What's wrong with me being a rich man?

Chapter 704 Exceeds Expectations (4k)

Silicon Carbon Group did respond to the battery discussion, but the most subtle point is that the positions of automakers and battery suppliers are not entirely aligned.

Batteries are one of the three major components of new energy sources.

If car manufacturers say it's good while battery manufacturers say it's bad, it will undoubtedly have a significant impact.

Public opinion did not calm down because of the fate of silicon carbon; on the contrary, it seemed to intensify, to the point that even Chen Rijun, the leader of Lingang, called to inquire and discuss whether mediation was needed.

Some things are difficult to discuss from a business perspective, but can be better communicated through other channels.

Yu Xing thanked the director for his concern but declined the suggestion: "Director, although there may indeed be some people taking advantage of the situation, we and Ningde are still quite restrained, and this attention will soon shift."

Both silicon carbon and CATL are indeed exercising restraint; otherwise, the differences regarding safety and energy density would have many more ways to spread in this mobile internet era.

Yu Xing reiterated that ternary lithium is good, with excellent energy density and safety that can be enhanced through various means, but the Silicon Carbon Group chose to promote lithium iron phosphate with more safety redundancy.

Regardless of what's being said outside, at least the executives haven't publicly started a feud, and they haven't used any channels like live streams, interviews, or industry conferences. Even if the manufacturers stop talking, gossip still lingers.

Seeing Mr. Yu's attitude, Chen Rijun naturally wouldn't interfere. Thinking about it, the matter probably wasn't at the most tense point. Otherwise, given Mr. Yu's past behavior, he probably would have directly stepped in and criticized it.

However, although Silicon Carbon Group did not discuss the safety differences between the two types of batteries more explicitly, some people naturally noticed this issue, with the most heated discussions coming from Hong Kong.

In December of last year, a bus equipped with a ternary lithium battery in Hong Kong exploded and caught fire, less than three months after its debut. Fortunately, it was parked at the company at the time and no one was injured.

News reports from less than a year ago have been brought up again at this time, and many Hong Kong residents naturally find the discussions in the media sarcastic, which has once again become fodder for mainland internet discussions.

In fact, this is one of the reasons why Silicon Carbon Group has remained restrained. Whether it is lithium iron phosphate or ternary lithium, especially for potential consumers, many people only know that these are new energy batteries, and such discussions will only give them a general understanding.

Although lithium iron phosphate has different physical properties, once the media frenzy is overwhelming, it will only damage the overall concept of new energy at this stage, rather than breaking it down into different companies.

CATL quickly noticed this problem as well. A significant portion of the online discussion was not about classifying the two types of batteries, but rather directly targeted CATL, silicon carbon, and new energy.

The company's leader, Zeng Yuqun, issued an internal gag order, requiring all senior executives not to accept media interviews, participate in discussions on this topic, or compare themselves to Silicon Carbon Group.

Short videos are quite popular now, and he even browsed related content and comments, but...

—Isn't CATL a supplier? Why are they attacking their customer instead?
—So your name is Ningde, huh? Just wait until you go public, and see if Brother Feng, who's known for his arrogance, can handle you!

—Given the history of short selling by Guoshanfeng, CATL should just list on the mainland.

Zeng Yuqun was quite taken aback by the large number of similar comments. After asking her colleagues, she learned that the "King of Short Sellers" had many followers online. Some of them created topics on Weibo, some opened Douyin accounts to track his activities, and others used past cases and Mr. Yu's words to analyze and predict...

"President Zeng, President Yu wouldn't go so far as to use that 'Over the Mountain Peak' to short-sell us, would he?" After explaining to the sect leader, Vice President Tang Xiuqi asked this question with genuine concern.

Zeng Yuqun dismissed it: "Isn't he the one who fabricates data for listed companies? How could he possibly short us? Look how calm President Yu is this time."

Tang Xiuqi nodded, agreeing with the statement.

After a while, Zeng Yuqun suddenly said, "But maybe after we go public, silicon carbide might suddenly start supplying batteries to other companies, which would also be a negative factor."

Tang Xiuqi was taken aback, then realized that it made even more sense.

Currently, silicon carbide is determined to follow the lithium iron phosphate route. More importantly, as demonstrated in its CG short film, the idea behind Lingang is not a secret: it is definitely possible to improve the range of electric vehicles from the perspective of structure and integration. The question is how much it can be improved.

Unfortunately, this is a route that battery suppliers like CATL find difficult to choose. Regardless of the upper limit of lithium iron phosphate, Silicon Carbon Group will remain highly competitive for at least the next three years.

Based on Yu Xinghe's strategy for silicon carbon, the probability of future competition between the two companies is increasing.

