Original link: https://www.latepost.com/news/dj_detail?id=1765
Tesla is growing with less debt
Tesla has a goal of delivering more electric vehicles at a compound annual growth rate of 50%. To get there, Tesla did what the auto industry does, cutting prices to drive sales. At the same time, its production has exceeded sales for five consecutive quarters, suggesting that capital expenditures are being prioritized for capacity expansion — investing in future growth with today’s profit margins.
From April to June this year, Tesla’s sales and revenue hit record highs, but the average sales price of a single vehicle (excluding financing leases) fell to US$46,000, nearly US$10,000 less than the same period last year. The operating myth that price cuts do not reduce profit margins has also been temporarily put away. The gross profit margin of vehicle sales has dropped to 17.52% (excluding finance leases), which is a quarterly low since 2018.
Musk does not intend to stop there, just as he will not lower his annual sales target of 1.8 million vehicles due to production cuts in the third quarter. He said that if the macroeconomic environment deteriorates, such as the central bank raising interest rates and consumers’ purchasing power declining, then Tesla will continue to cut prices.
And Musk seems convinced that the profits lost by selling cars at lower prices can be earned back by selling self-driving services 10 times, “sacrificing profit margins to produce more cars does make sense, because we think that in the not too distant future, valuations will rise significantly (because of self-driving capabilities).”
Tesla’s earnings filings were less confident about falling profit margins than the CEO’s blunt communication. For two consecutive quarters, it removed gross profit margins on auto sales from its earnings filings, letting analysts and investors do the math for themselves. Dan Levy, an auto analyst at investment bank Barclays, said that as Tesla accelerates investments in artificial intelligence and other areas, the company’s overall earnings will come under more pressure.
What is relatively optimistic is that Musk’s continuous transformation of Tesla is mutually reinforcing with Tesla’s sufficient cash reserves, abundant financing tools and extremely low debt levels.
Four years ago, Tesla’s total assets were about 1.3 times its total liabilities, its debts (loans, convertible bonds) due within one year exceeded $15 billion, and its cash in hand was only $5 billion. At the end of the first half of this year, Tesla’s assets were 2.35 times its liabilities, its debt due within one year dropped to $9.9 billion, and its cash in hand expanded to $23 billion.
During this period, Tesla continued to expand the scale of quarterly capital expenditures. The US$2.06 billion in the second quarter of this year was about 10 times that of four years ago. It is growing and spending more with less debt.
At the performance meeting, Musk, CFO Zach Kirkhorn, and Karn Budhiraj, who is in charge of the supply chain, all mentioned the next room for price cuts and sources of capital investment, and will still prioritize cost reduction and efficiency increase.
“The most important priority is to ensure that we continue to invest heavily in core technology, including AI spending, capacity expansion, and new product development,” Kirkhorn said. “It is very cash-intensive, so each key business is focusing heavily on cost reduction in the main business, and turnover efficiency in raw materials, work-in-progress inventory, and accounts receivable, all of which made appropriate progress in the second quarter.”
However, Bloomberg also noticed that after a year, Tesla repackaged different types of debt into ABS and sold them to other investors in exchange for funds.
Musk said the company’s raison d’être is to make goods and services, ideally great ones. Tesla’s future remains uncertain, but its risky strategy could change the face of the auto industry, or at least, how we think about how the company operates and makes money. (Gong Fangyi)
TSMC’s revenue falls, inventory hits new high
There are almost no bright spots in the second quarter report handed over by TSMC today:
- Revenue in the second quarter fell 13.7% year-on-year to US$15.68 billion;
- Net profit fell 23% year-on-year to US$5.84 billion, the first decline since the epidemic;
- Inventories continued to climb, hitting a record $7.5 billion;
- The full-year revenue guidance continued to be lowered from the original decline of 1% to 6% to a decline of 10%;
- Full-year capital spending is expected to be at the lower end of the original guidance of $32 billion to $36 billion.
