How much is the "water" of Great Wall Motor's semi-annual profits?

Car forecasters have found that Great Wall Motor’s real profit decline rate for the first half of 2017 is about 20%, but for Wei Jianjun, how to restore the high profits of the Great Wall for many years may require at least four things, and each one is not easy.

On July 21, Great Wall Motor announced its interim results for 2017, including operating revenue of 40.99 billion yuan in the first half of 2017, a year-on-year decrease of 1.46%, and a net profit of 2.49 billion yuan, a year-on-year decrease of 49.42%.

As for the decline in performance, the reason given by Great Wall International is that the increase in R&D investment, the reduction in price and inventory clearance leads to a decrease in profits, and the increase in advertising and advertising expenses. These reasons are somewhat far-fetched by the public opinion. What happened to the Great Wall?

Performance is concentrated in the second quarter

In response to the declining performance, Great Wall Motor’s reason is due to the increase in R&D investment, the promotion of old products, and the investment of advertising expenses. However, after predicting the 2016 Great Wall Performance Report by Great Wall, car forecasters found that the decline in profits was not sudden.

As far back as Great Wall Motor's 2016 annual report, the company had anticipated that with the launch of new products, the decline of old model profits, and staff investment, the first half of 2017 was the time when Great Wall faced the greatest pressure on profits and performance. However, the Great Wall accidentally stabilized the situation in the first quarter. According to the first quarter report of the Great Wall, operating income increased by approximately 13% year-on-year, keeping the Great Wall’s book performance.

However, after entering April, the Great Wall issued promotions to the outside world under the pressure of channel terminal inventory, and even shouted to make use of 1 billion yuan to make profits, including models such as H2, H5, H6, H8 and H9. According to the analysis of relevant consulting agencies, if RMB 10 million is true, the negative impact of the Great Wall’s net profit in the second quarter of 2017 will reach 1.0 to 1.2 billion yuan.

Automobile forecasters learned from related channels that another major factor that caused Great Wall Motor’s half-year performance was the decline in bicycle revenue and profits. It is understood that in 2017, Great Wall Motor’s bicycle revenue and profit were RMB 86,000 and RMB 0.26 million, respectively. This was a serious decrease from the previous quarter. Since the 2017 semi-annual report was not announced, the reporter estimated that the sales income of Great Wall Motor in the second quarter was approximately RMB 17.716 billion. , Compared with sales revenue of $22.98 billion in the first quarter, this dropped significantly.

At the same time as revenue and profit of bicycles declined, Great Wall Motor sold 460,000 vehicles for half a year, a slight increase of less than 10,000 units compared to 45.03 in the first half of 2016. Based on slight increase in sales volume, profits declined, and the overall profits of Great Wall Motor would not be too good. .

Real profit decline is about 20%

In response to the Great Wall’s public announcement of the Great Wall’s decline in performance, the car propheter found out through interviews that this was only part of the factor that led to the decline in profits, and could not fully explain the fundamentals of Great Wall Motor’s lucrativeness. In other words, the Great Wall’s profits plunged. Being able to live and live shows that the real situation of declining performance is not so bad. the reason is:

Great Wall Motor Sales Change from January to June

1. The sales volume increased slightly in the first half of the year. In the second quarter, the income from bicycles and profits fell sharply from the previous quarter. However, based on the sales revenue in the first quarter, the sales revenue of Great Wall Motors in the first half of 2017 was not ugly, that is to say, even if the second quarter fell to the bottom, Great Wall Motor sold in the first quarter. Sufficient to regain one game. With the launch of new vehicles and the release of production capacity, the relevant personage analysis will bottom out in the third quarter.

2. The old model cleans up inventory, with a profit of 1 billion yuan. Although the specific amount is not known, but 1 billion yuan should include terminal price concessions, distributor subsidies, and other expenses. This expenditure must be arranged in advance, is a short-term.

3. Increased investment in marketing advertising. The reporter learned after sorting that Great Wall Motor's advertising investment was mainly in the WEY brand. After interviewing companies in the marketing field, it was concluded that the investment in the Great Wall for the first half of the year was approximately several hundred million yuan. It was mainly used in CCTV's so-called “international brand plan” and some new media. However, many marketers believed that the investment was too extensive. The Chinese pointed out that this factor infers that the Great Wall is not satisfied with the sudden intrusion of marketing advertisements.

