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Standing in the most favorable position of the times, the "market value myth" of Great Wall Motors is not a castle in the air
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Source: Market Cap Watch ID: shizhiguancha
If you want to choose the biggest outlet in China's industry in the past two years, it is not to build cars.
After "Wei Xiaoli", the automotive industry ushered in a number of cross-border rookies, the number of which can be divided into camps according to their old banks, and the real estate faction, mobile phone faction, and Internet faction have appeared in groups and earned enough eyeballs.
The fate of the new and old forces has been infinitely magnified in the capital market, Tesla's market value was once equivalent to the sum of eleven traditional head car companies such as Toyota, Volkswagen, and General Motors, and Rivian rushed into the top three of the global auto market value list with only 336 vehicles delivered. In short, the atmosphere of irrational prosperity pervades the entire capital market.
What is rare is that even in this one-sided crushing situation, there is still an "alternative".
From 2020 to 2021, Great Wall Motor's A-share stock price increased by nearly 5 times in two years, and last year the company's market value once exceeded 100 billion US dollars, surpassing BMW and Honda, ranking 7th in the world.
▲ Data source: wind
Such a strong force not only has the limelight in the traditional independent car companies, but also makes the new car builders who cook oil on fire have to look up.
Looking at China, BYD currently ranks first among car companies with a market value of nearly 720 billion yuan, and Great Wall Motors ranks second with a market value of nearly 420 billion yuan. But it is worth noting that nearly half of BYD's revenue comes from mobile phone-related businesses, and the revenue of the automobile business accounts for only about 43%, if the automotive field is valued alone, BYD is theoretically inferior to Great Wall Motors.
In other words, Great Wall Motors has become a substantial "market capitalization brother" in China's auto industry.
In 2020, the A stock market value of Great Wall Motor exceeded 200 billion, but Chairman Wei Jianjun still firmly believes that the company is seriously undervalued. Looking back now, Wei Jianjun really didn't say anything big.
The performance of the capital market is a peer-to-peer projection of the operating conditions of a company, and behind the soaring stock price is the continuous burst of dividends, many of which are given by the industrial environment, but more are from within the enterprise.
This article will attempt to answer the following three questions:
1. Autonomous group rise, why is Great Wall Motors looked up to by capital?
2. What is the secret of accurate and high yield and crazy output?
3, the market value of 100 billion US dollars is not easy, why say that the bigger look is still behind?
1
Local substitution goes hand in hand with counter-offensives at sea
Great Wall Motors can have today, first of all, thanks to this era.
In the history of more than 130 years of development, the world's automobile industry centers have been in many places, from Europe to the United States, and from the United States to Japan. Now it is another historic shift, and the destination is China, which is not subjective wishful thinking, but the objective conditions are ripe.
To become the world's automobile industry center, the most important thing is nothing more than two points, one is the industrial base, the other is the market space, and it just so happens that China has made sufficient preparations.
Let's start with the industrial base.
China is already the world's second largest economy and the largest industrial capital country, with 39 industrial categories, 191 medium categories, and 525 sub-categories, and is the only country in the world that has all the industrial categories in the United Nations Industrial Classification.
In 2020, the value added of China's manufacturing industry as a proportion of GDP reached 26%, far exceeding that of Germany, Japan (about 20%) and the United States (about 11%) in the same period.
Look at the size of the market.
China is the world's largest automobile consumer market, with domestic car sales reaching 25.311 million units in 2020, accounting for 32.5% of total global sales. More importantly, China's car ownership is less than 200, and the level of 500-800 in developed countries, there is still a lot of incremental space in the future.
With a strong industrial base and a huge market size, the rise of China's auto industry has logically established, and the reality is indeed so.
▲The picture is taken from the Association of Passengers
According to the latest data from the Association of Automobile Manufacturers, from January to November 2021, the sales of self-owned brands reached 7.349 million units, an increase of 22.9% year-on-year. In contrast, the growth rates of Japanese, Ashkenazi and American systems are -0.8%, -7.2% and 8.5%, respectively. Another result of this is that the market share of independent brands has increased from 35.7% last year to 40.7%.
The overall rise of domestic cars, all independent brands will benefit from it, the reason why Great Wall Motors can stand out is because it understands consumers better and will tap consumer demand, which means creating a new incremental market.
The "tank phenomenon" is the most powerful evidence.
Before Great Wall Motor launched the Tank 300, the domestic hardcore off-road market was mainly based on foreign imported off-road models, with high prices and a niche market. With strong power performance and much lower than the price of imported models, the launch of the Tank 300 directly triggered a new trend of domestic hardcore off-road, and the monthly sales record was constantly refreshed.
