AutoBeta(AutoBeta.net)04/16 Report--

On April 15, Jianghuai Automobile released its first-quarter results for pre-sale. According to the announcement, the net profit of JAC Motor belonging to shareholders of listed companies is expected to lose 307 million yuan in the first quarter, and the net profit belonging to shareholders of listed companies after deducting non-recurrent gains and losses is expected to lose 485 million yuan. As for the reasons for profit losses, Jianghuai Motors said that due to the epidemic and chip shortage, 129400 cars of various types and chassis were sold in the first quarter of 2022, down 11.67% from the same period last year. At the same time, the rising prices of chips, batteries and other raw materials led to a rise in input costs, and the gross profit of the main business in the first quarter of 2022 decreased by about 418 million yuan compared with the same period last year. In addition, the income from the disposal of assets affecting profit and loss during the reporting period was about $8 million, a decrease of about $158 million over the same period last year.

It is worth mentioning that according to Jianghuai Automobile's annual report, Jianghuai Automobile realized operating income of 40.214 billion yuan in 2021, down 6.11% from the same period last year, and realized net profit of 200 million yuan belonging to shareholders of listed companies, an increase of 40.24% over the same period last year. In other words, JAC Motor lost its net profit for the whole of 2021 in the first quarter of this year.

In fact, JAC has been losing money since 2017. According to the data, the government subsidies included in the profits and losses of Jianghuai Automobile from 2019 to 2021 are 1.117 billion yuan, 1.303 billion yuan and 2.005 billion yuan respectively, while the net profits of the same period are 106 million yuan, 143 million yuan and 200 million yuan respectively. It can be said that if JAC had no government subsidy, it might have been "ST" by now.

From the perspective of the market environment, affected by the epidemic and the supply of spare parts, Jianghuai Automobile, which is nearly 60 years old, is indeed facing many challenges and pressures. Take the new energy vehicle market as an example, new energy vehicles have long become a "battleground" for major car companies, and although Jianghuai Automobile "holds Volkswagen on the left and comes on the right", the market performance does not seem to be optimistic.

In May 2020, Volkswagen China acquired 50% of JAC Holdings, the largest shareholder in JAC, and increased its stake in JAC Volkswagen to 75%, realizing its holding in JAC Volkswagen. According to the electric vehicle planning of Volkswagen Group, Volkswagen Anhui is expected to be built into the core production base of the next generation of pure electric models, with the introduction of MEB and SSP car-building platforms, bringing opportunities for Jianghuai Automobile extension cooperation. A new brand "Sihao" was unveiled at the 2020 Beijing Auto Show, as one of Volkswagen's sub-brands, covering the market of traditional fuel vehicles and new energy vehicles. However, although Sihao is a joint venture brand between Jianghuai Automobile and Volkswagen, Jianghuai Automobile does not have much say.

For NIO, Jianghuai signed a strategic cooperation framework with NIO as early as 2016 to produce ES8 and ES6 models. In March 2021, Jianghuai Automobile reached a deepening cooperation with Xilai Automobile and established Jiang Lai Advanced Manufacturing Technology (Anhui) Co., Ltd., in which Jianghuai Automobile holds 51% of the shares and takes the initiative. As the representative of the new power brand, the cooperation between Jianghuai Automobile and Xilai Automobile will feed back the products, services and marketing of Jianghuai Automobile.

However, working with Xilai Motors is not easy. Since July 2021, it is difficult to improve the delivery volume of NIO, and it has been surpassed by Xiaopeng, ideal, Nezha and other new brands. Take the latest delivery volume as an example, four new power car companies sold more than 10,000 vehicles in March, of which Xiaopeng was the highest of 15414, Nawei was 12026, ideal car and zero car were 11034 and 10059, respectively. As the leader of the New Power brand, it delivered less than 10,000 vehicles in March, only 9985, ranking lowest among the New Power brands that have released delivery data. For Jianghuai Automobile, the production performance of NIO affects not only production and sales, but also operating performance.

Earlier, Jianghuai Motor said when it announced its 2020 results that it planned to have total revenue of 50.8 billion yuan in 2021, but in fact it was only 40.3 billion yuan. For the 2022 target, Jianghuai Motor is expected to reduce its total revenue to 45 billion yuan, while vehicle and chassis production and sales are increased to 568000 vehicles.

The rise in sales but the narrowing of revenue may suggest that JAC's development in 2022 is not optimistic. "simultaneous development of passengers and businessmen" has always been the strategic policy of Jianghuai Automobile, and the commercial vehicle sector plays an important role, but affected by macro factors such as the continuous rise in international crude oil prices and the slowing down of infrastructure, the decline in sales in the commercial vehicle sector with stronger profitability will also directly lead to a reduction in revenue of JAC Automobile. In addition, in the passenger car market, Jianghuai Motor owns Jianghuai, Ruifeng, Sihao and other brands, among which Sihao, a joint venture with Volkswagen in China, bears greater development expectations, but the current development of the brand is mediocre. There is also a lot of uncertainty about whether it can be squeezed into the front end of the market. As for Xilai Automobile, it is currently expanding its product camp and will deliver three new models of ET7, ET5 and ES7 this year, but whether the situation can be improved still needs to be tested by the market.

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