The performance of 1H21 is outstanding, and 2Q21 continues the improvement trend: 1H21's operating revenue increased 27% year-on-year to 84.04 billion yuan, gross profit margin was about 9.5% year-on-year, sales fee rate dropped 0.6pcts to 4.6% year-on-year, and net profit increased 201% to 1.51 billion yuan. Among them, 2Q21's operating income increased 3% year-on-year / month-on-month basically unchanged at about 41.81 billion yuan, while home net profit fell 5% year-on-year / month-on-month increase of 31% to 860 million yuan; 2Q21 benefited from improved supply and demand / gross profit margin of new car sales caused by chip shortage, improved operation management such as inventory, and cost control.
New car gross profit margin improved / after-sales steadily improved, commission and rental business fell: 1) New car sales increased by 20% to 378000 units year-on-year, new car sales revenue increased 31% year-on-year to 73.37 billion yuan, and new car sales gross margin increased by 2pcts to 4.1% compared with the same period last year (of which 2Q21 increased by 1.5pcts to 4.9% compared with the previous year). 2) the number of maintenance entries increased 16% year-on-year to 3.821 million units, after-sales revenue increased 17% year-on-year to 7.35 billion yuan, and after-sales gross profit margin increased 1.2pcts to 36.9% year-on-year. 3) the commission agency income fell 20% year-on-year to 2.19 billion yuan (the total trading volume of used cars was 113000), and the commission agency gross profit margin decreased by 6.1pcts to 75.2% year-on-year, mainly affected by factors such as insurance premium change. 4) the revenue from the leasing business fell 2.1% to 920 million yuan compared with the same period last year, and the gross profit margin of the leasing business decreased by 8.9pcts to 48.7% year-on-year, mainly due to fluctuations in the market environment such as tight financing.
3Q21E new car gross margin improvement is expected to continue, optimistic about the long-term development prospects of used cars: we judge, 1) chip shortage recovery may still be uncertain; 3Q21E market supply and demand improvement trend is expected to continue, or will still boost new car gross profit margin. 2) the management guides the strategic planning to focus on new energy and used car business. In terms of new energy, 2020Compact 4 established the New Energy Division (promoting cooperation with new energy brands / city access application, and signed a strategic cooperation agreement with ARCFOX extreme Fox brand); as for used cars, the company built Guanghui independent used car brand, established an online promotion / offline backflow brand chain model through unified and standardized service mechanism including testing, evaluation / pricing, and gradually expanded the used car market. We believe that the used car business is expected to boost the gross profit margin for a long time (the industry chain may extend to the after-sale / commission business with higher gross profit margin). We are optimistic about the strategic layout and long-term development prospects of the company's expansion of outlets (especially retail outlets) in the second-hand car market.
Maintain the "buy" rating: in view of the improvement in gross profit margin of new cars caused by the shortage of chips, we increase the net profit of 2021E by 21% to RMB 2.89 billion, while the net profit of 2022E/2023E is about RMB 3.01 billion / 3.35 billion respectively. We are optimistic about the long-term improvement trends such as store upgrade / brand structure improvement, long-term profit structure optimization corresponding to after-sale and second-hand car propulsion, and operational efficiency improvement / expense rate decline, and maintain the "buy" rating.
Risk tips: deterioration of market supply and demand, adjustment of business policy of mainframe factory, pressure on gross profit margin, pressure on after-sale / commission, and pressure on used car business, performance pressure caused by store upgrading, repeated risk of market / epidemic, etc.