By November last year, the monthly sales of the Tank 300 had successfully exceeded 10,000, and it should be known that the once-extremely popular hard-core off-road representative Prado only sold 30,000 vehicles a year.
In 2021, Great Wall Motor launched a total of 30 new cars, becoming the most independent brand. Looking closely, the positioning is extremely precise, and each car seems to be tailored to a certain group.
The tank series focuses on the tenderness of the iron man, focusing on young and middle-aged men; the Great Wall Cannon aims at self-driving tours and outdoor camping; Euler Good Cat mainly attacks the urban women's market to meet the needs of transportation; Haval's first love is full of youth, positioning "the first car for young people".
From male to female, from youth to middle age, if the consumer portrait coordinate system is established on the horizontal and vertical axes of gender and age, then Great Wall Motors' models cover almost all groups within the four quadrants.
At the same time as the local market is replaced, the counterattack of the overseas market is also being carried out at the same time, and the most explosive is still the Great Wall.
In 2021, Great Wall Motor's overseas sales of about 142,800 units hit a record high, with a year-on-year growth rate of 103.7%, far surpassing SAIC, Geely, Chery and other local counterparts.
While enjoying the β of the times, it can also take the initiative to create α, which is the most fundamental reason why Great Wall Motors is looked up to by capital.
If you want to ask the reason for success, you must find the answer from within the enterprise.
2
Institutional change and technological refinement are both balanced
Precision, high frequency, Great Wall Motors can do these two things, thanks to the solution of two problems: people and technology.
On the occasion of its 30th anniversary, Great Wall Motors put forward the vision of transforming into a technology travel company, and in order to cooperate with the implementation of the strategy, the company carried out a drastic entropy reduction reform in the organizational structure.
First of all, break the inherent function-based process operation mode, "small" the organization, form an organizational form of "one car, one brand and one company", and optimize and adjust in accordance with the principle of "two links and one integration".
Second, the brand, planning, research and development departments will be opened up, and the communication barriers between each combat unit and consumers will be opened. In order to better break down the barriers of departments and positions and realize the transformation from positions to roles, Great Wall Motors has even launched a "de-generalization" initiative internally.
At the same time, Great Wall Motors also threw out a rare equity incentive plan in the A-share market, locking in talents and turning "hit workers" into "partners", which greatly improved the enthusiasm of employees.
After such an operation, the distance between producers and consumers has been shortened, the distance between enterprises and employees has also been shortened, and it is reasonable to do so well in the mining of market segments. However, the bigger secret of being able to release 30 particularly capable products in one year is still at the technical level.
A history of automobile development is the history of continuous improvement of production efficiency.
From the initial manual production method, to the large-scale assembly line production pioneered by Ford, to toyota-led lean production, and finally evolved to today's modular production. For more than a hundred years, car companies have been doing one thing: creating better products with lower costs and higher efficiency.
The so-called modular production is to ensure that the main modules such as power, chassis, and electrical system are fixed, and then adjust the size, configuration and shape of the model on this basis, and finally realize the same platform architecture collinear production of N-level models.
The advantage is that it can not only meet the diversified needs of the current models, shorten the development and production of new products and the listing cycle, but also improve the standardization of parts and reduce costs through large-scale procurement.
One sentence summary: reduce costs and increase efficiency.
Looking globally, a strong platform architecture has become standard for top automotive companies, such as Volkswagen has MQB and Toyota has TNGA. The former gave birth to the Beetle, Golf, Tiguan, etc., while the latter produced the Camry and Lexus ES.
In 2020, Great Wall Motors released three major technology brands of "Lemon", "Tank" and "Coffee Intelligence", of which "Lemon" and "Tank" are global highly intelligent modular technology platforms. Up to now, the sales of new models equipped with the three major technology brands have accounted for nearly 50%.
The construction of the modular platform has greatly improved the iteration speed of Great Wall Motors and ensured the company's high-frequency discharge in the market. But in terms of cost reduction and efficiency, modular production is not all.
In 2018, Great Wall Motors independently established four major parts companies such as Honeycomb Yichuang, Mande Electronics, Jingcheng Engineering, and Noble Automobile, which were introduced into the powertrain of the card slot, the assembly of vehicle wiring harnesses and the business of automotive heating system, chassis, interior and exterior decoration and seats. At this point, the company's parts system has officially moved from vertical closure to open symbiosis.
As a result, a more integrated and adaptable industry-wide supply chain system has further enhanced Great Wall Motors' competitiveness in terms of quality and cost.
A set of data, visible in the real chapter.
▲Source: CICC
From an absolute level, Great Wall Motors is already the enterprise with the highest profit on bicycles among its own brands; from the trend point of view, in the past few years, the profit level of Great Wall Motors has been the most resistant in its peers.
