BYD Still Has "Anxiety"

On February 18, it was reported that hillhood capital invested 200 million US dollars (about 1.3 billion yuan) to participate in the latest round of private placement of BYD shares. The news was then confirmed. Li Yunfei, general manager of BYD's brand and public relations division, said, "we would like to express our gratitude and recognition to Hillhouse for participating in this round of fixed increase. I believe that the combination of forward-looking capital and advanced intelligent manufacturing will bring better development prospects to enterprises. "

It is worth mentioning that before Hillard embraces BYD, this long-term investment company focusing on the automobile industry has already cleared all the stocks of Weilai, Xiaopeng and ideal automobile before December 31 last year. The clearance of "weixiaoli" has made a bet on BYD and Hillhead capital, which will shift its tentacles from the new force of car making to the layout of new energy industry chain of traditional automobile enterprises.

It is worth noting that from 47.69 yuan at the beginning of 2020 to 194.30 yuan at the end of the year, BYD's stock price nearly quadrupled in 2020, and its market value exceeded 700 billion yuan for the first time at the end of January 2021. However, contrary to the continuous rise of stock price, BYD's vehicle business performance in 2020 is not optimistic. BYD, a giant with a market value of 700 billion yuan, is also "anxious".

"Weixiaoli", a high-altitude warehouse clearing company, has made a bet on BYD

Hillhouse capital's fixed increase comes from the announcement of fixed increase plan for H shares of BYD in early December last year. It plans to issue no more than 20% of the total number of H shares, that is, no more than 183 million shares. According to the announcement, BYD plans to use the net raised funds for supplementary working capital, repayment of interest bearing debts, R & D investment and general enterprise purposes. Last month, BYD's fixed increase plan for H shares was approved by the CSRC.

On February 13, Hillhouse announced its latest position of US stocks at the end of the fourth quarter of 2020 on the website of the securities and Exchange Commission (SEC). According to the data, due to the reduction of holding a number of heavy stocks, the size of Hillhouse's position decreased slightly, from $13.202 billion in Q3 to $12.578 billion. Among them, clearance of new forces of car building Weilai, Xiaopeng and ideal stocks.

According to the public data, Hillhead capital was once keen to participate in the investment of new automobile manufacturing forces. It once led the investment of 100 million US dollars in the round a financing of Weilai, continued to invest in the C and C + rounds, participated in the B and C + financing of Xiaopeng automobile, and participated in the IPO of ideal automobile. In the third quarter of 2020, Hillard capital purchased 2412000 shares, 1671000 shares and 917000 shares of Weilai, ideality and Xiaopeng, respectively. At that time, the stock market value was 51.177 million US dollars, 29.057 million US dollars and 18.395 million US dollars, totaling nearly 100 million US dollars. As of December 31, 2020, compared with the end of the third quarter, the three companies have increased by 130%, 66% and 113% respectively.

"At present, the stock prices of Weilai, idealist and Xiaopeng are high enough, and the relationship between China and the United States is uncertain at present. It is safer for the three stocks listed in the United States to be transferred to China by Hillhead capital clearance." On February 21, Zhang Junyi, deputy general manager and CSO of Ping An Group's smart enterprises, said in an interview with the reporter of the 21st century economic report.

It is worth noting that this is not the first time Hillhouse capital has cleared the shares of Weilai automobile. In the third quarter of 2019, Hillard capital reduced its holdings of 68.12% of the shares of Weilai, and in the fourth quarter of the same year, all positions were cleared and no longer held its shares. At that time, Weilai's stock price had fallen to the red line of $1. With the capital injection of up to 10 billion yuan by Hefei Municipal Government in Anhui Province in the first half of 2020, Weilai has started to extricate itself from difficulties, and its share price and market value have risen together. In the third quarter of last year, Hillard capital re established its position to buy Weilai, and it cleared its position again in the fourth quarter.

Talking about the difference between the two clearance, Zhang Junyi told reporters: "one is to cut the meat to stop loss, the other is high-level liquidation, big investment opportunities are not missed."

It is worth noting that the clearance of three new forces of car building does not mean that Hillhouse is no longer optimistic about the new energy sector, and the logic of its heavy position in the upper and middle reaches of the new energy industry chain has not changed.

In July last year, Ningde times launched a directional capital increase, and Hillhead capital subscribed for 10 billion yuan at a price of 161 yuan per share, becoming the ninth largest shareholder of Ningde times. Since the second half of last year, Ningde era has risen sharply. By the end of February 22, the stock price of Ningde times closed at 375 yuan / share, with an investment margin of 1.33 times.

In addition, since the second half of 2020, Hillard capital has invested in the photovoltaic and lithium industry of the new energy industry chain, including Longji (601012. SH), Tongwei (600438. SH), enjet (002812. SZ) and Xinyi energy (03868. HK) of Hong Kong stock. These battery and material industries, which are located in the upstream of new energy, may be the "long-term value" of electric vehicle track in the eyes of Zhang Lei, founder of Hillhouse capital.

