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Falling down on Huawei to eat apples duzline.com

As we mentioned earlier, Apple is growing against the trend in the 2020 epidemic, and it has swollen the faces of all disapproving analysts.

In the first quarter of 2021,

Apple’s performance reached a record high; with the gradual easing of the epidemic and restrictions on its biggest rival, Huawei, a group of analysts are also quite optimistic about Apple’s new quarter. It was originally estimated that there would be a maximum of 32%. The huge increase.

But I did not expect that it still underestimated Apple’s ability to attract gold.

In the second quarter of 2020, Apple hit a new high in the second quarter of the previous year and set the highest growth rate since 2012.

Amazing growth rate

Let’s take a look at the overview; Apple has exceeded Wall Street expectations in all its key performance indicators this year, and it can be said that there are almost no dead ends.

Revenue is as high as 89.58 billion U.S. dollars, and because gross profit and operating profit have also reached new highs,So Apple’s profitability this quarter also hit a record high in the second quarter.

The historical high is not scary.

What’s scary is that the revenue is much higher than the first quarter of the previous year (2019), while the gross profit and operating profit are higher than the first quarter of last year (2020).

It is important to know that the first quarter of Apple’s calendar year (September to December) is the most prosperous season for Apple, which often accounts for about 40% of Apple’s annual revenue in one quarter; and the performance of the second quarter (January to March) of each year. , It tends to fall sharply, with a month-on-month drop of about 40%.

However, Apple’s profitability in this quarter is actually more profitable than last year’s peak season.

Apple’s performance over the years (2012~2021), please note that only the performance of the second quarter is listed here.

Regarding Apple’s profit margins,

two points are worth mentioning. First of all, Apple’s gross profit margin has been relatively stable at 38%-40% since 2012, but this year it has unexpectedly soared 4.2%, breaking through the 40% mark. Secondly, Odin mentioned earlier that Apple’s R&D spending has surged in recent years, which has been squeezing its operating interest rate; but he did not expect that the profit margin this quarter would stop falling and rebound.

The glorious Zhao Ming once said,China’s hardware companies have a combined hardware net profit margin of 5%, which can be said to be rare, but Apple’s hardware gross profit margin has further increased to 36.1%, while the operating interest rate is as high as 30.7%.

Imagine how terrible Apple’s ability to attract gold is.

But even more amazing is the growth rate. As can be seen from the above figure, since 2012, Apple’s growth has slowed down significantly. Although it has regained its growth momentum in recent years, it is still only a year-on-year increase of about 10-20%. But this year, Apple’s revenue growth rate reached 53.7%, and operating profit increased by 114%. This increase is the largest increase since Apple in 2012.

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Why did Apple achieve such an amazing rebound this quarter?

We mentioned earlier that there were outbreaks of epidemics in various parts of the world from January to March last year, so Apple’s performance in the same period last year was actually not very satisfactory, especially the iPhone’s performance fell year-on-year, forcing them to issue a profit warning in February. However, in addition to the easing of the global epidemic this season, the consumer market has slightly improved, leading to substantial growth in performance.

In addition, there are two reasons: the explosion of Apple’s various businesses and the rapid growth of the Greater China region.

Various businesses have exploded

First, let’s look at the performance of Apple’s various businesses.

Apple’s previous year performance (2012~2021) (million dollars), please note that only the second quarter results are listed here.

The first key is that the iPhone’s performance rebounded sharply (above), with a growth rate of up to 50%, the highest increase since 2012. Why did the iPhone suddenly explode this quarter? Cook attributed the 5G replacement wave (Idothinkthatthe5Gcycleisimportant) in the financial report. Odin cannot judge how much 5G will have on iPhone sales, but it is estimated that we mentioned the iPhone 12 postponement earlier, and to a certain extent the iPhone sales peak season will be postponed slightly later, leading to an explosion of iPhone 12 sales this quarter.

But the more interesting situation is the sales and average selling price of the iPhone.

iPhone sales and average selling price over the years (2012~2021), please note that the data after 2019 are based on IDC reports.

Soon after Apple released the quarter’s earnings report, many survey agencies also released the quarter’s smartphone sales data. IDC expects iPhone sales to be approximately 55.2 million units, an increase of 50.4% year-on-year; Canalys expects a lower growth rate of approximately 52.4 million units, year-on-year An increase of 41%.

Odin uses more optimistic IDC data as the basis to calculate the average selling price of the iPhone.

Although IDC has a relatively high base, the average selling price of the iPhone in this quarter was as high as US$868.44, which is a record high since the release of the iPhone (the blue line above) ).

Cook mentioned in the earnings conference that the best-selling iPhone this quarter is still the mid-range iPhone 12, but he said that the high-end Pro series still has strong demand. Judging from the above iPhone price data, the demand for Pro is real. It’s quite amazing. Apple’s gross profit margin increased sharply this quarter, which seems to have a lot to do with the high-end mobile phones selling too well.

iPhone, iPad and Mac have year-on-year performance year-on-year. Please note that only the second quarter results are listed here.

However, despite the huge sales of the iPhone, the revenue of the iPhone still only accounts for 53.5% of Apple. The past “iPhone dependence” has not relapsed. The biggest reason is that the sales of Mac and iPad also exploded at the same time (above).

