Financial reporter Wang Beibei
Sailun Tire continues to sit firmly on the throne of "A-share tire brother".
According to the 2023 annual report recently released by Sailun Tire, a number of core performance indicators have reached record highs. Among them, in 2023, the operating income will be 25.978 billion yuan, a year-on-year increase of 18.61%, the net profit attributable to the parent company will be 3.091 billion yuan, a year-on-year increase of 132.07%, the net profit not attributable to the parent company will be 3.146 billion yuan, a year-on-year increase of 135.64%, and the net cash flow from operating activities will be 5.313 billion yuan, a year-on-year increase of 141.63%.
Among the 9 tire companies listed on the main board, Sailun Tire has the best profitability, with a net profit of 3.091 billion yuan far ahead of its peers, demonstrating the remarkable results of Sailun Tire in terms of global layout, product strength improvement, and brand building.
The analysis shows that off-highway tires and overseas production capacity advantages have become important drivers of Sailun Tire's performance growth, especially off-highway tires have brought them greater profit margins, which in turn has increased the total profit margin of products. Last year, the gross profit margin of Sailun tire products reached 27.84%, an increase of 9.43% year-on-year.
It is worth mentioning that the performance growth flywheel of Sailun tire is still running at high speed. According to the first quarter report of 2024, Sailun achieved an operating income of 7.296 billion yuan, a year-on-year increase of 35.84%, and a net profit attributable to the parent company of 1.034 billion yuan, a year-on-year increase of 191.19%, achieving a good start in 2024.
Both production and sales reached a record high
Sailun announced that in 2023, Sailun will produce 58,635,400 tires, a year-on-year increase of 35.71%, and tire sales will be 55,786,300, a year-on-year increase of 27.07%. With the continuous improvement of Sailun tire production capacity release and capacity utilization, the company's production and sales of all-steel tires, semi-steel tires and off-road tires have reached a record high, and the gross profit margin of products has also increased significantly year-on-year.
Industry insiders pointed out that the main reason for the growth of gross profit margin is the upward trend of the tire industry and the decline in production costs. In 2023, among the main raw materials required for tire production, the year-on-year price change rates of natural rubber, synthetic rubber, steel cord and carbon black will be -10.1%, -4.28%, -11.42% and -10.61% respectively, in addition, the average value of China's export container comprehensive freight index in 2023 will be 937, a year-on-year increase of -66%, and the decline in the price of main raw materials and sea freight will reduce the cost of tire production to a certain extent and improve profitability.
Sailun Tire continues to make efforts in the field of off-highway tires. According to the annual report, Sailun has established a R&D, manufacturing and sales system covering giant engineering radial tires, small and medium-sized engineering radial tires, agricultural tires, solid tires and other products, and has been recognized by more and more domestic and foreign customers. Sailun off-highway tire products have been successfully matched with Caterpillar, John Deere, Case New Holland, JCB, Sany Heavy Industry, Tongli Heavy Industry, XCMG Group, Lovol Heavy Industries and other well-known engineering, mining and agricultural machinery enterprises at home and abroad.
Sailun Tire believes that with the continuous ramp-up of off-highway tire production capacity in Qingdao, Weifang and Vietnam, as well as the increase in downstream mining expenditure and global infrastructure investment, the performance of its off-highway tire segment is expected to continue to rise.
The advantage of overseas production capacity is also an important factor in Sailun's high profits. In 2023, Sailun Vietnam achieved a net profit attributable to the parent company of 1.594 billion yuan, a year-on-year increase of 46.88%, and a Cambodian subsidiary, CART TIRE, achieved a net profit attributable to the parent company of 565 million yuan, a year-on-year increase of more than 17 times.
Global competitiveness has been further enhanced
In 2023, with the overall improvement of economic operation and the steady recovery of domestic and foreign demand, the tire industry is facing better development opportunities. In this context, most of the listed companies in the tire industry have achieved good performance last year.
With the growth of performance, domestic tire companies are also constantly improving their product power and brand power. As far as Sailun Tire is concerned, the pace of global production capacity layout has been significantly accelerated. In China, Sailun Tire has carried out technical transformation of the original off-highway tire project of Qingdao plant to 60,000 tons of giant tire production capacity, and transformed the all-steel and semi-steel tire production capacity of Weifang plant into 100,000 tons of off-highway tire production capacity.
