Changan Motor shares closed at 20.35 yuan per share on June 28, up 217.97% from the low point of 6.40 yuan per share reached on April 27, and the market capitalization climbed to 201.9 billion yuan. It has become the fourth Chinese vehicle company stock with a total market capitalization of more than 200 billion yuan after BYD, Great Wall Motor and SAIC.

Before that, the share price of Changan Automobile fell all the way from 18.02 yuan per share hit in August 2021, and the market capitalization lost more than 100 billion yuan. In May 2022, the epidemic was brought under control and resumed production, sales in the terminal market picked up, and the Ministry of Industry and Information Technology talked about the continuation of preferential tax policies for the purchase of new energy vehicles. A series of good news gave birth to trillions of BYD, but also held up many auto stocks, including Changan Automobile.

In just two months, Changan Automobile is still that Changan Automobile. Is the sharp rise in share price due to fundamental changes, or has our vision changed in the new atmosphere?

1、The market capitalization rises to 200 billion.

Ups and downs have been the main theme of automobile stocks in the past two years. The China Composite Automobile Index (931008) climbed from more than 7000 in March 2021 to 11552.94 in October 2021, up more than 50 per cent, and then fell all the way down to the low point of the 6288.17 range hit on April 27, 2022, a decline of more than 40 per cent.

The trend of the new energy vehicle sector (885431) is the same, falling 40.73% from the high point of the range of 2983.48 points to 1768.31 points in just half a year.

On April 27, the share prices of many stocks reached a new low, with Guangzhou Automobile Group reaching as low as 14.63 yuan per share, down 37.61 percent from the high of 23.45 yuan per share at the end of last year. Great Wall Motor reached 21.28 yuan per share, down 69.48 percent from the high of 69.73 yuan per share at the end of last year. Changan Automobile fell 61.56% from the high of 16.65 yuan per share at the end of last year.

But after this day, under the comprehensive influence of the positive information released one after another, the whole automobile plate came out of the haze together. In the nearly two months since April 27, these auto stocks have rebounded by about twice as much. Changan Automobile has taken the lead by more than twice as much, making it into the "top four" with a market capitalization of 201.9 billion yuan.

Leaving aside BYD, the remaining three families in the "top four", Great Wall Motor, SAIC and Changan Automobile, sold 1.281 million, 5.464 million and 2.3005 million vehicles respectively in 2021, with revenues of 136.405 billion yuan, 779.846 billion yuan and 105.142 billion yuan respectively.

According to the data, among the three, Great Wall Motor, which has the least sales, has the highest market capitalization, SAIC, which has the highest sales, ranks second, and Changan Automobile has the lowest.

The market capitalization of 200 billion yuan is a key node for traditional car companies. There is a joke that, according to the valuation of the new power, the valuation of 200 billion yuan is a sign of the strength of the first world war in the new energy car-building battlefield, which lacks scientific basis, but it is also difficult to refute-after all, the current rookie "Yu San" of independent car manufacturing is "Wei Xiaoli." As of June 28, the total market capitalization of Wei Xiaoli is about 259.8 billion yuan, 197.2 billion yuan and 226.7 billion yuan respectively.

2、The "supernova" blessed by the boss

In the market, a large part of the voice believes that the fundamental reason for the recent strength of Changan Automobile share price is that investors see the company's hope in the field of new energy car-Avita.

Avita's predecessor is Changan Automobile and NIO Inc. Automobile established in July 2018 "Changan NIO Inc. New Energy Automobile Technology Co., Ltd.", originally Changan Automobile cut into the strategic layout of the field of new energy vehicles, and then changed its name to Avita Technology Co., Ltd. in 2021, the same year to increase capital and shares, and the introduction of Ningde era and other well-known shareholders, Avita also took advantage of Huawei's entry into the car market.

On June 25th, Avita and Huawei signed a comprehensive strategic cooperation agreement, and the two sides reached a consensus in all areas such as optimal resource investment and Huawei HI trademark licensing. Based on the new generation of smart electric vehicle technology platform CHN, they will work together to build a series of high-end smart electric vehicle products and continue to iterate to launch four new models by 2025.

It is worth mentioning that there are three main modes of cooperation between Huawei and car companies: the first is to sell spare parts such as Hongmeng operating system and domain controllers, which is equivalent to a parts supplier; the second is Huawei inside (HI), that is, Huawei brings full-stack smart car solutions to joint development with car companies; the third is smart car selection mode, which is not only deeply involved in vehicle design and definition, but also cooperates with Huawei stores for sales linkage.

After the Avita 11 was unveiled at the Chongqing auto show on June 25, Changan revealed that it had started booking and would officially go on sale on August 8 this year for delivery this year. In terms of sales, Changan Motor chose to quickly roll out its sales outlets in the form of "self-building + cooperation", which mentioned that "it is actively implementing the preparations for sales in its store channel with Huawei." From this, it is inferred that Avita chose the third mode.