Revenue from the highly anticipated high-performance computing business (including high-performance AI chips) fell 5% from the previous quarter. Like Nvidia, TSMC made a big bet on computing chip-related technologies early on, but it may not be because of the great opportunities for AI, but it needs to continuously develop more advanced processes to get rid of competitors.
However, the current reality is that AI chips, which account for only 6% of revenue, cannot restore the declining demand in almost all industries such as mobile phones and computers. Liu Deyin admitted frankly in the earnings conference call that TSMC cannot say whether the short-term enthusiasm for artificial intelligence can continue, but they have no choice but to continue to expand production, because if large customers like Nvidia continue to place orders, the company cannot afford the consequences of capacity shortages. Of TSMC’s $32 billion capital expenditure plan this year, it is expected that 70% to 80% will be spent on advanced manufacturing processes.
In June, TSMC opened a new advanced packaging plant in Miaoli County, central Taiwan, in order to keep up with strong demand for AI chips. TSMC expects that the problem of insufficient production capacity of advanced packaging will not be alleviated until the end of next year.
For the time being, AI cannot replace the mature workers that TSMC urgently needs to build overseas factories. Due to a shortage of engineers, mass production of TSMC’s Arizona plant will be delayed from 2024 to 2025. Liu Deyin said that in the future, more experienced local engineers may be sent to the United States to help train new local employees.
Other highlights from the performance meeting at the same venue include:
- The Kumamoto plant in Japan is expected to be mass-produced by the end of 2024; the German plant is still under evaluation and will focus on automotive chips; the 28nm plant in Nanjing is expanding production;
- The recovery of the Chinese market is later than expected; downstream customers are still very cautious about inventory, and it is expected that inventory adjustment will continue until the end of the year. Whether it can recover next year depends on the global macro environment;
- The 3nm process has already been mass-produced and has a good yield rate. The launch of Apple’s new iPhone in the second half of the year will not have as obvious an impact on performance as in previous years, because the 3nm process is complex and the manufacturing cost is higher. (Qiu Hao)
Apple’s GPT tool is not aimed at consumers
Well-known technology reporter Mark Gurman recently reported that Apple is quietly developing its own large-scale model tool, but there is no clear direction and plan for consumers. He said Apple’s AI tools could pose a challenge to OpenAI and Google.
The report also revealed many details: For example, promoting AI technology has become one of Apple’s main tasks, including addressing potential privacy issues. Apple created Ajax last year as a unified development framework for machine learning. Ajax is currently also used to develop large language models and ChatGPT-like chatbots, internally called “Apple GPT”.
Well-known technology blogger John Gruber commented that it is not surprising that Apple develops a large model, but it is strange not to do so. After the report was released, Apple’s stock price rose more than 2% to a record high. Gruber said the day’s gain eased back to 0.7% after people realized there wasn’t much new information in it.
In fact, the report may confirm the consistent impression of the previous market that Apple is cautious about generative AI. According to reports, “Apple GPT” was born as a trial late last year. It was initially not promoted internally due to security concerns. Later, more employees gained access, but only after special approval. In addition, Apple strictly prohibits the use of any work generated by “Apple GPT” to develop consumer-facing features.
This is consistent with Apple’s consistent attitude. At the financial report meeting in May this year, Apple CEO Cook said that there are still many problems with AI technology, and Apple will “consider carefully” before introducing more AI. At the WWDC conference in June, Apple did not mention AI once, but used a more rigorous concept of “machine learning”.
But this does not mean that Apple is behind in the field of AI. Currently, Apple uses “Apple GPT” internally to assist with product prototyping, text writing, and actively improve models. The same is true of technology companies such as Samsung, which have developed their own large-scale model tools to improve production efficiency because of concerns about internal data leakage. Cook also mentioned in May that most of Apple’s products actually use AI, such as car accidents, fall detection, image search and so on.