In foreign countries, on the basis of the two overseas factories in Vietnam and Cambodia, Sailun Tire continues to expand the production capacity of factories in Vietnam and Cambodia, and plans factories in Mexico and Indonesia to further deepen the global layout and enhance the company's ability to deal with international trade barriers. Among them, in 2023, the all-steel project of Sailun's Cambodia plant will be put into operation, and the all-steel, semi-steel and off-road tires of the third phase of the Vietnam plant will be put into operation. In October 2023 and January 2024, the company disclosed that the Cambodian plant plans to invest in the construction of a total annual output of 12 million semi-steel radial tires, and after the construction of the project, the Cambodian plant will have an annual production capacity of 21 million semi-steel radial tires and 1.65 million all-steel radial tires.
At present, the output of the third phase of the Vietnam base is expected to continue to increase with the ramp-up of production capacity this year, and the production capacity of the Cambodian, Indonesian and Mexican bases is expected to be completed in 2025, providing a guarantee for the performance growth of Sailun Tire. In addition, Sailun Tire has also planned the Dongjiakou base to maintain the company's medium and long-term growth.
"Through the global production capacity layout, the company can rely on the linkage effect of global production bases to shorten the supply cycle and serve existing customers more efficiently and conveniently. At the same time, the global production capacity layout can also effectively reduce the risk caused by inter-regional trade frictions, which is conducive to the long-term and steady development of the company. The person in charge of Sailun's related business said.
Benchmarking global giants to enhance the "three forces"
In the eyes of industry insiders, in recent years, domestic tire companies have continuously increased their market share by virtue of their product cost performance and other advantages. However, in the medium and long term, if domestic tire companies want to compete with international excellent tire companies, they need to further enhance their product power, manufacturing power and brand power.
Specifically, on the product side, it is necessary to continuously improve product performance through continuous and high-intensity R&D investment to create high-end products that can benchmark against first-line brands; on the channel side, it is necessary to intensively cultivate and link suppliers, dealers and stores to build an effective integrated channel system for production and marketing; on the brand side, it is necessary to seize the strategic development opportunity period of more mature domestic consumption concepts and the rise of independent passenger car brands to enhance brand influence.
Liu Yanhua, chairman of Sailun Tire, said that as a leading enterprise of domestic tires, Sailun Tire takes "making a good tire" as its mission, adheres to technological independence, intelligent manufacturing and brand internationalization, improves product performance through high-intensity R&D investment, realizes the optimal allocation of the whole industrial chain by improving the level of intelligence, and expands its global influence by focusing on brand building, helping the company become an influential enterprise in the world.
Focusing on shaping new quality productivity, Sailun Tire is committed to enhancing product innovation capabilities. According to the annual report of Sailun Tire, the R&D expenses of Sailun Tire will reach 838 million yuan in 2023, and the ratio of R&D expenses to revenue will also reach 3.23%, a new high in the past few years.
The high-end product strength of Sailun Tire has been further enhanced, laying a good foundation for the further improvement of its future profitability: first, it has successfully developed "liquid gold tires", and at the same time improved the three major properties of "rolling resistance, wet slip resistance and wear resistance", and the company has begun to increase the publicity and promotion of its products. Sailun Tire believes that the company's "liquid gold tire" products are expected to continue to contribute to the company's increment.
Sailun Tire said that the company will continue to increase the promotion of liquid gold tires, and further increase the global influence of the company's brand while building a high-end national brand. The company will also sort out the global brand matrix, pull through global promotion resources, establish a coordinated brand communication system at home and abroad, and enhance the company's brand image with high-end content output.
According to public information, as the first domestic tire company to build factories overseas, Sailun Tire currently plans four overseas bases in Vietnam, Cambodia, Mexico and Indonesia, and has established a global R&D, manufacturing, sales and service system, and its products are sold to more than 180 countries and regions in Europe, the United States, Asia and Africa.
Relevant research reports show that as Sailun Tire has continuously launched high-value new products in recent years, continuously increased its market share in high-end original parts and continued to break through the original pattern, and further consolidated the scale and profit margin of tire production capacity by expanding overseas production capacity, Chinese tire companies represented by Sailun Tire can gradually narrow the gap with foreign capital in terms of revenue scale and profit performance.