3
The stock market and the incremental market take all
Standing in the most favorable position of the times, the "market value myth" of Great Wall Motors is not a castle in the air.
The replacement of fuel vehicles by electric vehicles is an irreversible trend, but this is not achieved overnight, but it requires a long process. In the past, people invested a lot of financial and material resources in pure electric power, hoping to quickly jump from the fuel age to the pure electric era, but there is an insurmountable gap between reality and ideals.
Among other things, only the battery life has not been able to achieve freedom, taking Tesla as an example, the latest rear-wheel-drive version of the Model 3 has a cruising range of only 556km. In a country as vast as China, this endurance is obviously not enough.
Therefore, for a long time in the future, fuel vehicles and electric vehicles will coexist for a long time, and the advantage of Great Wall Motors is that both are taken.
At present, the company has formed five major brands of "Haval + Wei + pickup truck + Euler + tank", respectively, benchmarking 500,000-200,000 fuel SUVs, 150,000-300,000 fuel SUVs, 5-200,000 pickups, 5-200,000 electric cars, 200,000-300,000 yuan of urban off-road. In addition, there are two major reserve brands of "Salon" and "Beam" powered by EVs, which are used to benchmark new forces for car manufacturing.
In June last year, Great Wall Motors took the lead in the industry to release the "2025 Strategy" plan, aiming to sell 4 million vehicles per year by 2025 and increase operating income of more than 600 billion yuan.
As soon as the news came out, it triggered a heated discussion, and there were many voices of doubt.
It should be known that Great Wall Motors' sales and revenue in 2020 are 1.11 million and 103.3 billion yuan, respectively, and the completion of the task means that sales will increase nearly three times in 5 years, and revenue will rise nearly 5 times.
It's incredible to extrapolate linearly from the data of the past few years, but there's one important detail missing: hybridization.
According to the "Energy-saving and New Energy Vehicle Technology Roadmap 2.0", by 2025/2030/2035, the total proportion of hybrid vehicles (including energy-saving vehicles, PHEV and EREV) will reach 42.0%/47.8%/52.5% respectively.
It may be calculated that the current domestic passenger car sales are about 20 million vehicles per year, assuming that the future sales remain constant, according to the proportion of 42%, by 2025, domestic hybrid car sales will reach 8.4 million, while in 2020 hybrid passenger car sales are only less than 420,000.
This means that in the five years from 2021 to 2025, the domestic hybrid market will have 19 times the incremental space.
What is more noteworthy is that independent brands already have the strength to take over the hybrid market.
In 2020, BYD and Great Wall released DM-i hybrid and DHT hybrid systems respectively, and chery's Kunpeng hybrid system and Chang'an's Blue Whale hybrid system were unveiled last year. Coupled with SAIC EDU Gen2 and Geely ePro, the more capable independent car companies basically have their own hybrid systems, which ends the long-term monopoly of Honda and Toyota on the domestic hybrid market.
The highlight of Great Wall Motors is that its hybrid system is the most competitive of its own brands.
Lemon DHT adopts a highly integrated dual-motor hybrid architecture, which can achieve a balance of economy and power in the full speed domain and all scenarios. It can be driven in parallel mode, just like SAIC EDU Gen2 and Geely ePro, adapting to multi-scenario complex working conditions and obtaining high mechanical efficiency, or driving in series mode, similar to the ideal range extender system, with better fuel consumption performance.
Starting in 2022, Great Wall Motor's hybrid models will gradually start, and from BYD's practical experience, the prospects are quite optimistic. In 2021, BYD launched the "first shot" of China's hybrid, and the DM-i hybrid model sold more than 270,000 vehicles a year, a year-on-year surge of 467.6%, and even once out of stock.
Whether compared with the opponent or with yourself, it is not easy for the market value to collide with the line of 100 billion US dollars, but for Great Wall Motors, which occupies the time, place and people, perhaps this is just the beginning.
The time is that the center of the automobile industry is shifting to China, and this will inevitably be accompanied by the birth of the automobile giant. Just like Europe has Volkswagen and Daimler, the United States has GM and Ford, Japan has Toyota, China will inevitably appear in the future the world's top car companies, as a leader of the Great Wall Motors naturally have a greater chance.
Geographical advantage means that Great Wall Motors stands in the most favorable position at the turning point of the era, fuel and electric parallel, and in the field of hybrid breakthrough.
Renhe refers to the fact that Great Wall Motors has been effective in team building, forming a continuous organizational resilience and a talent mechanism that can go up and down.
By 2025, if Great Wall Motors can complete the target as scheduled, it will inevitably become a world-class car company with a market value of trillions, and the market value myth of "independent brother" may continue.