There are similar examples in China. So far, Tencent has not released self-developed large-scale models, nor has it released large-scale model applications for individual users. In June of this year, Tencent’s team published a paper in a sub-journal of Nature on the topic of building the world’s largest drug resistance database and assisting AI in the development of new drugs. (Lin Guangying)
Wall Street’s major investment banks cut more than $1 billion in layoff costs in the first half of the year
In the first half of this year, Goldman Sachs laid off 3,400 employees, accounting for 7% of the total. Morgan Stanley and Citigroup laid off 3,000 and 5,000 employees respectively, mainly affecting investment banking and trading departments. The three banks cut more than 11,000 employees, and the severance package alone cost more than US$1 billion.
They are also the most aggressive hiring banks during the pandemic. From 2020 to 2022, the total number of employees of Morgan Stanley, Goldman Sachs, and Citigroup will increase by 36%, 27%, and 20%, respectively. During the same period, JPMorgan Chase and Bank of America saw a net increase of 14% and 4% respectively, while Wells Fargo cut staff due to restricted regulatory business.
In the early days of the epidemic, banks expanded their recruitment in response to the deal boom. In 2022, as the central bank raises interest rates, mergers and acquisitions slow down, companies postpone listings, and consumers begin to reduce loans, but the enthusiasm for bank recruitment remains unchanged. A headhunter in charge of financial services recruitment described last year as “recruiting crazy”. Many companies recruited people not because of lack of manpower, but to maintain competitiveness so as not to miss the next wave of opportunities.
The turning point happened this year. Goldman Sachs took the lead in laying off about 3,000 employees in the first quarter. In the second quarter, Morgan Stanley and Citigroup also began large-scale layoffs. Wells Fargo, which is more inclined to the retail business, also lost 4,000 employees, while Bank of America tried to save costs and reduce staff by leaving employees themselves, but mentioned that the current rate of employee turnover was half that of last year.
Options Group, a Wall Street executive search firm, predicts that the investment banking business will continue to downsize in the second half of the year. Citigroup also hinted last week that it will continue to lay off employees, saying that it will continue to streamline the organization and reduce basic expenses in the second half of the year. Goldman Sachs said it has no further plans at this time, but has restarted the performance-based elimination system.
Morgan Stanley appeared more optimistic, saying last month that further mass layoffs were unlikely and saying this week that it expects to benefit from a backlog of deals and hopes to seize expansion opportunities. In the past two years, due to the sharp drop in valuation, many start-up companies have postponed their IPOs and are currently waiting for the opportunity. Last week, two biotechnology companies listed on the US stock market, and the amount raised exceeded expectations. (Lin Guangying)
IPO I knew early丨The most expensive new stock on the Beijing Stock Exchange, Jinbo Biotech, went public today
A total of 1 company subscribed for A shares today:
- Fuerjia: a manufacturer of skin care products, issued a total of 40.08 million shares at a purchase price of 55.68 yuan, with a price-earnings ratio of 29.07 times. The company mainly produces skin care products, such as masks, creams, toners, etc. Nearly a quarter of its revenue comes from its Tmall flagship store.
- From 2020 to 2022, the company will realize operating income of 1.585 billion yuan, 1.650 billion yuan, and 1.769 billion yuan respectively, with a compound annual growth rate of 9.64%; realize net profit attributable to the parent company of 648 million yuan, 806 million yuan, and 847 million yuan, with a compound annual growth rate of 8.63%.
A total of 3 companies listed on A shares today:
- Jinbo Biology: A manufacturer of consumables for the medical aesthetics industry, actually raised 245 million yuan, with a total market value of 8.569 billion yuan, an increase of 159.69% on the first day.
- Zhixin Precision: a manufacturer of automation equipment, actually raised 529 million yuan, with a total market value of 4.587 billion yuan, an increase of 116.87% on the first day.
- Kangpeng Technology: A manufacturer of display materials and new energy battery materials, actually raised 900 million yuan, with a total market value of 6.233 billion yuan, an increase of 38.57% on the first day. (Intern Lin Hongsheng)
OTHER NEWS
Hang Seng Technology ETF Fund (513260) rose more than 1%, and popular Chinese concept stocks collectively strengthened.