"President Zeng, President Zeng, the mid-year report for silicon carbon has been released! It just came out!" Another vice president rushed over to deliver the latest news.

Upon hearing this, Zeng Yuqun immediately returned to her office with great curiosity and turned on her computer. Sure enough, she saw that the news about the interim report of silicon carbide had become a trending topic on many platforms.

He clicked in and saw the eye-catching performance information. Although he had some reservations about silicon carbide, he couldn't help but say, "The stock price is going to rise. As expected of silicon carbide, as expected of Kyushu!"

—In the six months ending June 30, 2016, Carbon Silicon Automotive achieved sales of 78,900 vehicles, approaching the level of 82,500 vehicles for the entire year of 2015. Total operating revenue was 317.18 billion yuan, vehicle sales revenue was 281.67 billion yuan, new energy vehicle subsidy revenue was 35.51 billion yuan, operating profit was 54.83 billion yuan, net profit attributable to the parent company was 11.21 billion yuan, and net profit attributable to the parent company excluding non-recurring items was 8.21 million yuan.

— The gross profit margin of the automotive business (excluding subsidies) increased significantly from 13.5% in 2015 to 21.2%, breaking the 20% mark for the first time, marking the company’s formal entry into a new stage of large-scale profitability.

—During this reporting period, the company's core competitiveness achieved a qualitative leap, and the scale effect was fully released. The production cost per vehicle dropped significantly from RMB 320,000 in 2015 to RMB 280,000, a decrease of 12.5%, which became the core driving force for the improvement of gross profit margin. The second phase of the Shanghai Lingang plant released its production capacity in May, completely resolving the tight supply situation. The number of directly operated stores increased from 71 at the end of 2015 to 123, and the average monthly sales per store increased to 107 vehicles, with operational efficiency leading the industry.

The one-time investment in the Lingang Phase II plant has temporarily impacted the current net profit, but it is the most important foundation for the company's high-speed growth over the next three years. The company is confident in achieving its sales target of 15 vehicles for the whole of 2016, and the gross profit margin of the automotive business will further increase to over 23%.

On August 15, Silicon Carbon Group simultaneously released its interim results announcement and full interim report, revealing a great deal of information and immediately attracting research and analysis from domestic and foreign institutions.

The most surprising thing is that the net profit attributable to the parent company of Silicon Carbon Group turned positive in the first half of the year, and the company has entered the profit stage. Although there is a very important prerequisite for such a turnaround: it received a subsidy of 35.51 billion yuan from the government. But subsidies are still money.

Silicon Carbon had mentioned profitability as early as its IPO, believing that it could be achieved by the end of 2016. The mid-year performance undoubtedly exceeded market expectations.

Whether it's range-extending or not, phosphoric or not, this mainland new energy company, established just a few years ago, is already profitable!
Furthermore, it does not rely on large-scale shipments of low- and mid-range products, but rather on competition from high-end products.

Such a conclusion still needs to be accompanied by preconditions, such as cash subsidies and license policies. However, these things are not only applied to Silicon Carbon Group. Great Wall Motors, Geely, SAIC Motor, BYD, and others are all making products under such policies. It is just that Silicon Carbon Group broke through first!

—Silicon Carbon Group has turned a profit!
—The undisputed number one new energy vehicle!
—The Silicon Carbon Group is leading the development of China's new energy industry!

While Zeng Yuqun was still reviewing the financial report, several official media outlets' online accounts had already published brief reports, highly praising the performance of the Silicon Carbon Group. Since Silicon Carbon is currently a key player in the discussion surrounding new energy batteries, the financial report's performance was naturally being further disseminated and analyzed. First and foremost, the same old question remained.

Who exactly is buying such expensive range-extended vehicles?
Is it oily or not? Is it electric or not?!

The discovery of some information in the financial report provided the answer: because Shanghai and Zhejiang Province continued the subsidy policy from 2015 from January to June, a detailed analysis revealed that this region contributed 31% of the sales of carbon silicon vehicles, at least 24,500 units.

In addition, major cities such as Beijing, Guangzhou, and Shenzhen also account for an important proportion.

Therefore, nearly half of the products from the Silicon Carbon Group's Jiuzhou New Energy are likely sold in these regions, with the remainder distributed across other sales areas nationwide.

The second question is whether this profit is genuine or not...

Profitability is profitability, but the national and local subsidies are also real. If these subsidies are deducted, the Silicon Carbon Group will not be able to make a profit for the time being, but in reality, the subsidies cannot be deducted.

Some people are still using the issue of subsidies to negate the profits of Silicon Carbon Group in the first half of the year. However, as soon as the Hong Kong Stock Exchange opened, Silicon Carbon's share price jumped up, with the increase reaching as high as 13%. The share price has stood above the HK$90 mark for the first time and is expected to continue to challenge HK$100.

