\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 058 Sailun Group Co.Ltd(601058) )
Event: on April 1, 2022, the company announced that the annual report of 2021: the company realized an operating revenue of 17.998 billion yuan in 2021, with a year-on-year increase of 16.84%; The net profit attributable to the parent company was 1.313 billion yuan, a year-on-year decrease of 11.97%; The net profit attributable to the parent company after non deduction was 1.193 billion yuan, a year-on-year decrease of 20.64%; The net cash flow from operating activities was 837 million yuan, a year-on-year decrease of 75.56%. In Q4 of 2021, the company achieved an operating revenue of 4.753 billion yuan, a year-on-year increase of 12.06% and a month on month increase of 3.50%; The net profit attributable to the parent company was 311 million yuan, a year-on-year decrease of 2.34% and a month on month increase of 4.01%; The net cash flow from operating activities was 306 million yuan, a year-on-year decrease of 68.70% and a month on month increase of 46.44%.
Comments:
In 2021, the operating revenue reached 17.998 billion yuan, a year-on-year increase of + 16.84%. Under the obstruction of export, the tire production, sales and revenue still increased year-on-year.
In 2021, the global epidemic continued to recur, resulting in many adverse factors, such as labor shortage, economic downturn, sharp rise in sea freight, sharp rise in raw materials, lower than expected demand in some markets, which brought great challenges to the whole tire industry. In the face of difficulties, the company complies with the trend of the times and works closely around the national strategy of “carbon peak and carbon neutralization” and the established development strategy of the enterprise. In this case, the company achieved an operating revenue of 17.998 billion yuan, a year-on-year increase of 16.84%. Revenue growth comes from several factors: 1) actively expand production and invest in Vietnam phase III, Cambodia and Weifang production base; The increase of production capacity led to the increase of production and sales. In 2021, the production and sales of tires increased year-on-year, with a total production of 453977 million tires, a year-on-year increase of 6.56%; 43619700 tires were sold, with a year-on-year increase of 4.98%. 2) In 2021, the company raised the price of its products several times to cope with the pressure of rising raw material prices and rising sea freight prices.
The net profit attributable to the parent company was 1.313 billion yuan, a year-on-year decrease of 11.97%. The net profit was dragged down by the increase of raw material costs and the rise of sea freight
During the reporting period, the net profit attributable to the parent company was 1.313 billion yuan, a year-on-year decrease of 11.97%; The net profit attributable to the parent company after non deduction was 1.193 billion yuan, a year-on-year decrease of 20.64%. The year-on-year decrease in net profit was mainly due to the rise in raw material prices and sea freight prices, and the increase in tire product prices could not fully cover the cost increase. According to Bloomberg, as of March 25, 2022, the freight rate of 40 foot TEU from China to the west of the United States of FBX index was US $1602430/feu, 11.69 times higher than that in early 2020; From China to Europe, it is 1273940 US dollars / feu, which is 6.75 times that of the beginning of 2020, and from China to the east of the United States, it is 1735880 US dollars / feu, which is 6.55 times that of the beginning of 2020. During the reporting period, the prices of the main raw materials of tires rose sharply. According to wind information and Zhuo Chuang information, in 2021, the average price of natural rubber was 1348956 yuan / ton, up 17.50% year-on-year; The average price of polybutadiene rubber was 1326145 yuan / ton, with a year-on-year increase of 45.60%; The average price of styrene butadiene rubber was 1335602 yuan / ton, a year-on-year increase of 38.08%; The average price of carbon black was 8162.6 yuan / ton, a year-on-year increase of 47.02%; The average price of antioxidant 4020 was 3282913 yuan / ton, a year-on-year increase of 78.87%; The average price of cord fabric was 2932831 yuan / ton, a year-on-year increase of 53.98%. According to our calculation, as of April 1, 2022, the raw material index has risen to 1.32 times that at the beginning of 2020.
Independent research and development of liquid gold tires to improve comprehensive performance
Using the new materials prepared by the world’s first “chemical rubber mixing” technology, the company has independently developed a low-carbon green tire product – liquid gold tire, which has significantly improved the rolling resistance, wet skid resistance and wear resistance of the tire. In November 2022, German t ü V Rhine released the real vehicle test results with a test cycle of one month and more than 10000 kilometers at the fourth China International Import Expo: the comprehensive fuel consumption of racing wheel liquid gold tires per 100 kilometers is 16.56% lower than that of similar products with the best feedback from Chinese first-class brands in China’s heavy truck market. According to the calculation of oil price of 6.5 yuan / L, 22 tires per vehicle, saving 1L of oil and reducing 2.66kg of carbon dioxide emission, according to the actual vehicle test data, according to the annual driving mileage of 200000 kilometers, the liquid gold truck tires (rolling resistance class a) save 14000 L / vehicle, save 92000 yuan / vehicle and reduce 37.6 tons of carbon dioxide compared with the best similar products fed back by China’s first-class brands in China’s heavy truck market.
