On April 21, Great Wall Motor announced its first quarter financial report, with Q1 revenue of 31.12 billion yuan, a year-on-year increase of 150.6%; net income attributable to owners of the parent company was 1.64 billion yuan, a year-on-year increase of 352.2%, turning a loss into a profit compared to the same period last year.
However, the market is not buying into this financial report, mainly due to the lower-than-expected gross margin and net margin.
Next, we will break down this Q1 financial report of Great Wall Motor in detail. Why did it fall short of expectations? How should we view it?
Due to multiple factors, the gross margin declined, and Q1 net income fell short of expectations.
Great Wall Motor's auto sales in Q1 2021 were 0.3388 million vehicles, a year-on-year increase of 125.42%, a quarter-on-quarter decrease of 21.37%, which is lower than the revenue decrease. Q1 gross margin was 15.13%, a 3.13% decrease compared to the previous quarter, with a net margin of 5.27%, down 1.47% from the previous quarter.
Taking into account the brokerage's relevant views, I have summarized a few key factors here:
1) The price increase of upstream bulk commodities: In Q1 this year, the price of cold-rolled steel increased by 700 yuan compared to the fourth quarter of last year, and by 1000 yuan compared to the third quarter of last year. Prices of bulk commodities and precious metals such as rhodium have also risen significantly, leading to an increase of 1-2k in the average cost per vehicle for Great Wall.
2) There has been a change in the vehicle structure: Great Wall Q1 Ora brand sales ratio has increased compared to the previous month, the net profit capability of the weaker new energy brand Ora has increased by 1.5% compared to the previous month, and the proportion of new energy sales has increased from 5% in last year's Q3 to 5% in this year's Q1.
Causing the average...