BYD should reflect on the free fall after the peak

From the previous "black horse" miracle praised by the industry, to the current fall of the free fall after the peak, in recent years, especially the recent BYD carrying too much is non-controversial.

BYD President Wang Chuanfu, who led 20 people to start a business 16 years ago, has now mastered a large group of 180,000 people and assets of more than 60 billion yuan. However, BYD is also experiencing the biggest test since its establishment.

From BYD (002594.SZ)'s latest third-quarter financial report, although BYD stopped the downward trend, it still did not show a fundamental improvement. There are still many places where BYD needs reflection and improvement.

The financial difficulties The third-quarter financial report showed that during the reporting period, sales of 94,000 vehicles were achieved, an increase of 9.1% year-on-year, operating income of approximately 11.8 billion yuan, a year-on-year increase of approximately 10.95%, and a net profit attributable to shareholders of the parent company of approximately 77 million yuan. , a year-on-year increase of approximately 582.07%. However, from January to September of this year, net profit attributable to shareholders of listed companies fell 85.5% year-on-year to 353 million yuan. At the same time, BYD expects net profit attributable to shareholders of listed companies to fall by 35% to 65% in the same period of last year.

The simultaneous growth of sales volume, main business income, and profits shows that BYD's performance has stopped the downward trend. However, from the data of the financial report, it still failed to out of the current financial difficulties.

From the first three quarters of view, its current ratio remained at 0.63, and the quick ratio remained at around 0.4, which was not significantly different from the first half of the year.

This is mainly because BYD’s fixed asset investment is still at a high level. In the non-current assets of BYD in the first three quarters of this year, construction in progress reached 10.8 billion yuan, an increase of 3.4 billion yuan over the same period of last year. Excluding the 7.3 billion yuan in the first half of this year, the construction in progress in the third quarter reached 3.5 billion yuan.

However, engineering materials decreased by 1.5 billion yuan over the same period of last year to 2.3 billion yuan, indicating that fixed investment began to shrink after reaching a high level.

Compared with the same period of last year, short-term borrowings in the first three quarters did not change much, they were all around 9.7 billion yuan. Insiders told the "First Financial (Weibo) Daily" that BYD should be "removing the Western Wall to fill the Western Wall" and use borrowings to repay loans due.

The bills payable amounted to RMB 8.3 billion, an increase of 109.11% from the beginning of the year. BYD said that it was mainly related to the increase in the volume of transactions settled by suppliers in the form of bills.

Long-term borrowings increased from 3 billion yuan in the same period last year to the current 6.7 billion yuan. Long-term borrowings increased by 120.33% compared with the beginning of the year, BYD said, mainly due to the increase in long-term borrowing due to expansion of financing needs this year.

Correspondingly, the total debt of BYD increased from 31.8 billion yuan in the same period of last year to 39.7 billion yuan now.

Regarding the inflection point of BYD's performance, Wang Chuanfu said that this is next year's event. BYD expects the 2011 full-year decline in net profit to be still lower than the rate of decline in January to September 2011, mainly due to the impact of the sales growth of new models such as the peak season of the auto industry and S6 in the fourth quarter, as well as new customers and new products in the mobile phone parts business. The introduction of products will drive business growth. In addition, the integration of related investment of the Group will also bring certain benefits to the Group.

Persistence in new energy For BYD's sharp decline in performance since the second half of last year, and the resulting financial difficulties, the most intuitive performance is the decline in BYD's (microblogging) sales business. Because from the second half of last year, BYD Auto's sales channels began to collapse. In 2010, BYD Auto's total number of dealers was 22.63%.

However, at the same time as the sharp drop in stall revenue from the traditional auto business, BYD is sprinting harder and has invested more in the overall deployment of new energy. Between the reduction and the increase, the current situation of BYD has been caused.

According to the budget, BYD invested about 19.8 billion yuan in major industrial parks in Pingshan, Huizhou, Guangdong, Shangluo, Xi'an, and Changsha, Hunan. Among them, most of the investment in the project involves new energy projects.

In the input of new energy, BYD is almost a whole industrial chain layout. In addition to the well-known electric vehicles in the industry, BYD has also involved solar energy and storage power stations, and it has become the three dreams of BYD.

However, experts in the industry believe that in the new energy field, it is still in a large-scale investment period. When it can be truly large-scale commercialization, it is difficult to make it clear. The advance industrialization of BYD this approach may drag on BYD's overall future profitability.

In addition, new energy sources are also currently facing policy risks. In particular, new energy vehicles, China's current development line has been undecided, after the instigation since 2009, also began to reflect on the development of electric vehicles.

In this context, on October 26, the E6 forerunners went public. Wang Chuanfu said that this proves that our industry chain is up. Next year there will be 2,000 buses. Next year and next year will be sales of several billion yuan of new energy vehicles. The capital market is willing to see such a situation, new energy vehicles can achieve Billions, not billions before. At present, BYD basically determines the electrified electric vehicle as the entry point for new energy vehicles, and K9 electric bus and E6 taxi as the pure electric bus combination route.

In the three-year adjustment period of BYD, the first is the network adjustment. There were more than 1,000 in the past, and now there are more than 830, a lot of reductions. Wang Chuanfu said: “We are only unable to get out, and now they are not willing to go out, S6 With the successive launch of G6 products, the confidence of dealers is very good."

The major expansion of the market decision since 2009 is the mistake of BYD's decision-making. This kind of mistake can not be simply attributed to misjudgment in the market, but is due to the current management model.

Wang Chuanfu said that as an entrepreneur, there are dreams and pressures. Every day in 2009, it was confusing, the production capacity was great, and the products sold well. At that time, it was easy to make mistakes. The mind was hot and when it was stressed, it would calmly think.

How to avoid the next crisis is a question that BYD should consider now. For how to avoid the next crisis, Wang Chuanfu said that the company will train many talents who understand both technology and management. We will train technical professionals to share strategic decisions.

BYD insiders told reporters that for BYD, it is time to improve the management structure. It is reported that the reason why the "decrease of layoffs" has made a lot of noises is that no one dares to take responsibility, everything needs the boss to make a decision.

BYD, which has developed so far, still continues its previous management model. Currently, the general managers of dozens of divisions of BYD have reported directly to Wang Chuanfu, and Wang Xiaofu has made decisions on major events and small matters. This kind of decision-making system has gradually lost BYD in its body and its efficiency has become low.

Wang Chuanfu said: "We believe that it is difficult for our own brands and that our own brands can also take off. Chinese people are not stupid and not lazy. Why are they worse than foreigners? If we talk about the market, our market is the first in the world; if When it comes to funds, the Chinese people have a lot of money and the government also supports them. On the engineer side, China also has the most competitive engineers in the world. Why is it worse than others? Therefore, relying on the spirit of entrepreneurs, making mistakes does not matter, we must continue to summarize. Do it well."

However, we must not only rely on entrepreneurship, we must also comply with the will of the market. Now is the time for BYD to begin to change this management model. Corporate decision-making truly fits the market will, BYD can avoid the next crisis.