With outstanding advantages in technology research and development, giant engineering radial tires and other products have obtained a number of certifications
The company is also the scientific research demonstration base of the national rubber and tire engineering technology research center and the engineering research center of giant engineering radial tire and new material application in Shandong Province. At the same time, it has also undertaken to build scientific research platforms such as the national and local joint engineering research center of giant engineering radial tire and new material application. Many products of the company have been recognized by relevant departments: “super wear-resistant off-road radial tire” has been successfully selected into the catalogue of innovative industrial products in Shandong Province; “Radial tire casing for construction machinery” was rated as the single champion product of manufacturing industry in Shandong Province by Shandong Provincial Department of industry and information technology; “Super wear-resistant off-road radial tire”, “50 / 80r57 giant engineering radial tire new product”, “urban bus special tire new product” and “high mileage car tire with superior comprehensive performance” were successfully selected into the first and second batch of “Qingdao innovative products” list.
The anti-dumping tax rate in Southeast Asia was implemented, and the anti-dumping + countervailing tax rate in Vietnam was 6.23%
In May 2021, the U.S. Department of Commerce announced the final determination of double anti-dumping tax rates for products involved in Southeast Asian countries and regions, including Vietnam’s anti-dumping tax rate of 0% – 22.27%, including Vietnam’s anti-dumping tax rate of 0; Vietnam’s countervailing duty rate is 6.23% – 7.89%, of which Vietnam in the round is 6.23%. Vietnam’s anti-dumping tax rate in the round is lower than expected and belongs to a low level in China’s overseas factories. Objectively, it may bring price advantages and greater bargaining power to the company.
The production capacity has increased rapidly, and the Cambodian factory is expected to contribute to the increment
In 2021, the company’s annual production capacity of all steel tires increased by 4.05 million, that of semi steel tires increased by 5 million, and that of off-road tires increased by 37000 tons. Actr, a joint venture between the company and the United States’ solid platinum tire in Vietnam, has successfully reached the production capacity of the project with an annual output of 2.4 million all steel radial truck tires. In March 2021, the company also invested in the construction of a project with an annual output of 9 million semi steel radial tires in Cambodia. The project has been completed throughout the reporting period and has entered the stage of mass production and sales. In February 2022, the company invested in the “annual output of 1.65 million all steel radial truck tires project” in the Cambodian factory.
The output of off highway tires has increased greatly, or it may become a new profit growth point
In 2021, the annual production capacity of off-road tires will increase by 37000 tons (including 23000 tons in Qingdao factory and 14000 tons in Vietnam factory). In 2021, the output of off-road tires was 718400 tons, with a year-on-year increase of 46.02%. Vietnam plant will add 50000 tons of off-road tire capacity in 2023 and Qingdao plant will add 10000 tons in 2022, which will contribute more increment to the company.
Continuously expand production capacity
In 2022, the company will continue to promote Vietnam’s phase III “project with an annual output of 3 million semi steel radial tires, 1 million all steel radial tires and 50000 tons off-road tires”, Cambodia’s “project with an annual output of 9 million semi steel radial tires” and “project with an annual output of 1.65 million all steel truck radial tires”.
Improve technology R & D capability
With the goal of building a competitive R & D system, open up the whole process of product, process and quality development, and promote the transformation of R & D to agile and accurate positive development. In terms of quality, we will be market-oriented, strictly control the quality line of enterprise products, and control the quality of each tire. At present, the framework of the company’s independent technology system has been built. In the future, a more perfect technical standard and system with independent intellectual property rights will be formed through the accumulation and optimization of R & D project data.
Accelerate the construction of smart factories and smart Enterprises
In recent years, the company has paid attention to the construction of industrial Internet and actively explored the application of 5g, artificial intelligence, big data, cloud computing and other new generation information technologies in the tire industry. The company continues to improve the intelligent level of product manufacturing process. The company has jointly built the “rubber chain cloud” industrial Internet platform with a number of companies, realizing the comprehensive interoperability of internal operation and upstream and downstream enterprises, as well as the overall optimal allocation of resources in the industrial chain. In the future, the company will deepen the construction of the “rubber chain cloud” platform in an all-round and valuable way, continue iterative innovation, realize the rapid replication and promotion of the ecological platform, and continue to maintain the leading position in the industry.
Build an international brand
The company will systematically promote the promotion of three-dimensional brands, including corporate culture, corporate image, products, technology and events. At the same time, it will also broaden the promotion media such as TV, newspapers and magazines and we media, and further expand the audience of brand publicity, so that consumers can better understand the company’s products, so as to continuously improve the company’s brand construction level.
Strengthen the promotion of liquid gold tires
In 2022, the company will continue to strengthen the promotion of liquid gold tires and continuously launch more types and specifications of liquid gold tire products to meet the needs of consumers outside China, which can not only bring higher economic benefits to the company, but also help the realization of the national strategic objectives of “carbon peak” and “carbon neutralization”. It is estimated that the net profit attributable to the parent company in 2022, 2023 and 2024 will be RMB 2.182 billion, RMB 3.120 billion and RMB 4.063 billion respectively, corresponding to PE of 13.94, 9.75 and 7.49 times, maintaining the “buy” rating.
Risk tip: “uncertainty of business development of liquid gold” (EVEC tire tread compound); The risk of project progress falling short of expectations, the impact of the epidemic on the global economy exceeding expectations, the risk of price fluctuation of main raw materials, the risk of international trade friction, the risk of environmental protection and safe production, the risk of overseas operation, the risk of new production rising short of expectations, the risk of exchange rate fluctuation, the risk of increased competition in the same industry, the risk of economic downturn, etc.
