BYD Automobile Co., Ltd. recently successfully completed the wholly-owned acquisition of Xi'an Xiwo Bus Co., Ltd., with a total transaction value of up to 166 million yuan. This means that Xiwo Bus officially became a wholly-owned subsidiary of BYD, and the original shareholder Xi'an Hi-Tech Group Co., Ltd. completely withdrew.
Xiwo Bus is a company focusing on the production and marketing of buses in Xi'an, with strong technology and experience in the team to create high-quality and high-performance buses, including city, tourism, school buses and other types. The products are diverse to meet all kinds of needs, and the domestic and foreign markets have good performance. However, in the face of the rise of other modes of transportation, its market advantage has gradually weakened.
As early as September 2011, Volvo Bus withdrew from Xiwo Bus and transferred its shares to Xi'an Aircraft Industry Group. Previously, the two sides worked closely together. After Xi'an Aircraft Industry Group took over, it strengthened the management and control of Xiwo to promote its development.
With innovative technology and brand influence, BYD has performed well in the domestic and foreign markets. Since 2003, BYD has invested in the construction of a number of new energy commercial vehicle bases in Xi'an to expand the field of commercial vehicles. After the acquisition of Xiwo Bus, BYD's position in the global bus market has been more stable, and the layout of the new energy industry chain has been improved. Integrating Xiwo resources, BYD will promote the technological progress of new energy buses and inject new impetus into the industry.
It is worth mentioning that BYD's latest financial report shows that its debt exceeds 530 billion, and the debt ratio exceeds the 76% warning line.
In recent years, BYD has developed rapidly, and the scale of assets and liabilities has expanded, while revenue and profits have also shown an increasing trend. According to semi-annual data, from June 2023 to June 2024, BYD's assets increased from 591.1 billion yuan to 686.2 billion yuan, and its liabilities increased from 460.7 billion yuan to 531.6 billion yuan, and the debt ratio decreased slightly to 77.47%. Although the debt ratio remains high, BYD's expansion has relied heavily on borrowing. In addition, the current ratio decreased from 0.67 to 0.66 and the quick ratio decreased from 0.44 to 0.36, both significantly below the normal level for industrial companies (current ratio of 1.5-2.0 and quick ratio of about 1.0).
In terms of cash flow, BYD's net cash flow in June 2023 was 81.9 billion yuan, which plummeted to 14.1 billion yuan in June 2024, a decrease of 67.8 billion yuan.
Comparing the June 2024 data of Great Wall, BYD and SAIC, the asset scale of Great Wall is 198.6 billion yuan, BYD 686.2 billion yuan and SAIC 973.1 billion yuan respectively; The scale of liabilities is 124.6 billion yuan for Great Wall, 531.6 billion yuan for BYD and 626.7 billion yuan for SAIC; The debt ratios were 62.73%, 77.47% and 64.4% respectively. In terms of the scale of assets and liabilities, Great Wall is the smallest, followed by BYD, and SAIC is the largest; However, BYD has the highest debt ratio under medium asset size. If the new energy vehicle industry faces risks or related policies such as subsidy reduction and tax incentives are cancelled, BYD's ability to resist risks is obviously weaker than Great Wall and SAIC.
In 2024, BYD will also challenge its sales target of 4.5 million units. In recent months, BYD's monthly sales have remained above 300,000 units, and in December 2023, it set a new record, and at this momentum, 4.5 million units may be completed in less than a year. Until then, sufficient capacity is the key to the ramp-up in deliveries.
In addition, BYD is still exploring uncared areas of the auto market in order to achieve full price segment coverage, let's wait and see.