\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 966 Shandong Linglong Tyre Co.Ltd(601966) )
Event:
The company issued the annual report of 2021 and the report of the first quarter of 2022:
(1) in 2021, the company achieved a revenue of 18.6 billion yuan, a year-on-year increase of + 1.1%; The net profit attributable to the parent company was 790 million yuan, a year-on-year increase of – 64.5%; The net profit attributable to the parent company after non deduction was about 640 million yuan, a year-on-year increase of – 69.4%. Among them, Q4 achieved a revenue of 4.3 billion yuan in a single quarter, a year-on-year increase of – 17.0% and a month on month increase of – 0.3%; The net profit attributable to the parent company is – 140 million yuan; The net profit attributable to the parent company after deducting non profits was – 180 million yuan.
(2) in 2022, Q1 company achieved a revenue of about 4.35 billion yuan, a year-on-year increase of – 12.7% and a month on month increase of + 2.0%; The net profit attributable to the parent company is about -92 million yuan; The net profit attributable to the parent company after non deduction is about -163 million yuan.
Comments:
The rising costs of raw materials and shipping superimposed on the decline in demand, and the performance was under periodic pressure: in 2021, affected by the continuous rise in the prices of upstream raw materials such as crude oil, steel and coal, the prices of the main raw materials of tires, such as natural rubber, synthetic rubber, carbon black and cord fabric, remained in a high fluctuation state for a long time. The average price of natural rubber in 2021 increased by 25.3% year-on-year, and the average price of carbon black in 2021 increased by 52.3% year-on-year. At the same time, the epidemic in 2021 led to port congestion, and high oil prices pushed up shipping costs, resulting in increased pressure on the company’s transportation end. In addition, affected by the shortage of chips and the switching of national five country and six standard, the demand of automobile market is blocked. Due to the superposition of three factors, the gross profit margin of the company’s tire products fell by 8.7pct to 16.9% in 2021, and the profit of the whole year was under pressure. In 2022q1, the company still has certain sales pressure, and the tire sales volume decreased by 3.55% year-on-year to 15.71 million. Due to the reduction of sales volume and the high price of raw materials, the company’s profit has not turned positive, but the loss has narrowed month on month.
The supporting system of globalization has been gradually improved, and the supporting field of new energy has developed rapidly: at present, the company has established a strategic cooperation relationship with first-class main engine manufacturers at home and abroad. At the same time, by continuously adjusting the proportion of supporting medium and high-end products, medium and high-end models and medium and high-end brands, the profitability of the supporting field has been continuously improved, so as to form a brand breakthrough and stimulate the replacement market. In terms of passenger cars, in 2021, the company realized fixed-point and quantity supply of a number of main tires, and became the first tire enterprise in Chinese Mainland to develop fixed-point tires for eight mainstream models in the world’s top ten automobile manufacturers, such as Audi, BMW, Volkswagen, etc. In October 2021, Honda Lingpai realized formal mass production, and Linglong became the only tire supporting enterprise of Honda in China. In terms of independent brands, the company has officially supplied FAW Hongqi eqm5 and ls. In the field of new energy, in 2021, the company accounted for nearly 20% of the overall market share in the tire supporting market of new energy vehicles, with a sales growth rate of 182%, ranking first in China’s tire market. In terms of commercial vehicles, the company has become the supplier of man and Scania under Volkswagen, and is also the only domestic brand supporting Faw Jiefang Group Co.Ltd(000800) j7 high-end models.
The channel construction has been continuously improved and the retail model has been continuously innovated: the company’s products are sold to 173 countries in the world, the market business covers Europe, the Middle East, the Americas, the Asia Pacific, Africa and other major regions in the world, and the distribution of the sales network on all continents is relatively balanced, and a full coverage sales network system has been realized. Since the strategy of “the first year of new retail” was put forward in 2020, the company has continuously developed and innovated retail models. On August 29, 2021, the company launched “new retail 2.0”, relying on the small program of “Linglong car care station” for passenger cars and “Linglong card friends’ home” for commercial vehicles, to meet the diversified product and service needs of users, provide road rescue and national joint insurance services for customers, and help dealers and stores improve their core competitiveness. At the same time, the company continues to promote the globalization of marketing, and has successively participated in the sponsorship of more than 100 sports events around the world to activate the brand with sports marketing; Advertising has been launched in different channels such as China Central Television, high-speed rail and Tiktok, reaching more than 2 billion people a year, and building popularity for the company with the help of authoritative media and industry vertical media. With the joint promotion of a number of measures, the company’s new retail transformation is progressing smoothly, helping the company to continuously improve its brand value and profitability.
The “7 + 5” strategic layout has been steadily promoted to ensure future development: in 2021, the company responded to the national strategy of mutual promotion of China’s big cycle and international China’s double cycle, and began to promote the “7 + 5” strategy in response to macro risks such as geopolitical and trade frictions. At present, the company has five production bases in China: Zhaoyuan, Dezhou, Liuzhou, Jingmen and Changchun; There are two production bases in Thailand and Serbia (under construction) overseas. The global layout is increasingly improved, the service radius supporting the main engine factory is continuously optimized, the delivery efficiency is continuously improved, and the market share is expected to be further improved. In terms of new retail, in 2022, the company will continue to promote channel construction around the “ten thousand stores and one hundred merchants” plan, comprehensively develop and upgrade store channels, develop phase III retail projects, and continue to build a one-stop user service platform with “automobile service + Travel Service + life service” as the core. With the relaxation of macro constraints in the future, the company’s strategic layout has been solidly promoted, and its future development can be expected.
Profit forecast, valuation and rating: considering the high cost of raw materials and shipping and the pressure on the company’s phased profit, we lowered the company’s profit forecast for 20222023 and added the profit forecast for 2024. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.140 billion yuan (down 65%), 1.226 billion yuan (down 67%) and 1.384 billion yuan respectively, and the converted EPS will be 0.77, 0.83 and 0.93 yuan / share respectively. The company’s “7 + 5” strategy is advancing steadily, the new retail transformation is progressing smoothly, and there is a broad space for development in the future. We still maintain the company’s “overweight” rating.
Risk warning: the production progress is less than expected; International trade risks affect export sales; The price of raw materials fluctuates.
