On the afternoon of December 28, Xiaomi's automotive technology conference arrived as scheduled. How much Xiaomi attaches importance to this press conference and the automotive business can be clearly seen from Lei Jun's frequent warm-up in the past few days.
On December 25, coinciding with Xiaomi's official announcement of the 1,000-day milestone of car manufacturing, Lei Jun posted a number of Weibo spoiler press conferences, admitting that the price of the new car may be a bit expensive, "but there are reasons for being expensive";On the 27th, Lei Jun posted five Weibo posts in a row, paying tribute to Weilai, Ideal, Xiaopeng, BYD, and HuaweiOn the day of the press conference on the 28th, Lei Jun was not idle, and posted early in the morning that he was "a little excited today", and then encouraged netizens to leave messages and ask questions, and the excitement was undoubtedly expressed with a little nervousness.
It is no wonder that Lei Jun, who is accustomed to seeing big scenes, is so excited, after all, whether it is Xiaomi's internal employees, investors or the entire new energy vehicle industry, they all have great expectations for Xiaomi cars. For Lei Jun, building a car is a big gamble, and it also carries the hope of Xiaomi's turnaround. The growth of the smartphone and IoT markets is slowing down, and Xiaomi urgently needs a new growth point.
Although there is still a period of time before the launch of sales, after this press conference, the appearance, design, and technical parameters of Xiaomi cars have been undoubtedly revealed. When the gambling came to unveil the cup, the tens of billions of chips that Lei Jun had smashed, and the complex emotions of excitement, nervousness, and excitement could be transformed into real benefits and lasting joy?
*From Lei Jun Weibo).
Lei Jun attaches great importance to Xiaomi cars and expects them, and in turn, you can see how embarrassing Xiaomi's current situation is. Looking at the earnings report alone, Xiaomi's performance is not too bad, but the market's confidence is indeed not very strong.
Since the second quarter of last year, Xiaomi's stock price and market value have shown a downward trend for most of the time, which is the longest dormant period since the stock price fell below record in September 2019. As can be seen from the ** chart, Xiaomi's current market value is about 400 billion, wandering between the 30th percentile value and the 70th percentile value, down more than 50% from the stage high of 836.1 billion in 2021, and its performance in the big cycle can only be regarded as decent.
Several other valuation indicators are also unsatisfactory. The TTM (12-month dynamic price-to-earnings ratio) is only 2269, almost overlapping with the 30th percentile and close to the lowest level in the past three years;The price-to-book ratio and price-to-present ratio are also at cycle lows, with the latter taking a sharp turn in the second half of the year.
In contrast, Xiaomi's recent financial data is actually not lacking in bright spots, at least far from being as bad as the market capitalization and stock price reflect. In the third quarter, Xiaomi's total revenue was 70.9 billion yuan, a slight increase of 06%, which was in line with market expectations and successfully stopped falling and rebounded. What's even more gratifying is that Xiaomi's gross profit margin has significantly exceeded 6 percentage points year-on-year to 227%, and the adjusted net profit recorded 6 billion yuan, a year-on-year increase of 1829%, much higher than the market expectation of 4.8 billion yuan.
There is a clear divergence in performance and market capitalization, which makes people want to ask: how did Xiaomi lose confidence in the capital market?
The potential for business growth is an important indicator to consider.
Objectively speaking, the market is not unconfident in Xiaomi, but worried about the entire consumer electronics, AIoT, and Internet industries. Even industry giants like Apple and Samsung are feeling a deeper chill in the second half of this year. Xiaomi's performance recovery in the second half of the year is due to the fact that it relies on cost savings to make profits, and the second is that the general environment of the smartphone market is slowly picking up and the inventory pressure is declining slightly. But markets are also unsure how long this recovery will last.
Data shows that in the first three quarters of this year, Xiaomi's smartphone business revenue declined year-on-year. 4% and 2%, with third-quarter shipments up 4% year-over-year, but the average shipment price fell 58%, there is still no shortage of challenges. Even if global smartphone shipments return to growth next year, Xiaomi's market share will remain high, and the potential for growth will not be as good as before.
Although Xiaomi has long been more than just a mobile phone company, the importance of smartphones in its business map is irreplaceable. After all, AIoT, Internet business, and huge ecological chain investment are all built around the main business of mobile phones. And when the smartphone market is saturated, Xiaomi can't turn things around on its own.
At this time, Xiaomi needs a new business that does not revolve around mobile phones, but has a complete and huge industrial chain and broad growth space as a growth point - there is no more suitable choice than new energy vehicles at this stage.
