On the evening of April 28, BYD released the first quarter of 2020 financial report shows that the first quarter operating income of about 19.679 billion, a year-on-year reduction of 35.06%; a quarter of net profit attributable to shareholders of listed companies of about 113 million, a year-on-year reduction of 84.98%.
What's worth paying attention to is that BYD's net profit after non-recurring gains and losses in the first quarter was -471.7 million, or a loss of more than 400 million. The financial report shows that in the first quarter, BYD received automobile-related government subsidies of 533 million yuan. In other words, without the auto subsidies, BYD would have been in the red in the first quarter.
However, in the quarterly report, BYD expects its net profit to reach 1.45 billion yuan in the first half of this year. The reason for the change in performance in addition to the business improvement in all sectors, there is also a "mask production is also expected to provide a positive contribution to the Group's sales revenue and earnings growth.
"The mask business is a dark horse," said one investor. Because, BYD Electronics also released its earnings report on the evening of April 28, showing a profit of 657 million yuan in the first quarter, an increase of 69.44% year-on-year. Earnings for the first half of the year is expected to increase 2.8 times (the same period last year earnings of 575 million yuan).
That is, the second quarter BYD electronics earnings will be no less than 1.528 billion. Last year, BYD net profit of 1.6 billion, the first half of this year, its profits will exceed last year's annual profit of 36%. This investor said "the mask business can not be credited".
True, registered in Hong Kong, BYD Electronics, a subsidiary of BYD Precision Manufacturing Co., Ltd. BYD brand model DG3101 KN95 masks, in early April to obtain U.S. FDA approval.
In addition, the state of California spent nearly $1 billion (about $7 billion) in early April to purchase 200 million masks a month through the end of June from a U.S. subsidiary of BYD. And, California has already made its first payment of $495 million to the BYD subsidiary. Meanwhile, BYD has partnered with Japan's SoftBank Group to produce the masks, supplying 300 million masks a month to Japan starting in May.
At present, BYD has 300 production lines for masks, with a daily output of 20 million, and is increasing production at a rate of 1 million to 2 million masks a day, making it the world's largest mask producer.
In addition to China, the global epidemic has not yet improved significantly, as the world's largest mask manufacturer BYD, not only with the Chinese medical team to assist countries, after obtaining the certification of the relevant U.S. agencies, began to export to earn "extra money".
At the same time, on April 26, BYD announced the official opening of direct sales channels, in the BYD e-commerce to consumers sales of self-produced masks.
"No subsidies, new energy car companies are dead BYD will also live." An investor said. Obviously, for the first half of the better financial expectations, the mask business for the group's revenue can not be underestimated.
But there are also investors who said "the recent good, the future is worrying. The mask business is not sustainable in the long term, and the main business has not improved."
It is true that if there is no car-related subsidies of more than 500 million, the first quarter of BYD net profit is still a loss. This year's January-March BYD car sales totaled 61,300 units, down 47.9% year-on-year, sales close to the waist. The new energy vehicle sales of 22,200 units, down 69.67% year-on-year, new energy vehicle sales decreased by about 2/3. For the new energy vehicle leader BYD, such data is really difficult to bring profit to the enterprise.
In addition, BYD's 2019 financial report released on the evening of April 21, showed that last year's operating income of 127.7 billion yuan, a year-on-year decline of 1.78%; net profit of 1.6 billion yuan, a year-on-year decline of 41.93%. Last year's new car sales were 461,400 units, down 11.39% year-on-year, of which new energy vehicle sales were 229,500 units, down 7.39% year-on-year.
From the data, the impact of the epidemic, the first quarter of this year's auto business compared to last year's dismal. Although BYD said that the second quarter of this year, the market share of each business segment will be improved, new energy vehicle costs to further reduce, etc., but the automotive business is still BYD's largest business segment.
Last year, BYD's turnover of automobiles and related products accounted for only 49 percent, while the business accounted for 59 percent in 2018. Cell phone components and assembly services accounted for 43 percent last year, up 9 percentage points from 34 percent the year before. In addition, the secondary rechargeable battery and photovoltaic business increased to 8 percent from 7 percent the year before.
Corresponding to this, BYD's automobile and its related business revenue last year was 63.266 billion yuan, down 16.76 percent year-on-year; cell phone parts and assembly service revenue was 53.38 billion yuan, up 26.40 percent year-on-year, and secondary rechargeable batteries and photovoltaic business revenue in 2019 was 10.506 billion yuan, up 17.38 percent year-on-year.
Despite its declining share, the automotive business remains the group's top business. Compared with other business segments, it is the only one with declining operating income.
In the first quarter of this year, Tesla's cumulative sales reached 18,600 units, surging 73 percent year-on-year. And BYD's new energy vehicle sales of 22,200 units in the first quarter, down 69.67% year-on-year. Although BYD's sales are still higher than Tesla's, the gap between the two is narrowing with a surge and a sharp decline.
The epidemic has made masks medical supplies a sought-after commodity, and BYD's masks have received big international orders and are starting to be sold to consumers. The mask revenue may have made up for some of the economic losses suffered by the epidemic-hit BYD, but it's still hard to form a long-lasting and stable source of profit. How to improve the competitiveness of its auto business and fend off competition from brands like Tesla is BYD's top priority.
This article comes from the authors of Automotive Home Car, and does not represent the viewpoint position of Automotive Home.