AutoBeta(AutoBeta.net)08/20 Report--

On August 19, Cyrus released its semi-annual results report for 2022. The report shows that in the first half of the year, Selis's operating income was 12.416 billion yuan, an increase of 68.14% over the same period last year; the net loss of shareholders belonging to listed companies was 1.717 billion yuan, compared with a net loss of 481 million yuan in the same period; after deducting a net loss of 1.714 billion yuan in non-recurrent profit and loss, the net loss in the same period was 1.126 billion yuan. During the reporting period, Cyrus recorded a government subsidy of 80 million yuan in the current profit and loss.

For revenue growth, Cyrus said that as the company's high-end new energy vehicle M5 began to deliver, the higher price of a single high-end new energy vehicle sales increased. For the net profit loss, Cyrus has previously said that due to the continued investment in research and development of Selis new energy vehicles, as well as the previous large investment in fixed assets, production and sales are still in the climbing stage, depreciation and amortization expenses have increased. In addition, with the market promotion of Selis new energy vehicle products, marketing expenses, labor costs and other factors have increased.

Data show that Chongqing Xiaokang Industrial Group Co., Ltd. (hereinafter referred to as "Xiaokang Co., Ltd."), originally known as "Chongqing Ba County Phoenix Electrical Appliance Spring Factory", was registered and established in September 1986, and was later restructured and renamed "Chongqing Yu'an Innovation and Technology (Group)". In June 2003, Yu'an Group and Dongfeng Company jointly established Dongfeng Yu'an vehicle Co., Ltd., each holding 50% of the shares, mainly producing "Dongfeng well-off" brand micro-cars, which is also the first example of a joint venture between state-owned enterprises and private enterprises in the history of New China. In May 2007, Yu'an Group changed its name to "Chongqing Xiaokang Industrial Group Co., Ltd." and "Dongfeng Yu'an" changed its name to "Dongfeng well-off".

In 2016, Xiaokang spent $30 million to create a new energy brand, SF MOTORS, in Silicon Valley, and went deep into Tesla's hinterland to build new energy vehicles. However, the new energy car-building road of well-off shares is not smooth, not only losing money year after year, but also a very low sense of existence in the market. In April 2019, SERES Cyrus made its debut at the Shanghai auto show. The first model, the SERES SF5, sold at a subsidized price range of 278000 to 458000 yuan, but the car rim did not know who it was, and sales continued to be dull.

In April 2021, Xiaokang shares and Huawei signed a memorandum of cooperation in the field of new energy vehicles, launching the first cooperation model, Cyrus Huawei Smart SF5, with a price range of 21.68 yuan to 246800 yuan, not only on Huawei's official website, but also in Huawei stores and flagship stores. Judging from the data, Cyrus SF5 sales did soar after Xiaokang shares partnered with Huawei, but the effect was not good. Data show that Cyrus SF5 sold 7420 vehicles from April to November 2021.

In order to break the situation, Xiaokang shares carried out a second cooperation with Huawei to launch the high-end new energy brand AITO, and the first model, the AITO M5, was officially launched at Huawei's flagship winter new product launch. At the press conference, Yu Chengdong spent more than an hour introducing the M5 and stressed that the M5 is Huawei's "deeply involved in R & D, design and manufacturing from scratch, fully reflecting Huawei's ability and concept of smart cars." "the AITO M5 is designed by the Huawei team," Yu said at the press conference. Facts have proved that the M5 has indeed achieved relatively good results. The data show that the M5 sold a total of 26348 vehicles from January to July in 2022, of which 6128 were sold in July.

After reaching a cooperation with Huawei, the share price of Xiaokang shares soared, reaching as high as 90.50 yuan. However, both the market and capital are optimistic about Huawei behind the well-off shares, not the well-off shares. Take the market as an example, when the M5 was just delivered, in order to improve the recognition of the products, many car owners bought the replacement logo of Cyrus online and replaced it with "HUAWEI", "Huawei of China" and so on.

Huawei has said publicly that it will not build cars and that it is only a partnership with Xiaokang shares, but in the eyes of consumers, the selling point of the M5 lies in carrying Huawei Hongmeng cockpit, and its core driving force comes from Huawei Drive ONE pure electric drive extended range platform. In addition, Yu Chengdong also spoke crazily for M5 on many occasions.

The matting also reflects users' lack of confidence in the Selis brand. Consumers' awareness of Huawei is much higher than that of Jinkang Selis, and it also shows that the M5 is a veritable Huawei car in the eyes of consumers. In response to the matting incident, Zhang Zhengping, chairman of Xiaokang shares, responded: "whether the product is good or not, the market has the final say." If the product doesn't work, no matter whose label it is posted, no one will buy it. "

Due to Huawei's high sense of existence, online and offline sales channels and core components are provided by Huawei, Xiaokang shares are rumored to be reduced to Huawei's contract factory. In response to the relevant questions, Xiaokang has repeatedly stressed that "it was and is not a contract factory, let alone a contract factory, and Huawei has created a deep cross-border cooperation model for joint business."

In fact, it doesn't make much sense whether Xiaokang shares are contract manufacturers and whether Huawei builds cars. From a fundamental point of view, Xiaokang is responsible for research and development, production and delivery, while Huawei is responsible for brand sales channel promotion. However, in the process of research and development of the M5, Huawei led the research and development. Apart from the Hongmeng cockpit and rig, the "Huawei" logo on the car interior and charging posts is clearly visible, even in the official marketing promotion. The words "well-off" or "Selis" are rarely seen. According to Yu Chengdong, "in addition to providing key automotive hard parts, Huawei's mobile phone industrial design team, software team and user experience team are also involved in the cooperation."

The data show that the first loss of Xiaokang shares was in 2020, when the net loss increased from 1.729 billion yuan to 1.824 billion yuan in 2021. The loss was due to the soaring marketing expenses, R & D costs and team expansion after the transformation of the new energy vehicle market. To sum up, as of the first half of 2022, Xiaokang shares had a net loss of 5.27 billion yuan in two and a half years.

To be sure, despite the continued high sales of the M5, Huawei is the beneficiary rather than Xiaokang shares. It is understood that in addition to well-off shares, Huawei has also decided to cooperate in smart car business with Changan, Chery, Jianghuai and Polar Fox. If Huawei deepens cooperation with other car companies in the future, the position of well-off shares will be in jeopardy. In addition, there is only one year left before Huawei's agreement to "not build cars".

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