In fact, Xiaomi's market capitalization has shown signs of excellence in the fourth quarter, a big improvement from the year's low of around 250 billion, and two waves of small peaks in late October and early December. The market may also realize that Xiaomi's market value is undervalued, and gradually correct, but unfortunately this upward momentum is not stable.
The time for the release of Xiaomi cars is getting closer and closer, but the attitude of the market has been fluctuating, which shows that investors also want to see real results.
So here's the problem. This launch conference, which only talks about technology and does not release products, can it really meet all the imagination of the outside world about the valuation space of Xiaomi Auto?If Xiaomi Auto can really reshape the valuation logic of Xiaomi Group, then how much room for growth is there?
So far, the outside world is still very recognized for the valuation potential of Xiaomi Auto. Because the strategic significance of Xiaomi cars has long surpassed the car itself: this is not only a new business growth point, but also represents a new hardware ecology, and even has the potential to recreate a Xiaomi.
As mentioned above, the value of Xiaomi's mobile phone business lies not only in the mobile phone itself, but also in Xiaomi's smart hardware ecological chain, Internet service and mobile phone AIoT strategy built around the mobile phone.
At the beginning of last year, when Xiaomi's market value fell to the bottom and evaporated more than 360 billion yuan from the peak of the stage, there were still many investment banks that defended it, including Wall Street predators such as Bank of America, Goldman Sachs, and JPMorgan Chase, as well as local giants such as CICC and China Merchants **. Most of the defense reasons put forward by these investment banks and institutions are inseparable from one point: Xiaomi has a huge investment territory and intelligent industrial chain, and its value cannot be summarized by Xiaomi's own performance.
At that time, Xiaomi invested in more than 300 ecological chain enterprises, and the sum of the book value of its investment in listed companies was close to 50 billion yuan, a year-on-year increase of more than 60%. It is said that BAT is the best VC predator, and Xiaomi is not inferior to them at all. What's more, most of these investments are made around Xiaomi's smartphone industry chain, which can not only increase the value of the company's book investment, but also greatly benefit the development of the mobile phone business.
This principle also works on Xiaomi cars. Hoarded technology patents, R&D talents or secondly, the first chain and production line built by Xiaomi for car manufacturing are more valuable tangible assets, and they are also valuation indicators that the capital market attaches great importance to.
*From Xiaomi Auto's official Weibo).
In the 1,000-day sprint to build a car, Xiaomi has not only worked hard to overcome technical difficulties, but also invested abroad.
According to public information, Xiaomi Group, Yangtze River Industry** and Shunwei Capital, a subsidiary of Lei Jun, have invested in a large number of auto parts (power batteries, intelligent cockpits), intelligent driving, and semiconductor companies in the past two years, creating an automotive industry chain that is no less than BYD and Huawei. Among them, there are many leading companies in various fields such as Honeycomb Energy, China Innovation Airlines, Zongmu Technology, Hesai Technology, Anrui Micro, Black Sesame Intelligence, etc.
In terms of production lines, the total investment of Xiaomi's first and second phase factories is close to 10 billion US dollars (in the next 10 years), and it has reached in-depth cooperation with the Beijing Economic Development Zone Management Committee. Referring to the experience of Tesla, Ideal, and Xiaopeng, it can be found that self-built factories are one of the core assets of car companies. With the passage of time and the ramp-up of production capacity, these fixed assets will not only not depreciate, but will become more and more valuable.
Speaking of which, we can basically answer the first question above:That is, Xiaomi Auto is fully capable of changing Xiaomi's valuation logic and giving it more valuation space. As long as the protagonist debuts and the new car is released, the potential of the industrial chain can be realized.
As for the latter question, that is, how much room for valuation improvement and when the recovery will come, it depends on another assessment indicator - mass production capacity.
At the press conference, Lei Jun was full of confidence. He said that Xiaomi insisted on starting from the bottom and core technology, and spent 10 times the investment to build a good car. As for the long-term planning of Xiaomi Auto, Lei Jun revealed that its goal is to become the world's top five car manufacturers within 15-20 years, and strive to catch up with Porsche, Tesla and other competitors.
The amount of information at this launch was huge. The appearance of the new car was released through major official channels before the opening of the press conference, and the intelligent cockpit, surging OS, full-stack self-developed intelligent driving technology, and CTB integrated battery technology were also unveiled one by one.