On July 20, Hong Kong stocks opened higher, and the Hang Seng Technology Index rose by more than 1%. Among the constituent stocks, Kuaishou rose by more than 3%, and Meituan and Tencent Holdings both rose by more than 2%.
Yesterday, a large order was bought, and today a large order was sold, and the sales volume of southbound funds hit a new high in the past two and a half years.
On July 20, southbound funds sold more than HK$13.8 billion of Hong Kong stocks, a record high since February 2021. On the previous day, the net purchase of Hong Kong stocks by southbound funds was nearly 16.5 billion Hong Kong dollars, which was also the highest since February 2021. However, the overall trend of Hong Kong stocks did not fluctuate much. The Hang Seng Index closed down 0.33% yesterday and closed down 0.19% today.
Kuaishou announced that it will use 100 billion traffic to support the job search business “Kuaipin”.
Kuaishou held the Kuaipin Annual Summit in Suzhou on July 20. Liu Xiao, the business manager, said that at least 250 million people have used Kuaishou Kuaipin every month in the past year, and Kuaishou plans to invest 100 billion traffic in this business. According to Kuaishou’s financial report, in the first quarter, Kuaipin’s average daily resume delivery volume increased by more than 300% year-on-year, with a peak of over 500,000 copies. The Kuaipin business will be launched in early 2022, posting recruitment information and receiving resumes in the live broadcast room.
Nayuki’s tea is open to franchising. It is estimated that the investment in a single store will be about 1 million, and the cost will be paid back in one and a half years.
Nayuki’s Tea today announced the “Partnership Plan” to recruit single-store and regional partners. The detailed rules show that the investment amount of a single store is about 1 million yuan, the capital verification amount is 1.5 million yuan, and the store area is required to be 90-170 square meters to preserve the space experience. Naixue said that it is expected to pay back the cost in about one and a half years. Nayuki’s tea currently has nearly 1,200 stores in nearly 100 cities. HEYTEA opened to franchise at the end of last year. As of May this year, it has newly entered more than 150 cities and opened more than 430 stores.
SAIC confirmed that it will jointly develop an electric vehicle platform with Audi.
According to Jiemian News, in response to the previous rumors that Audi acquired SAIC’s electric vehicle platform, SAIC responded today that it has reached a consensus with Audi that the two parties will cooperate to accelerate the development of electric vehicles. According to previous media reports, the negotiation between Audi and SAIC involves the three-electric system, car body and intelligent driving system of the Zhiji electric vehicle platform. Audi can use this to save time and investment in the development of pure electric platforms and launch new pure electric models faster.
Southeast Asian e-commerce platform Lazada received a capital injection of US$845 million from Alibaba.
According to reports, Lazada, a Southeast Asian e-commerce platform, has received another capital injection from Ali, and has received a total of about 5.8 billion US dollars in funds. In March of this year, Ali announced organizational changes and established the Ali International Digital Business Group. Lazada is part of the group and headquartered in Singapore. Lazada’s total merchandise transaction volume ranks second among the five Southeast Asian countries except Indonesia, and Shopee, an established e-commerce company in Southeast Asia, still has an advantage. This year, the TikTok e-commerce platform TikTok Shop officially announced the launch of its mall in Southeast Asia, and Temu, a cross-border platform under Pinduoduo, is also preparing to enter the Southeast Asian market.
Douyin said that it has not applied for a fund sales license and has not conducted tests with fund companies.
It was reported yesterday that Douyin is applying for a fund sales license, and has recently cooperated with some large fund companies to conduct sales-related tests. At present, all aspects of preliminary preparations have been completed. Douyin responded that it has not applied for a fund sales license and has not conducted tests with fund companies. However, many media have mentioned that ByteDance’s current financial business has covered lending, insurance, payment, etc., and it still needs funds.
Some insurance companies stopped selling all traditional life insurance with predetermined interest rates higher than 3.0% at the end of July.
