Beijing time on December 30, 2019 evening, Wei Lai vehicle (NYSE:NIO) issued an unaudited third quarter financial report. Data show that the company's total revenue during the quarter was 1 billion 837 million yuan, an increase of 21.8%, an increase of 25% over the previous year, a net loss of 2 billion 451 million yuan. Although it is still in a deficit, the loss margin narrowed by 23.2%, a slight increase of 3.1% over the same period last year.
By the end of December 2019, the three quarter earnings ended at the end of September were too late. However, this is the first quarterly earnings report released by Wei Xin CFO after taking office. It is also a quarterly report after the sales of Wei Lai single quarter, and the market has a high degree of concern. In October 2019, the three quarter sales volume released by Wei Lai showed that the company delivered 4799 vehicles during the quarter, exceeding the expected growth of 35.1%.
Neither delivery nor financial data is a long way to go for Wei. However, the performance of the single quarter can not explain everything. Whether the company has long-term investment value remains the most concerned problem for investors. At the conference call after the earnings announcement, more than one analyst or investor asked the management: is the sales / sales cut sustainable?
Investors' attitude towards Wei is still very subtle. After the release of the earnings report, Wei Lai's stock price fluctuated violently. As of the morning of December 31, 2019, Beijing's stock price jumped 53.72%, closing at 3.72 US dollars / share. The intraday increase was over 100%.
Sales growth growth potential?
The sales revenue of Wei Lai automobile increased mainly due to the pickup in delivery volume, especially after the ES6 was listed, it quickly gained a large number of fans in the market. Data show that in the third quarter of 2019, Wei delivered a total of 4799 vehicles, an increase of 35.1%, of which 4196 were delivered by ES6 and 603 by ES8.
ES8 is the first volume production model of Wei Lai. It is a 7 large SUV, and ES6 is a 5 medium-sized SUV with a larger user group. It is regarded as an important vehicle by "Wei". In mid June 2019, the first batch of ES6 began to be delivered.
Li Bin, founder and chairman and chief executive officer of Wei Lai, said in a conference call that sales in the three quarter exceeded expectations. On the one hand, it was competitive because of its own products. On the other hand, it benefited from the expansion of the sales network and the gradual shaping of the user community.
"In the second half of 2019, we further expanded our sales network by opening up more efficient space." Li Bin said that the measures to increase the space for the future are conducive to continuously improving the number of orders. As of the end of 2019, there will be 22 Wei Lai centers and 48 Wei Lai spaces covering 52 cities.
The gradual formation of the user community means that Wei has established word of mouth among the users and has led to more sales. One data is that the total delivery volume of 2019 is expected to exceed 20 thousand, of which more than 48% of the sales volume is achieved by the new users recommended by the old users. "This is a number that has never been seen in the automotive industry." Li Bin said.
Based on the current situation, Wei Lai expects to deliver a total of 8000 ES8 and ES6 units in the fourth quarter of 2019, an increase of about 66.7% compared with the third quarter, and the revenue generated will increase by about 53% compared to the third quarter.
"In the second half of 2019, although the sales of electric vehicles decreased, the decline was mainly in the low-end electric vehicles, mainly in the field of vehicle operation. After the subsidy went back, they did have some pressure on the cost. But in fact, after so many years, more and more customers in the market tend to have electric cars at the same price. That's why we look at more than 300 thousand of the medium-sized SUV market, more than 400 thousand of the large and medium SUV market, and the size of the two markets together has almost about 1000000 cars. We have enough confidence to occupy a relatively reasonable proportion in the whole market. Li Bin said.
Li Bin also said, "from the perspective of competitive layout in 2020, at least I did not see particularly competitive products coming out." After Tesla's domestic production, Li Bin also said that although Model 3 and ES6 are almost priced, they are not the same market segments, but they are "very confident" in general.
It is worth mentioning that the day before the release of the earnings report, the third NIO Day was held in Shenzhen. Wei has released 100 kwh liquid cooled thermostat battery pack and 20 kilowatts household DC charging pile, third mass production models, electric car running SUV EC6 and new ES6 products, which has further enriched the product line from the perspective of charging matching and vehicle matrix.
Continue to promote sources of income and reduce expenditure
Besides the income growth, the sales and management expenses in the third quarter were 1 billion 164 million 400 thousand yuan, 18.1% lower than the ring, and 30.3% lower than the same period last year. In addition, the cost of R & D in the third quarter of 2019 was 1 billion 23 million 200 thousand yuan, a decrease of 21.3% compared with the same period in 2018.
Wei Wei, chief financial officer, said that in the current quarter, the company has implemented a comprehensive cost control approach and optimized its operational efficiency.
In fact, since the beginning of the year, Wei Lai has changed the relatively radical way of operation. Since 2019, there have been many rounds of layoffs in order to optimize the input and return of resources. Li Bin said that the number of people coming from the end of 2019 will remain below 7500, and I believe that there will be some improvement in the first quarter of 2020 and subsequent business data.
Feng Wei also said that at present, efforts are being made to formulate the 2020 budget and plan for further improvement of efficiency. "In 2020, we will further reduce our R & D expenditure. The fourth quarter revenue conference will share more details."
Overall, however, as a newly established car company, Wei will still be in short supply in the short term, and investors are also very concerned about their cash flow. Before that, Wei Lai had repeatedly reported relevant financing information, but not many of them were finalized, which made Wei Lai fall into a bigger controversy.
However, Feng Wei said that financing matters are still advancing, and from the perspective of its own, it has relatively good hematopoietic capacity. "Many car manufacturers, who want to have a good cash flow, want to sell more cars. Although cash is a challenge, but based on the current sales momentum, I think cash from sales is still healthy, which is a very basic basis for us. "
It is worth noting that in September 2019, Li Bin has already subscribed to a convertible bond subscription agreement with a subsidiary of Tencent holding company, which has a total amount of $200 million. The latest report shows that the convertible bonds have been completed within the reporting period.