However, Lei Jun's attitude is still reserved. Catch-up targets were mentioned, and a lot of technical parameters and design details were revealed, but not much additional information was provided on the delivery issue, just trying to send a positive signal to the market.
For example, Lei Jun revealed that the super motor V6 V6S equipped with Xiaomi SU7, the first mass-produced model of Xiaomi Automobile, has been mass-produced, and can achieve a speed of 21,000rpm. The V8S, which has a speed of 27,200 rpm and overtakes Tesla and Porsche, has also entered the production stage and is expected to be officially launched in 2025. The production of important components is on track, which will undoubtedly clear the way for new car deliveries.
*From Xiaomi Auto's official Weibo).
However, facts show that the outside world is still very concerned about the exact mass production and delivery schedule of Xiaomi cars. There is a clear difference in the perspectives of investors and consumers, and the former certainly wants to see more than just technology. During the press conference, Xiaomi's share price rose at 0Around 5%, there was no obvious positive stimulus, but the smart car 50 ETF ** increased by nearly 4%, indicating that the press conference had limited impact on investors.
It can only be said that the market's friendly expectations have been fully released before, and now a strong dose is needed to play a role in driving up stock prices and pushing up market capitalization. The new car-making forces represented by Ideal, Xiaopeng, and Weilai, as well as FF, which finally achieved a "zero breakthrough" not long ago, have proved this truth with their own experience:The valuation of new EV manufacturers depends on concept in the early stage, production capacity in the medium term, and technical personality and differentiation in the later stage, and profit is secondary.
Among them, NIO, which started the earliest and had the most tortuous journey, is the most worthy case for reference. When NIO submitted to the New York Stock Exchange in 2018, its total deliveries were less than 500 vehicles, and its net loss in the reporting period reached 25700 million, 50200 million and 96400 million yuan. At the beginning of the listing, the market was also not optimistic about the future of NIO, and the IPO broke on the same day, and the market value of the first day shrank by nearly eighty percent compared with the valuation before the listing.
In 2019, NIO's share price once touched the $1 mark, and it was about to reach the point of being forced to delist. The turning point came in the second quarter of 2019, when NIO's deliveries finally exceeded market expectations for the first time.
According to statistics from investment banks, 2019-2020 is the ramp-up period of NIO's production capacity. At the craziest time, the market value of NIO could rise by 10 million yuan for every car delivered. Although NIO's total loss reached a record 11.3 billion yuan in 2019, it did not prevent its market value from soaring to the sky, until it later exceeded the 100 billion dollar mark. The market value of NIO has been declining since the beginning of last year, and the ideal has bucked the trend to become the leader of the new car-making forces, and the gap in delivery volume is also the core reason.
It can only be said that for the new industry of new car manufacturers, the traditional price-to-sales ratio and price-earnings ratio valuation methods are not effective. What the market needs to look at is the actual delivery volume, which may also be the pain and lesson left over from the era of PPT car manufacturing. If Xiaomi Auto wants to realize its potential and promote the market value of Xiaomi Group to return to the peak, it must pass the mass production hurdle as soon as possible.
The development time of the industry is not too long, but the new car-making forces have gone through many stages and experienced many rounds of bankruptcies, and the attitude of capital has actually been changing. What is certain is that Xiaomi Auto has not caught up with the most frenzied capital and the fastest soaring valuation of new car-making forces, and the dividends it can eat will not be as many as "Wei Xiaoli" and Tesla.
As early as the 2021 China Electric Vehicle 100 Forum, a number of investors hinted that the valuation of new EV manufacturers has reached a critical point. After all, at the most exaggerated time, the PS value of NIO reached 38 times, Xpeng was 57 times, and Toyota, the world's largest car company, was only 12 times. It is also after 2021 that the production capacity of most new EV manufacturers has reached a bottleneck period, and valuations and stock prices** have also arrived as scheduled, and the general environment has become more and more turbulent.
Looking back on history, the new car-making forces have passed the embryonic period and the explosive period, and entered the next stage of adjustment. The valuation of new car-making forces has also climbed to the top of the cycle and began to fall one after another, with only a few car companies such as Tesla and Ideal being exceptions.
Times are different, the market's patience is weakening, and the valuation space given to Xiaomi Auto may not be as generous to "Wei Xiaoli" as it was at the beginning. After thousands of days of building a car, Xiaomi has been racing against time, but this section of the road before crossing the line is the most difficult.
However, Lei Jun never lost confidence, because he also knew a truth: as long as he can survive the mass production, what awaits Xiaomi cars will be an infinite sea of stars.