According to Zhang Xiang, an independent auto analyst, "this can be seen as an early warning of the bursting of the bubble of new forces in car manufacturing." On February 22, in an interview with the 21st century economic report reporter, he said, "as the gap between traditional automobile enterprises and new automobile manufacturing forces is gradually narrowing, the fund shortage of new automobile manufacturing forces is becoming more and more obvious."

Previously, it was reported that Hillhouse capital originally planned to participate in the subscription with a higher amount, but it did not get a positive response from BYD, and the final price was set at $200 million. Belong to the new energy track, hillhood capital focuses on adjusting the position of BYD, and what does it like about BYD?

"BYD's batteries and vehicles have opportunities, and its lithium iron phosphate technology is spreading rapidly, even compared with Ningde era." Zhang Junyi said.

Indeed, thanks to the rapid development of the new energy vehicle industry, the power battery field is quite popular. BYD has a long history of layout in the field of power batteries. In March last year, BYD launched a new generation of battery products, blade batteries, and then loaded them into new energy vehicles of BYD brand and other brands. However, in the past year, no new vehicles of other car companies using the blade batteries of BYD were put on the market.

At the end of January this year, a record of BYD's internal teleconference circulated on the Internet showed that BYD will supply blade batteries for FAW and Hongqi, and is expected to ship in the second half of the year. According to the official website of the Ministry of industry and information technology, the newly declared Hongqi pure electric car E111 will use lithium iron phosphate battery produced by Chongqing Fudi battery company. The Chongqing factory of Fudi battery is the location of BYD's blade battery production line. In addition, according to media reports, BYD's blade battery has been designated by Hyundai Motor Group and a Hyundai project team has been established. It is expected to start supplying overseas next year.

According to SNE research, a market research company, by 2023, the power battery demand of new energy vehicles is expected to reach 406gwh, the supply is expected to be 335gwh, and the gap is about 18%; by 2025, this situation will further deteriorate, and the supply gap will reach about 40%. As the "heart" of new energy electric vehicles, the power battery accounts for 30% - 40% of the total vehicle cost. In other words, the enterprises that have mastered the core battery technology and battery supply have a huge voice, and the corner of the capital market is becoming increasingly hot. After holding the Ningde era, it is understandable that hillhood capital has participated in the subscription of BYD, which has been deeply cultivated in the battery field for a long time.

In addition, some analysts pointed out that under the background of the current "chip shortage" spreading, Hillhouse capital's subscription to BYD is focused on its semiconductor business. At the end of last year, BYD semiconductor's spin off and listing once attracted market attention, which was considered as seeking a new profit growth point. In April last year, BYD showed the intention of splitting BYD semiconductor. In the next two months, BYD semiconductor completed two rounds of strategic financing, with a total financing amount of 2.7 billion yuan. After the financing, the valuation of BYD semiconductor has exceeded 10 billion yuan. At present, BYD semiconductor has received the guidance of CICC, and has carried out the guidance and filing in Shenzhen Securities Regulatory Bureau. The split listing is only one step away.

Zhang Xiang said: "Hillhouse capital investment in BYD is not necessarily in favor of its chips, because BYD's IGBT chips are mainly self-sufficient and have less external supply. As a traditional automobile enterprise, BYD has strong strength, ranks top in the battery industry, has a wide range of industrial chain layout, diversified business types, strong anti risk ability, and has a large development prospect and space. "

In fact, before Hillhouse capital increased its capital to BYD, the capital market was optimistic about BYD's development prospects for many times. According to Goldman Sachs research paper, BYD's target price was raised to HK $293 per share, giving it a "neutral" rating. JP Morgan has also increased its holdings of BYD Hong Kong stock for many times in 2020.

"Anxiety" of 700 billion market capitalists

The rise of market value cannot hide the decline of sales volume. According to the data, from January to December 2020, BYD's cumulative sales volume was 427000, a year-on-year decrease of 7.46%. Among them, the cumulative sales volume of new energy vehicles was 189700, a year-on-year decrease of 17.35%.

BYD's 2020 semi annual report shows that as one of BYD's three major business pillars, BYD's auto sector achieved revenue of 32.072 billion yuan during the reporting period, down 5.62% year-on-year. It is worth noting that the auto business accounts for 53.01% of the group's revenue. The implication is that BYD's non Automotive business accounts for half of the group's revenue, and the other two businesses mobile phone parts and assembly business The revenue was about 23.38 billion yuan, up 0.24% year on year; the revenue of rechargeable battery and photovoltaic business was about 4.791 billion yuan, with a year-on-year growth of 7.59%.

