Image source: Visual China
Relying on the dual chain drive of supply chain + industrial chain, under the background that the global macro situation is still complex and severe in 2023, SUMEC (600710), a second-level subsidiary of China Machinery Industry Group, a central enterprise, is still "stable". In 2023, the company achieved revenue of 122.981 billion yuan and net profit attributable to the parent company of 1.030 billion yuan, a year-on-year increase of 12.80%. As the only central enterprise in Jiangsu Province with revenue of more than 100 billion yuan for three consecutive years, how does SUMEC achieve a cross-cycle? How to achieve "Zhiyuan" in the future? Recently, the reporter of "Public Securities Journal" had a face-to-face communication with the company's executives by participating in the shareholders' meeting of SUMEC.
The industrial chain sector has made efforts to help profit growth
The company's business is divided into two major sectors: supply chain and industrial chain, and supply chain operation provides services, including bulk commodity trading and mechanical and electrical equipment imports; The industry is divided into three major sectors: environmental protection, advanced manufacturing, and consumption. Among them, environmental protection includes clean energy and ecological environmental protection; Advanced manufacturing includes outdoor power tools, diesel generators, shipbuilding and shipping; Big consumption includes clothing, home textiles, branded school uniforms, etc.
According to SUMEC's annual report, in 2023, the industrial chain business will achieve revenue of 31.318 billion yuan, a year-on-year increase of 3.27%, accounting for 25.47% of revenue; The total profit was 2.505 billion yuan, a year-on-year increase of 15.02%, and the total profit accounted for 63.30%. In addition, the gross profit margin of the industrial chain business was 16.13%, an increase of 0.15 percentage points year-on-year.
According to Wind statistics, from 2020 to 2022, the total profits of SUMEC's industrial chain sector accounted for 56%, 53%, and 58% respectively. It can be seen that the industrial chain sector has become the company's main source of profit and growth driver.
Among them, the total profit of the large environmental protection sector in 2023 will increase by 4% year-on-year, mainly due to the growth of clean energy, and the total profit will increase by 9.17% year-on-year; The total profit of OPE outdoor power equipment decreased by 20.44%, mainly affected by the inventory cycle and downstream demand cycle of the OPE industry; Diesel generator set revenue increased by 89% year-on-year, and total profit increased by 55% year-on-year; Shipping revenue increased by 22% year-on-year, and total profit increased by 2.4% year-on-year; The total profit of clothing and home textiles increased by 28% and 19% year-on-year respectively, mainly due to the recovery of overseas inventory demand, and the total profit of brand school uniforms increased by 5.6% year-on-year.
In SUMEC's industrial chain sector, the shipbuilding business attracts attention. The company's New Ocean Shipyard has its own brand patents in the design of the Crown series of bulk carriers. According to the research data of Clarkson, a British shipbuilding and maritime dynamic analysis agency, the new Ocean Shipyard will complete the delivery of 7 ships in the first quarter of 2024, with a delivery volume of 119,000 CGT, a year-on-year increase of 6.8%.
Compared with the beginning of 2022, as of March 2024, without superimposed exchange rate factors under the US dollar, the new shipbuilding price index on the revenue side increased by 19%, and the steel price on the cost side, which accounted for 20%-40%, fell by 23%. Does this mean that there is still room for the company's marine sector to release profits?
"Hopefully, because our shipbuilding business is locked in at the outside price, but our costs are fluctuating. From the current point of view, whether it is the price of ship plates, or other factors such as exchange rates, it is still developing in a more favorable direction, and it is hoped that the income level can be improved. Zhao Weilin, deputy secretary of the Party committee and general manager of SUMEC, told reporters.
The category structure of the supply chain continues to be optimized
In the face of changes, challenges and uncertainties, SUMEC's supply chain sector adheres to the business policy of "seeking progress while maintaining stability, quality first, and innovation first", and has stabilized its scale and efficiency in the severe market environment by actively optimizing its product structure, market structure and customer structure. The supply chain sector will achieve revenue of 91.393 billion yuan in 2023, a year-on-year decrease of 17.41%; The total profit was 1.453 billion yuan, a year-on-year decrease of 9.49%.
According to SUMEC's annual report, the company's bulk commodity trading business model has two types: self-operated and agency, of which the self-operated model is the mainstay, which can be divided into unified purchase and distribution and self-operated distribution, and the proportion of unified purchase and distribution is relatively higher. Unified purchase and distribution means that the company collects orders from downstream customers and collects sufficient deposits, integrates downstream customer needs, and centralizes procurement from upstream manufacturers. Under this model, the risk of inventory hoarding is low due to the certainty of existing downstream customers and the advance receipt of deposits. Self-operated distribution refers to the company's own judgment of the market, choosing to purchase from upstream producers when commodity prices are low, and then selling after the subsequent price recovery, which has a certain degree of flexibility.
So, in view of the current supply chain business situation, how does the company plan to improve the gross profit margin of the supply chain business in the future?
Zhao Weilin said: "Overall, the gross profit margin of the supply chain industry is relatively low, and the gross profit margin of SUMEC's supply chain business is better than that of the industry. Even in this case, we are still thinking about optimizing the product structure, market structure, and customer structure. On the one hand, it actively carries out trade in high value-added and high-margin products; On the other hand, it is committed to providing customers with a four-in-one supply chain integration solution of 'technology introduction, resource supply, product distribution and logistics services', which will also help improve the profitability of the company's sector. ”
It is worth noting that in 2023, the domestic trade volume of the company's petrochemical products with high added value will reach 18.61 billion yuan, a year-on-year increase of 15%; The annual cumulative operation of coal, steel, minerals, petrochemical products, forest pulp and paper, textile raw materials, agricultural products and other bulk commodities exceeded 48 million tons.
The continuous growth of the industrial chain sector, the optimization of the supply chain category structure, and the parallel development of the two businesses attracted the increase in northbound capital (through Hong Kong Securities Clearing Company Limited). When talking to reporters about the company's stock price, Zhao Weilin pointed out: "SUMEC's understanding of market value management is to continuously optimize the company's fundamentals, and then return shareholders and investors with real money, rather than catering to the pure concept of the market. We must do a good job in management, do a good job in performance, strengthen and improve corporate governance, fulfill social responsibilities, and shoulder the responsibility of central enterprises. If the cash dividend plan for 2023 is approved, the cumulative dividend amount will reach 1.823 billion yuan since our restructuring and listing, and the dividend ratio for three consecutive years will be higher than 40% of the net profit attributable to the parent company that year. ”
Reporter Liu Yang