4. The research and development expenses increased, and the annual report was analyzed. As of December 31, 2016, the total number of employees of Great Wall Motor reached 71617. The staff cost accounted for 7.37% of the Group's operating income. In addition, with the input of the WEY brand models, the Great Wall personnel in foreign countries Overseas investment in R&D has also increased.

5. The employee's year-end bonus is accompanied by a change in policy. It is understood that Great Wall Motor began to change the past year-end bonus withdraw policy from the end of January 2017 to monthly, and estimated that the amount of the year-end compensation for Great Wall employees in the first half of the year will be approximately 7. 100 million yuan.

Through analyzing these five reasons, it is easy to find that excluding the two-factor price reduction of RMB 1 billion and year-end bonus of RMB 700 million, the profit of the Great Wall declines by about 200% due to the competitive pressure of SUVs, product shifts, and long-term factors that increase investment in R&D. % (25+7+10=4.2 billion yuan), that is, the real profit of Great Wall Motor should be reduced from 5 billion yuan to 4.2 billion yuan. It is not difficult to see that the reason why Wei Jianjun was not in a hurry is that the performance of the Great Wall remains saved.

Wei Jianjun still has to go 4 dangerous roads

"This is in line with Wei Jianjun's character." Although no book looks to the eye, Wei Jianjun hopes to send a signal to all owners of the company. Great Wall Motor is now developing very urgently. After combing the reporters, it is found that the future Great Wall requires at least five dangerous and dangerous roads:

1, how to break the sales ceiling. Judging from the current Great Wall product matrix, it can be divided into old and new models. Old models including Haval H2, H5, H6, H8 and H9 are already being promoted. Profits of these products can only be driven by scale, ensuring the sales of Great Wall Motors. Market. Another part of the product may be Wei Jianjun’s reconsideration of sales growth.

Combing is not difficult to find, in the future, Wei Jianjun’s three sales cards in the hands of soy sauce can be played: WEY, the new H series and the M6 ​​series. From the product lineup, it can be seen that WEY hits the mid-to-high end market, and the new H series continues to be the backbone, and the M6 ​​breaks through as a low-end market with a higher price/performance ratio.

With the introduction of the product, how to ensure that the new H series wins competition with other car companies SUV is a key, and WEY brand can guarantee on the volume is also a major key, but on the basis of the original old H series improved M6 Series, how to make breakthroughs in the cost-effective and grassroots channels is also a top priority. Which card to play first test the wisdom of Wei Jianjun.

2. Guarantee the average bicycle price. It is easy to see from the April Great Wall initiative to promote that the old H series in the SUV gradually become the Red Sea China market prices and profits are declining, how to ensure that profits must be the Great Wall's top priority, for many years Great Wall Motor's core is not the size, but good The profitability of this may also be the most valued by Wei Jianjun.

Therefore, as the price range between WEY and the new H6 increases slightly, the future bicycle price of Great Wall Motor may also increase. However, how to allow consumers to accept this change, especially the price of WEY products and H6 is close, this may be a key to Great Wall's sales strategy. Wei Jianjun's understanding of sales is to send the product to the past. The next step may not be as simple as that.

3, cost control. With the intensified competition in the SUV market, a 94.93% company focused on the SUV market must guarantee its advantages in parts and materials. However, the following issues are: Upstream and downstream supplier costs, labor costs, R&D costs, and marketing costs must be the major trends.

Car readers found that Great Wall Motor made preparations for cost control in its financial report: First of all, it invested in transformation of factory automation, reduced labor costs with automation, and increased the scale of self-produced engines and transmissions. The cost of core components' interviews will also be greatly reduced, which is the biggest core of its cost control.

4. Gross profit must be kept at 20%. With the increase in the unit price of WEY and new H products and the increase in costs, the increase in gross profit margin was offset. Therefore, Great Wall Motors still needs to achieve economies of scale in the future. According to the annual report released by Great Wall Motor in the last four years, gross profit of Great Wall dropped from 28% to 24% year-on-year. With the market competition and cost increase, Great Wall Motor should control gross profit to 20% on the basis of control scale. The above points are to ensure that the business benefits are better.