According to reports, regulators have been notifying by phone in recent days, requiring insurance companies to remove traditional life insurance with a predetermined interest rate greater than 3.0%, dividend insurance with a predetermined interest rate higher than 2.5%, and universal insurance with a minimum guaranteed interest rate higher than 2.0% before July 31. Under the condition that other factors remain unchanged, the reduction of the predetermined interest rate means that insurance products will become more expensive, the interests of consumers will decrease, and the cost of liabilities of insurance companies will decrease. Since the beginning of this year, the insurance regulatory authorities have repeatedly emphasized the adjustment of debt costs, and the adjustment of predetermined interest rates has become the general trend.
In June, the export volume of Swiss watches increased by 14% year-on-year, and the growth rate was faster at low and medium prices.
The export value of Swiss watches in June increased by 14% year-on-year to 2.4 billion Swiss francs (about 2.8 billion US dollars). The industry believes that the growth shows that people’s demand for high-end watches such as Rolex and Patek Philippe is still solid. The demand for mid- and low-priced watches has improved more significantly. Among them, the export value of mid-range watches priced at 200 to 500 francs increased by nearly 20% year-on-year, and the export value of watches below 200 francs increased by 10%. In the first half of this year, the export value of Swiss watches hit a new high.
Netflix’s quarterly revenue fell short of expectations, and its stock price fell 9%.
Netflix’s revenue in the second quarter increased by 2.7% year-on-year to US$8.2 billion, which was lower than the company’s previous guidance of US$8.5 billion. In addition, the recent stock price has been quite strong, and the unmatched performance caused the company’s stock price to plummet by nearly 9% after hours. Netflix has been looking for new sources of growth as streaming competition intensifies and the U.S. market nears saturation. The company launched lower-priced plans with ads last November and began cracking down on member account sharing. But investors and the companies themselves have overestimated the short-term impact of these measures. Still, the recent Hollywood strike is likely to have less of an impact on Netflix than most of its peers due to its larger pipeline of overseas projects and programming.
Businesses slashed IT spending and IBM missed quarterly revenue expectations.
IBM’s computer mainframe business revenue fell by 14.6% in the second quarter, dragging down the overall revenue by 0.4% to US$15.48 billion, which was lower than market expectations. The weak demand is mainly due to the reduction of IT costs by enterprises in the context of inflation. In addition, the surge in related expenditures during the epidemic also consumed part of the demand in advance. In addition to IBM, peers such as Accenture and Tata have also recently warned of weak demand.
Chips and steel were dragged down, and Japan’s exports to China in June fell by 11% year-on-year.
Japan’s exports rose 1.5% YoY in June, missing expectations. Among them, exports to the United States increased by 11.7% year-on-year, and the growth rate was faster than that of the previous month, mainly driven by automobiles, construction and mining machinery. Exports to China fell by 11% year-on-year, and the decline was significantly larger than that of the previous month, mainly due to the decline in exports of steel, chips, and non-ferrous metals. Japan’s imports fell 12.9 percent in June, mainly due to lower prices for imported energy, which may help ease cost pressures.
Hayao Miyazaki’s new work has set the most successful opening performance in the history of Studio Ghibli.
On July 14, Japanese animation master Hayao Miyazaki’s latest work “What Kind of Life Do You Want to Live” was released in Japan, and the number of viewers exceeded 1.35 million in 4 days, surpassing the box office record of “Spirited Away” in the same period. This work of Hayao Miyazaki’s “closed mirror”, which has been rumored for many years, once again returns to the theme of anti-war and growth perspective. The local word-of-mouth is divided into two levels around whether the plot is too obscure. According to news from Universal Pictures, Christopher Nolan’s new film “Oppenheimer” has been confirmed to be introduced in mainland China, and the schedule is to be determined.
The US Powerball lottery offers more than $1 billion in jackpots.
On July 19, local time, the US Powerball lottery issued a prize of 1.08 billion US dollars, and a lottery player in California won the prize. This is the third time in Powerball’s history that prize money has topped the $1 billion mark. Winners can choose to take a lump sum of $558.1 million in cash, or take out $1.08 billion over 30 years, increasing by 5% each year. In addition, winners are required to pay a 37% tax on most winnings.
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