2022 & 1Q23 results are in line with market expectations
The company announced 2022 & 1Q23 results: 2022 revenue was 744.06 billion yuan, net profit after deducting non-return to the mother was 8.99 billion yuan; 1Q23 revenue was 145.92 billion yuan, net profit after deducting non-net profit was 2.16 billion yuan.
Development trends
The new troika continues to gain strength, and independent profit was steady in 4Q22. The company continues to accelerate business development in autonomous, new energy and overseas markets, and the new troika continues to gain strength. It independently sold 2,785 million units throughout the year, accounting for 52.5% of total sales, of which SAIC Motor sold 839,000 passenger cars; 1,073 million new energy models, +46.5% over the same period; overseas models sold 1,017 million units, +45.9% over the same period last year. In terms of profit, the consolidated gross margin in 2022 was 12.4%, +0.5ppt compared to the previous year; by business, the gross margin for automobile/parts/finance was 4.5%/22.7%/80.0%, respectively, compared to -0.4/-0.6/+3.2ppt. On the net profit side, net profit of non-attributable to the mother for the whole year was 8.99 billion yuan, non-operating profit and loss of 7.13 billion yuan, including government subsidies of 3.66 billion yuan, asset disposal income of 2.86 billion yuan, mainly included in 4Q; on the independent side, 4Q22 deducted non-net profit - joint venture investment income - asset/credit impairment losses were -2.71 billion yuan, 4Q21/3Q22 was -24.8/2.33 billion yuan. If 4Q expenses were +5.1 billion yuan month-on-month, the profit of a broad range of independent businesses remained positive after restoration; income/profit declined in the first quarter. However, the decline was manageable.
The 2Q22 pandemic dragged down, and joint venture profits returned steady in the third quarter. Annual joint venture investment income was 10.84 billion yuan. Taken together, GM's ASP increased, and the popular/GM profit margin declined. Profits were significantly dragged down by the epidemic in the 2nd quarter. The 4Q22 joint venture investment income reached 3.30 billion yuan, and 3-4Q22 profits have recovered steadily. Looking at the split, SAIC Volkswagen and GM's annual manufacturing revenue was 1647.2/162.79 billion yuan respectively, net profit was 8.993/5.58 billion yuan respectively, and the corresponding net profit of bicycles was 6609/4768 yuan respectively. At the level of other subsidiaries, SAIC Wuling's revenue was 81.14 billion yuan and Guimu's net profit was 1.46 billion yuan, maintaining a year-on-year increase; SAIC Motor's financial revenue was 21.55 billion yuan, and Guimu's net profit was 6.26 billion yuan. Competition in the 1Q23 industry intensified, and the investment income of joint ventures remained at 2.27 billion yuan. The decline was manageable.
Accelerate intelligent electrification transformation, targeting trillion-level leading car companies. The company released the “Three-Year Action Plan for the Development of New Energy Vehicles”, which plans to achieve SAIC Motor's annual sales target of 3.5 million new energy vehicles by 2025 through brand optimization and intensive cultivation of innovative technology. On the autonomous side, Zhizi plans 4 new models, with sales reaching 300,000 units in 2025; Skyvan/Roewei/MG plans to sell more than 13 new energy products, with new energy sales exceeding 1 million units in 2025. In overseas markets, the company plans to sell 1.5 million vehicles by 2025, accounting for more than 20% of the group's sales. Independent new energy and overseas development will help the group become a trillion-level leading car company.
Profit forecasting and valuation
The current stock price corresponds to 9.1 times P/E in 2023. Maintaining an outperforming industry rating, considering increased market competition, the 2023/24 profit forecast was lowered by -17.4%/-18.1% to 180/19.7 billion yuan. Considering the sector's valuation correction, the target price was lowered 16.7% to 17.5 yuan. Corresponding to 11 times P/E in 2023, there is 23.9% upside compared to the current stock price.
risks
The impact of the chip shortage continued, and subsequent sales fell short of expectations.