We must know that the performance of Mac and iPad in recent years has not been satisfactory,

but we mentioned that after the outbreak of the epidemic last year, the demand for homeschooling and office work has surged, leading to an explosion in sales of computers and tablet devices.

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At the same time, last year Apple released a new version of the M1 chip version of the Mac after the release was well received, but sales will not enter the peak period until this quarter, which has further promoted Apple’s performance growth.

As for the two major growth businesses that have attracted much attention from Wall Street in recent years: services and wearables, they are not so bright in comparison.

The service sector is fortunate. This year’s revenue is close to 17 billion U.S. dollars. Not only is its ability to attract money comparable to that of the iPhone ten years ago, it also maintains a 15% to 20% quarter-on-quarter growth rate every quarter.

Wearable performance year-on-year (2016~2021), please note that the data in 2017~2019 is recorded as “other products”.

The problem is the wearable business.

Apple launched AirPods in 2016, and it became very popular immediately, becoming another important engine for Apple’s performance growth. But beginning in 2021, Apple’s wearable business began to slow down significantly; although the wearable business revenue for this quarter was still as high as $7.836 billion, the growth has fallen from the double-digit numbers in the early years to single-digit numbers.

Earlier news pointed out that Apple has felt that AirPods growth has slowed, so it has cut orders; in addition, there have been news that Apple is preparing to launch a cheap AirPods.

From this perspective,The era of brutal growth of true wireless headsets is about to pass, and Android manufacturers who are still entangled in the headset market seem to have to prepare early.

China and overseas markets

Another key to Apple’s rapid growth this quarter is the Greater China region.

Apple’s historical performance in different regions (2012~2021), please note that only the second quarter results are listed here.

As can be seen from the above figure, apples also bloomed in various places this quarter, with explosive growth globally. The Asia-Pacific region, with the largest increase, recorded a 94.2% increase, while North America, with the smallest increase, also recorded a 34.7% increase.

Undoubtedly, the blooming of apples all over the world certainly has something to do with the slowing down of the epidemic, but more noteworthy is the Greater China region.

Although the Asia-Pacific region is growing rapidly,

it is too small to compare with the Greater China region. Although Apple’s revenue in the Greater China region is still smaller than that in developed countries such as North America and Europe.

However, Odin also mentioned that Apple has reversed its disadvantages in the Greater China region in recent years and has resumed growth since the beginning of last season.

Everyone remember that Odin said last season that Apple’s performance in the first quarter of 2021 exceeded Wall Street’s expectations by nearly 8 billion, and this 8 billion came from the performance of the Greater China region, which turned from decline to growth.

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Apple’s historical performance in different regions (2012~2021), please note that only the second quarter results are listed here.

Apple further reversed the decline in the Greater China region this quarter, from -7.5% year-on-year last year to 87.5% this year, adding $8.273 billion to Apple out of thin air.

Apple’s revenue this quarter was US$89.584 billion, which exceeded Wall Street’s expectations by US$12.22 billion, and Apple’s revenue growth this quarter was US$31.271 billion.

This quarter’s revenue in the Greater China region only accounted for less than 1/5 of Apple’s revenue, but revenue growth accounted for more than a quarter of Apple’s revenue growth this quarter.

The rapid growth in the Greater China region is not only due to the outbreak of the epidemic in China last year, which led to Apple’s sluggish performance in the Greater China region last year. Another important point is also the well-known Huawei. Last season, we mentioned that Huawei’s sales plummeted after the restrictions in September, fell to Huawei and ate Apple.

It is the same in this quarter, but the situation is more special.

Data collated from: History of Anhu Prefecture

According to Canalys’s China mobile phone market share, iPhone’s sales in the Greater China region were 12 million units. Although a 49% year-on-year increase, it still falls short of vivo, OPPO and Xiaomi.

But judging from the “China’s mobile phone market in March 2021, the retail gear situation” published by the Minister of Anhu Duhu earlier (above), in the last quarter, Apple mainly snatched Huawei’s mobile phones in the 4000~5000 yuan gear in China. Market, and this season, it has snatched Huawei’s most high-end mobile phone market of more than 5,000 yuan.

What’s the situation? RMB 5,000 is approximately US$770, while RMB 8,000 is approximately US$1200.

In other words, why has the average selling price of iPhones increased sharply this season? Why did Apple’s gross profit margin soar suddenly? It is estimated that Huawei is unable to protect the high-end market in the Greater China region, and other domestic mobile phones are also unable to fill the vacancy.

One more thing

The last thing worth mentioning is cash flow.

Earlier, Xiaomi, which announced that it would build a car with a high profile, but showed a lot of cash to build a car, had a cash flow of approximately RMB 113 billion at the end of the period.

Apple’s cash flow at the end of the calendar year (2012~2021)

But Cook stated in the financial report that Apple “only” had $83 billion (approximately 538 billion yuan) of cash flow in the quarter, a year-on-year decrease of about 11% (above); at the same time, Apple announced that it would launch 90 billion (approximately) 583 billion) USD stock repurchase program. But on the other side, Apple’s investment in property, plant and equipment does not increase but decreases (the picture below).

Apple’s investment in property, plant and equipment over the years (2012~2021)

Apple obviously has the funds to build a car, but it seems that there is no obvious sign of burning money.

Do they really want to build a car? Still a mystery.

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