The exploration of this part of the profit information has led to another branch, with many people noticing a difference of 3 million between the net profit attributable to the parent company and the net profit attributable to the parent company after deducting non-recurring items for silicon carbon.

The net profit attributable to the parent company after deducting non-recurring items was 8.21 million yuan, which proves that the Silicon Carbon Group made a profit in its main business of car manufacturing in the first half of the year. As for the extra 3 million yuan in Huaxia Yuan in net profit attributable to the parent company...

The main body of the financial report also provides an explanation of this part.

—At the end of 2015, the company's supply chain team predicted that due to the growth of new energy vehicles, the core raw materials for power batteries, such as lithium iron phosphate, would be in short supply and prices would enter a period of rapid increase. In order to hedge against the risk of rising costs, the company's board of directors approved the use of no more than RMB 15 billion of idle funds to strategically invest in high-quality listed companies in the power battery industry chain.

——本次投资于2015年12月至2016年1月分批完成，累计投入资金13.65亿元，主要投资标的披露如下：当升科技、天赐材料、多氟多、国轩高科。

That's a pretty straightforward explanation!
Silicon Carbon used the money to speculate in stocks!

They even made a profit of 3 million! The unrealized profit rate is 21.98%!

"It's not uncommon for companies to use idle funds to hedge cost risks, but this one hedge is done so well!"

"If lithium iron phosphate wants to raise prices and profit from silicon carbide, then silicon carbide should profit from the stock prices of those companies first!"

"Damn, the boss really knows how to make money from the stock market, no wonder he's a finance guy."

"666, Mr. Yu, you really have to teach me this!!"

Silicon Carbon is a publicly listed company, and although it is based in Hong Kong, its financial reports related to the new energy industry naturally attract many investors, and the response to Silicon Carbon stock speculation is particularly enthusiastic.

Regarding the question of whether or not it is permissible to copy homework, the financial report also provided suggestions in the outlook section.

The company expects lithium iron phosphate prices to remain high in the second half of 2016, gradually declining in 2017 as new production capacity is released. The company will reduce its holdings in some parts of the industry chain in a timely manner, based on raw material price trends, to lock in profits. At the same time, the company will continue to deepen cooperation with core suppliers to establish long-term and stable supply relationships, ensuring the stability of raw material supply and prices.

Prices are expected to fluctuate at high levels in the second half of the year, decline next year, and carbon silicon holdings will be gradually reduced!

The judgments and actions of companies like Silicon Carbon Group, a representative of new energy, have been given. How exactly to proceed depends on the different interpretations of the shareholders.

The more you dig into the carbon silicon financial statements, the more information you find.

Some studies have examined its sales and R&D expenses, noting that the development of the next model based on silicon carbide is already on the agenda. Other studies have examined the future market performance of silicon carbide, noting that the company's financial report disclosed that it has more than 30,000 undelivered orders and that production is scheduled until September 2016.

From sales volume to profits to subsidies to competition...

The information provided by silicon carbon gives all parties something to talk about. Those who want to praise it can praise it to the fullest, and those who want to criticize it can continue to criticize it. Even stock traders can get multi-dimensional judgments.

With the release of the interim report for the first half of the year, the previous discussions about batteries were quickly swept away.

Is the new energy sector viable? Silicon Carbon Group is already making money.

Is lithium iron phosphate any good? Silicon Carbon Group is already making money.

Just then, GAC saw that the discussion about new energy vehicles suddenly took a turn for the better and announced that the new Trumpchi GS7 five-seater model would be launched on October 15th, and promotions about its more cost-effectiveness also emerged again.

Whether the GS7 can be revived this time remains to be seen.

"Silicon Carbon Group is the backbone of China's new energy industry. I believe that Silicon Carbon's stock price is severely undervalued. I will personally invest in Silicon Carbon's stock in the hope of supporting its development!"

Pang Qingnian, the founder of Youngman Automobile, gave an excited interview to the media, saying that President Yu has brought honor to Zhejiang entrepreneurs and that he will take concrete actions to support the stock of silicon carbon.

Liu Wanying noticed the interview and found it quite novel, so she forwarded it to Boss Yu.

Yu Xing receives a lot of messages every day, especially after the financial report is released, he receives a lot of congratulations. However, Xiao Ying's chat box is pinned to the top, and even though she often receives strange news, she will basically scan through the content.

He opened it again this time, and after closing it, he was about to continue browsing other information when he suddenly returned thoughtfully to look at it again.

Youngman Automobile, Pang Qingnian.

With so many people offended, so many criticisms raised, and so many things investigated, a sudden, sycophantic compliment seemed to have startled the very peak of the mountain.

(End of this chapter)