Currently on the market, the Selis SF5 and AITO M5 launched by the traditional carmaker Xiaokang Co., Ltd. is the model born under this mode. Among them, the M5 began delivery in March this year, and the cumulative delivery volume has reached 11296 as of May. This is the case with the previous sample, and people are looking forward to the performance of Avita 11 after entering the market.

According to the evaluation of some institutions, if it is calculated according to Changan Motor's 40% stake in Avita (the actual holding is 39.02%), Avita contributes about 100 billion yuan to the market value of listed companies. In other words, half of Changan's current valuation of more than 200 billion yuan comes from the market's expectation of Avita.

It is clear that the soaring share price of Changan Automobile is largely influenced by Avita, and even if it is not yet listed, it is impossible to judge the sales effect of its subsequent entry into the market. But there is no denying that the way investors look at it has changed during this period.

3、Intelligent barriers are limited.

Changan Automobile put forward the "Shangri-La Plan" for new energy vehicles as early as 2017, and the first car company in the country said it would stop selling fuel vehicles in 2025, five years earlier than BYD. Then, in 2018, it proposed an intelligent strategy "Beidou Tianshu" plan, focusing on smart travel, artificial intelligence, chips, high-precision maps, voice interaction, holographic technology and other areas.

However, Changan Automobile then suffered a sharp fluctuation in its performance. Financial data show that with the sharp decline in sales of Changan Ford and Changan Mazda joint venture brands, Changan Automobile deducted non-net profit losses of 3.17 billion yuan, 4.76 billion yuan and 3.25 billion yuan respectively from 2018 to 2020.

During this period, Changan Automobile continued to sell or buy non-performing assets to reduce its weight, and carried out a comprehensive reform of the new energy sector. after three consecutive years of losses, it finally improved in 2021: deducting non-net profit reached 1.653 billion yuan to achieve annual profit.

In retrospect, the forward-looking of Chang'an Automobile in the era of fuel-fueled cars is self-evident, but unfortunately, its actions are not as quick as thinking. Until 2021, Changan Automobile can best handle the low-end oil-to-electric product Mercedes-Benz series, including the Mercedes-Benz EV and the Mercedes-Benz E-Star based on the Mercedes-Benz EV, with price ranges of 4.98-171800 and 6.98-74800, respectively, both of which belong to the mini-car level.

Data show that in 2021, Changan Automobile New Energy sales of about 100000 vehicles, 76500 for Changan independent brand. 76400 of these sales are contributed by the Mercedes-Benz series. From January to May in 2022, Changan Automobile New Energy sold 51600 vehicles, accounting for 2.7% of the market, of which Mercedes-Benz E-Star sold 41300 vehicles.

On June 25, 2022, Changan Automobile brought six new energy products, including Changan Deep Blue SL03, UNI-K iDD, UNI-V iDD, Auchan Z6 iDD, LUMIN, Avita 11, to the Chongqing Auto Show. When you are dazzled, you may say, "who are they?" "

In fact, none of the above products are on sale except the UNI-K iDD, which went on sale in March. But these six products can be seen as all Changan's painstaking efforts in new energy-the digital pure electric brand Deep Blue, the motorized brand UNI upgraded from the UNI product line, the high-end smart electric car brand Avita, and the hybrid version of UNI, Hongguang MINIEV electric car LUMIN, Changan Skoda Auchan, which has failed to hit the high end. To put it simply, it is a comprehensive attack of the mixture of new energy brands and old brands.

Looking at the entire car manufacturing industry, from the price positioning, we can see that the young car-making rookies are choosing the track, and Changan Automobile wants all of them. From the LUMIN of the low-end line to the Avita 11 of the high-end line, the price covers an ultra-long range of 4-500000 yuan.

Interestingly, the new energy sources of Changan Automobile have to play a game before they go to war. Before LUMIN can match Wuling Hongguang MINIEV, it is already in the same price camp with its own Mercedes-Benz E-Star. Auchan Z6 iDD and Auchan X7 EV are in the price range of 15-200000 yuan. UNI-K iDD and Deep Blue SL03 collide with each other around 200000 yuan.

Comparatively speaking, Avita 11, which superimposes the halo of Ningde era and Huawei, is the most eye-catching in this batch of new products. Some people even think that it will be the most likely product at the time of Changan Automobile's new energy transformation, and its specific performance has a significant impact on the long-term trend of the stock price.

That's why, although Changan Motor currently owns only 39.02% of Avita, which is no longer included in the consolidated statements of listed companies, Avita's performance still touches the hearts of investors. However, it should be noted that the core intelligent technology of Avita 11 is in the hands of Huawei, which, as a "supplier", will also share its technology with other competitors, in other words, Avita's intelligent barriers are extremely limited.

On June 29, both well-off shares and Changan Motor, both of which belong to Huawei's car-building concept, fell by the daily limit. The daily limit rose yesterday and fell today, which is very much like the stock price performance of the new forces of car building, and Changan Automobile has also experienced a market pursuit of "high growth and high expectations" through the light of Avita.

What needs to be vigilant is that taking off the aura of Avita, Changan Automobile is still that Changan Automobile, and the future performance of Avita 11 is the key to the trend of the capital market.