In January, Wang Chuanfu, chairman of BYD Co., Ltd., said in a speech at the forum of China's 100 people's Congress of electric vehicles, "2021 will be the first year for the rapid development of electric vehicles in China. The industry pattern will be accelerated to adjust, and the time is ripe for electric vehicles to completely replace fuel vehicles. In the next five years, the compound growth rate of the (new energy vehicle) industry will reach more than 37%

But BYD has a long way to go in the development of new energy vehicles. According to the 2020 new energy vehicle sales list released by the China Federation of passenger transport in January, Tesla Model 3 topped the list with 137000 units, Wuling Hongguang Mini EV and Euler R1 ranked second with 112800 and 47000 respectively, while Qin EV and Han eV of BYD ranked fifth and eighth with 41000 and 29000 respectively. The sum of sales of both was only half of Tesla's sales.

In addition, it is worth noting that the increasingly fierce power battery competition has become BYD's worry. SNE, a Korean market research institution According to the global power battery market data released by research in 2020, from January to December 2020, the installed capacity of global power batteries in electric vehicles will reach 137gwh, with a year-on-year increase of 17%. Among them, Ningde era's annual installed capacity reaches 34gwh, with a year-on-year growth of 2%; LG NEW energy, with an installed capacity of 31gwh, ranks second in the world with a market share of 22.63%; Panasonic ranks third in the world with an installed capacity of 25gwh The market share is 18.25%; BYD's installed capacity is 10 GWH, ranking fourth, which is three times more than that of Ningde era.

Since 2021, BYD has begun to accelerate. BYD's strategic layout has gradually become clear after a series of actions, such as the release of a new logo, the establishment of Chongqing Fudi Battery Research Institute Co., Ltd., large-scale capital increase of subsidiaries, and adjustment of organizational structure.

On February 2, it was reported that BYD would adjust the organizational structure of its auto business, involving the appointment and adjustment of a number of senior executives. At that time, the reporter of the 21st century economic report confirmed to BYD that the relevant person in charge replied "basically true". During the organizational structure adjustment, BYD officially established four business departments, namely, dynanet sales division, E-Net sales division, brand and public relations division, and after-sales service business department. The general managers of each department are Lu Tian, Zhang Zhuo, Li Yunfei and Gao Zikai.

BYD official said, "this adjustment will be more conducive to BYD's all-round improvement in brand building, product planning and marketing, customer experience, etc., and build more valuable automobile brands with partners and users to match the development needs in the next 3-5 years."

At present, BYD's product series include Qin, Tang, song, yuan, Han and E series. Among them, e series was launched in 2019, mainly focusing on high-quality pure electric cars, complementary to the mid and high-end Dynasty Series. Among them, the selling price of BYD yuan and E series products is below 100000 yuan, the price range of Qin and Song Dynasties is between 100000 yuan and 200000 yuan, and the price band of Tang and Han Dynasties is mainly about 200000-300000 yuan.

All along, BYD's chaotic product line and naming plan have been criticized. Taking Qin as an example, there are a new generation of Qin, Qin pro and Qin plus models. The three models have three different powertrain versions: fuel, EV and DM, and the powertrain versions of each model are different. Recently, with the introduction of DM-I hybrid system, BYD's plug-in hybrid models will be divided into dm-p and DM-I versions. A model has a variety of power configuration options, and the product types dazzle consumers.

According to the internal conference call minutes mentioned above, BYD plans to launch an independent high-end brand of new energy and build an independent dealer network in 2022. After the adjustment, Zhao Changjiang, general manager of BYD Auto sales, will be transferred to high-end brand to be responsible for the preparation work, and BYD's high-end brand plan has officially surfaced. This also means that BYD's brand structure is becoming more and more clear, and there will be three levels of high-end brand series, Dynasty Series and E-Series from high to low.

"The brand power is not strong enough, the new retail can not keep up with it, and the brand recognition of BYD by young consumers is not high. It is necessary for BYD to adjust its organizational structure and impact on high-end brands." Zhang Xiang told reporters.

Hua'an securities research paper points out that BYD attaches equal importance to "attacking up" and "exploring downward", and BYD will enter a strong cycle of vehicle models in 2021.

On the one hand, the flagship model byd-han will drive its brand strength upward; on the other hand, the listing of DM-I super hybrid platform will achieve parity with fuel vehicles. With the advantages of endurance, power and fuel consumption, plus series models are expected to seize the market of traditional economy fuel vehicles. It is estimated that the sales growth rate of the company's new energy passenger vehicles will be 132% / 37% from 2021 to 2022, and EPS (earnings per share) will be 1.45/1.98/2.42 yuan from 2020 to 2022.

With the adjustment of the organizational structure, BYD's vehicle business will be fully developed in 2021, and compete more fiercely with new energy brands such as Tesla and Weilai.