AutoBeta(AutoBeta.net)07/10 Report--

As of July 8, 2020, BYD has become the largest Chinese automaker by market capitalization, followed by SAIC, Xilai, Geely and GAC GROUP, respectively, according to the official account of CICC Automotive Research. However, CICC believes that the valuation of BYD as part of the vehicle has not yet been fully realized.

As of July 9, BYD shares rose 3.72% to 87.6 yuan, with a market capitalization of 238.99 billion yuan, while SAIC shares fell 0.62% to 19.20 yuan, with a market capitalization of 224.32 billion yuan. BYD's market capitalization surpassed SAIC to become the first vehicle company in China.

BYD and SAIC are among the top car companies in China, but both in terms of production and marketing scale. The operating income or profit level of SAIC is much higher than that of BYD, and the gap between the two companies is not the slightest, so how does BYD catch up with SAIC in market capitalization?

BYD and SAIC are both important auto companies in the fuel vehicle market, but BYD has a more prominent layout in new energy vehicles and power batteries than SAIC. Data show that BYD sold 461400 vehicles in 2019, including 229500 new energy vehicles. As the development trend of future vehicles, new energy vehicles have gradually become the main sales force of BYD.

While developing new energy vehicles, BYD has also accelerated its layout in the semiconductor field. In April this year, BYD Microelectronics, a subsidiary of BYD, changed its name to BYD Semiconductor through internal restructuring and plans to go public. It is precisely because of the earlier layout in the field of new energy vehicles and investment in the semiconductor sector that the market has given BYD a higher valuation premium.

Of course, BYD is also facing tremendous market pressure at present. Due to the epidemic, the market downturn and new energy subsidies and other factors, BYD's sales performance obviously fell short of expectations. In the first half of the year, car sales fell by 30.45% to 158600, of which new energy vehicle sales fell by 58.34% to 60700. New energy vehicle sales have declined for 12 consecutive months.

SAIC, as the first auto company in China by sales, began to show a sharp decline in its performance in 2019. According to the data, SAIC's sales fell 11.5% to 6.238 million vehicles in 2019, operating income fell 6.53% to 843.324 billion yuan, and net profit fell 28.9% to 25.603 billion yuan.

In 2020, SAIC showed great pressure under the influence of COVID-19, facing severe performance challenges when sales ranked first. In the first quarter, SAIC's sales fell 55.71 per cent to 679000 vehicles, operating revenue fell 47.08 per cent to 105.9 billion yuan and net profit fell 86.42 per cent to 1.121 billion yuan.

Entering the second quarter, the overall recovery of China's auto market is obvious, and a number of brands have returned to the sales level of the same period in April and May, but SAIC's major brands still decline to varying degrees, which is lower than the average market level. market share has fallen sharply.

SAIC's performance also alarmed senior officials in Shanghai, who asked SAIC to study brand, sales and quality issues, while relevant departments in Shanghai increased support for SAIC brands and a number of new cars.

In June, SAIC finally returned to the level of the same period last year, with sales up 2.77 per cent to 479400 vehicles. However, among the major brands of SAIC Group, only SAIC Volkswagen and SAIC GM are on the list of domestic Top10 companies, and sales are in a state of decline.

SAIC's loss to the overall market caused strong dissatisfaction among shareholders. Some shareholders said that under the influence of the market downturn since last year and the COVID-19 epidemic this year, SAIC, as a large automobile group ranked first in the country, did not perform well. Instead of continuing to expand its market share in the market downturn, it lost the market. Chen Hong, chairman of SAIC, said, "strive to outperform the market this year." It is true that the performance was not good some time ago, and we also hope that shareholders can cheer up more and not always throw cold water on it. "

On the whole, negative performance in the first half of this year due to many adverse factors is inevitable. However, in view of the diminishing impact of the current epidemic on the domestic car market, the increase in sales in previous months is basically due to the fierce demand for car purchases in the previous months, so the second half of the year is more challenging for car companies. In the context of the easing demand for cars and the still declining car market, it is particularly critical whether car companies can maintain their current performance.

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