Kenon Holdings, the parent company of Qoros, recently released its third-quarter financial report. Due to a 59% year-on-year increase in sales to 5,833 vehicles, Qoros Auto's revenue in the third quarter of this year increased by 54% year-on-year to RMB 607 million (US$91 million). Sales revenue increased significantly, but due to the increase in vehicle deliveries and the increase in R&D expenses during the same period, as well as the impairment of fixed assets such as plant equipment, Qoros' sales costs in the third quarter soared 85% year-on-year to RMB 824 million. Qoros Auto's losses in the third quarter reached RMB 465 million. According to previously disclosed data, Qoros Auto's cumulative losses in the first three quarters of 2016 reached RMB 1.35 billion. Kenon Holdings, the parent company of Qoros, recently released its third-quarter financial report. Due to a 59% year-on-year increase in sales to 5,833 vehicles, Qoros Auto's revenue in the third quarter of this year increased by 54% year-on-year to RMB 607 million (US$91 million). Sales revenue increased significantly, but due to the increase in vehicle deliveries and the increase in R&D expenses during the same period, as well as the impairment of fixed assets such as plant equipment, Qoros' sales costs in the third quarter soared 85% year-on-year to RMB 824 million. Qoros Auto's losses in the third quarter reached RMB 465 million. According to previously disclosed data, Qoros Auto's cumulative losses in the first three quarters of 2016 reached RMB 1.35 billion. Although the losses remain, Liu Liang, the new chief operating officer of Qoros Auto, said in an interview with the First Financial reporter that although Qoros' net profit and other performances still need to be improved based on the disclosable financial data, the reasons affecting the net profit performance are partly due to historical factors such as Qoros's research and development and cost sharing methods. If we consider curves that reflect current market performance, such as wholesale and retail volumes, net income, fixed operating costs, earnings before interest, taxes, depreciation and amortization (EBITDA) and net profit, Qoros Auto's market performance has gradually improved in the past two years. Liu Liang also frankly admitted that although Qoros positioned itself as a "startup company", in fact, it often suffered from big company diseases, and there is a lot of room for improvement and improvement in cost control and execution efficiency. The new "helmsman" who has been in office for less than 100 days hopes to improve the appearance of Qoros as soon as possible. On the one hand, he will accelerate the deployment of dealers and the launch of new cars to drive sales growth; on the other hand, he will continue to increase cost control and savings. "I hope that Qoros Auto can achieve positive cash flow in economic and operational aspects next year." This is a small goal he set for himself. As for the next step, the reporter learned that Qoros may officially launch a financing plan next year, with an amount of up to 10 billion yuan, smoothly promoting the "amphibious strategy" of both traditional and new energy vehicles in the future, while further increasing investment in emerging fields such as autonomous driving and travel. Qoros’s “loss” account book Low sales and high losses have always been a pair of contradictions that easily attract attention. Such opposition and conflict have repeatedly made Qoros Auto a hot topic in the industry. In 2015, Qoros Auto's cumulative sales were less than 20,000 vehicles, but its losses were as high as more than 2 billion yuan. The disparity in data and the sharp contradictions have repeatedly caused Qoros to be criticized in the industry. In the first 10 months of this year, although Qoros Auto's sales volume increased by 70% year-on-year, exceeding 18,000 vehicles, the loss of 1.35 billion yuan in the first quarter still made it difficult for it to escape the situation of being "tortured" by the industry. "Many people pay attention to Qoros, but it is not scientific to evaluate the current operating status of Qoros Auto only by looking at the net profit," Liu Liang told the reporter of China Business Network. According to him, if you want to consider the current operating status of Qoros, you should look more at the profit before interest, taxes, depreciation and amortization. That is, the current income before deducting amortization, taxes, interest and financial expenses, rather than the net income after deducting the above series of expenses. The reason for this, Liu Liang explained, is that Qoros Auto is a start-up company, and the company's amortization and depreciation model and financial costs are all determined by the way the shareholders decided on the business model and strategic investment when they established the company. Since Qoros cannot obtain sharing of R&D and equipment investment from both parent companies, the huge initial investment needs to be digested separately. This is itself a high-investment and high-depreciation model. In addition, Qoros adopts the "production method" for depreciation, so in the early stage, as sales increase, the depreciation cost will also increase rapidly. Only when it reaches a certain sales node will the cost growth curve be