the dark blue SL03 and the dark blue S7, of which the dark blue G318 was just listed in June this year. This also means that the sales responsibility for the first five months of this year is the dark blue SL03 and the dark blue S7. It is not easy to hit the annual target with only two products.
On the other hand, Avita’s sales performance has not been very good since it was delivered in December 2022. Although the sales volume in the first half of the year exceeded that of the whole of last year, the half-year completion rate was about one-third of the annual sales target, and it was also at the end of a number of new power brands.
Faced with the slow pace of transformation, Changan Automobile has started a new round of product offensive. Earlier this year, Changan Automobile declared a number of new models to MIIT in one go, of which Changan exclusive 6 models. Judging from the product launch in the second half of the year, in addition to the dark blue S07, which was officially launched on July 25, the dark blue car will launch L07 in September, and the S05 will also be launched this year. In addition, Changan Qiyuan will launch Changan Qiyuan E07 in addition to the current A05, A07, and Q05; in the second half of the year, Avita will fully enter the range extension field, and then Avita 07 will be launched, as well as a new sedan product.
Past data has changed, and sales in other sectors account for nearly 30%
2024 semi-annual performance forecast shows that Changan Automobile is expected to achieve a net profit of 2.50 billion yuan – 3.20 billion yuan in the first half of the year, a decrease of 58.19% – 67.33%; the corresponding net profit after deduction 800 million yuan – 1.50 billion yuan, an increase of -35.58% to 20.79%.
For the sharp decline in performance, Changan Automobile said that the main reason is that in 2023 Quarter 1 acquired Deep Blue Automotive Technology Co., Ltd., the original holding of its equity was re-measured at fair value to confirm non-recurring profit and loss of 5.02 billion yuan. It is reported that in 2023 Quarter 1, Changan Automobile spent 1.332 billion yuan to acquire a total of 10.34% equity of Deep Blue Automobile from Changxin Fund and Undertaking Fund, and the shareholding ratio of Deep Blue Automobile became 51%, thus forming a controlling stake.
Securities Star noted that in the first half of last year, Changan Automobile’s net profit and net profit after deducting non-profit were 7.653 billion yuan and 1.509 billion yuan respectively. The net profit after deducting non-profit shown in the performance forecast was 1.242 billion yuan, with a difference of 267 million yuan in the middle. Changan Automobile did not explain the reasons for the change in the data in the performance forecast, nor did it correct it in the previous announcement. If the data is reported in the first half of last year, Changan Automobile’s net profit after deducting non-profit in the first half of this year fell by 0.6% -46.99% year-on-year.
Due to the increase in income and decrease in profits of Changan Automobile in the first quarter of this year, the overall profit performance in the first half of the year was dragged down. The current revenue was 37.02 billion yuan, an increase of 7.14% year-on-year; the corresponding net profit attributable to the parent was 1.158 billion yuan, a decrease of 83.39%.
Fortunately, the performance has improved in the second quarter. The net profit of the parent is expected to be 13.4 to 2.04 billion yuan, an increase from the same month; the net profit after deducting non-profit is expected to be 6.9 to 1.39 billion yuan, an increase from the same month. Changan Automobile said that it is mainly due to the upward trend of the company’s brand, the optimization of product structure, and the stability of its own brand profitability; The profitability of the joint venture business has gradually improved.
In the field of joint venture brands, Changan Ford and Changan Mazda sold 19,500 and 5,500 vehicles respectively in June, both of which decreased year-on-year. However, the cumulative sales in the first half of the year still achieved growth, of which Changan Ford sold 111,600 vehicles and Changan Mazda 36,800 vehicles, an increase of 13.36% and 14.44% year-on-year respectively. During the same period, the sales of independent brands 1.1213 million vehicles, an increase of 9.88% year-on-year.
Securities Star noticed that the current support for the overall sales volume of Changan Automobile, in addition to Chongqing Changan, which accounts for the largest proportion, is the second largest other sector.
The June production and sales express shows that 375,000 of the cumulative sales of over 1.30 million vehicles in Changan Automobile came from other sectors, accounting for 28.11%, an increase of 0.48 percentage points from 27.63% in the same period last year.
It is reported that other segments of Changan Automobile include sub-segments of joint ventures such as Changan Leapfrog and Jiangling Investment. The main products of Changan Leapfrog are light trucks, minibuses, special vehicles and new energy vehicles. In addition to a few minibuses, more are freight vehicles.
In contrast, SAIC Motor Group (600104.SH), its cumulative sales volume in the first half of the year was 1.827 million, and the sales volume of other sectors was 16,800, accounting for 0.92%; GAC Group (601238.SH) sold 863,000 vehicles in the first half of the year, and other sectors recorded sales volume of 3897 vehicles, accounting for only 0.45% in the group.