lower than the sales growth node, and it takes time to reach this node. "If we consider our EBITDA, our performance in the past two years has shown a healthy and benign growth trend." Liu Liang showed a chart to reporters. According to the data in the chart, from 2014 to date, Qoros Auto's sales volume and net income growth rates have been basically the same, while the performance of EBITDA and net profit have shown a trend of getting better year by year. Even if according to the data disclosed in the financial report, the growth rate of Qoros Auto's sales cost in the third quarter was higher than the growth rate of its revenue, but its loss amount has narrowed compared with last year. At the same time, it has also made some progress in controlling marketing and administrative expenses. In the third quarter, Qoros Auto's advertising and marketing expenses fell 36% year-on-year to 69 million yuan, and administrative expenses fell 33% year-on-year to 107 million yuan. The new round of financing in 2017 may exceed 10 billion yuan Tian Yongqiu, an analyst who has been paying close attention to Qoros Auto, also believes that judging from the financial data, Qoros Auto's performance has improved in the current period. However, he also told reporters that the next cash flow will be a big test for Qoros Auto. According to the financial report, as of September 30, 2016, Qoros Auto's total loans and borrowings (excluding shareholder loans) reached 5.6 billion yuan; current liabilities (excluding shareholder loans) reached 3.9 billion yuan, including 2.6 billion yuan in trade and other payables, 1.3 billion yuan in current assets and 103 million yuan in cash and cash equivalents. At present, Qoros Auto's cash flow mainly comes from financing activities, including long-term loans, shareholder loans, and cash flow from car sales. According to Tian Yongqiu, Qoros has basically used up all its loan quotas under long-term credit, so the number of loans in the third quarter did not increase compared with the second quarter. On the other hand, it is unlikely that both shareholders will continue to provide blood transfusions to Qoros. According to incomplete statistics, from November 2015 to the first half of 2016, the parent companies of both parties have provided Qoros with various loan financing or guarantees of nearly 4.8 billion yuan. In addition to the 1.1 billion yuan loan from both Chinese and foreign parties in the second quarter of 2016, the total amount has reached nearly 6 billion yuan. Therefore, the next step for Qoros is to solve the daily liquidity and R&D investment through additional financing and increasing car sales. For this reason, Qoros is planning the next round of financing. According to the reporter, the new round of financing may be officially launched in 2017, and the financing scale may exceed 10 billion. Whether the new round of financing can be in place in time is a big test for Qoros Auto, and more importantly, how Qoros will achieve self-sustaining blood by increasing sales. According to Liu Liang's plan, by next year, Qoros Auto will achieve "positive operating cash flow." His strategy is simple - increase revenue and reduce expenditure: continue to implement the "cost management plan (CMP)" to achieve better cost control, and more importantly, boost sales. Liu Liang told reporters that the market segments that Qoros has entered are not enough and the competitiveness is not strong enough. Starting from next year, Qoros hopes to launch a new car every year. At the same time, Qoros also needs to speed up its layout in the dealer network, which is widely known as "shortcomings" in the industry. At present, Qoros has less than 110 dealers. In his opinion, in a market as large as China, it is necessary to expand the network to 200 to 300 as soon as possible before it can move forward. At present, Qoros still has at least 150 network blank spots in the second and third-tier markets. Third, the dealer profitability needs to be further improved. For this reason, Qoros' dealer management model will also be adjusted from the current vertical management model and the direct management by the Shanghai headquarters leaders to the war zone management model. The six regions will be fully empowered, and the heads of the regions will be directly responsible for network development, sales, after-sales service, marketing, etc., so as to promote sales according to the actual situation of the region. Although the situation is still difficult, Liu Liang believes that "the automotive industry is a marathon." Although Qoros is still struggling, judging from the recent launch of high-end brands by domestic automakers, Qoros is currently on the right track. In the future, Qoros will continue its "amphibious strategy" of traditional and new energy vehicles in parallel, and has also made some arrangements in terms of intelligence and autonomous driving. According to him, Qoros's autonomous driving car will enter the testing phase next year. As for the next step of development, Qoros will share resources with shareholders, take advantage of the resources of Chery and Israel, change the past high-investment model, and enter a more benign growth stage. As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity. |
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