In 2020, against the trend of high growth, Princhengshan entered the dividend period of scale expansion.

On the last day of March, Princhengshan (0 1809), a leading tire enterprise, showed its "report card" for 2020.

Since 2020, under the pressure of the overall economic situation affected by the epidemic, driven by solid capacity expansion and technical strength, Pulin Chengshan's performance has continued to grow, showing a strong momentum of steady and long-term development.

In 2020, the performance grew rapidly against the trend.

Under the impact of the global epidemic, the global tire market demand will be depressed in 2020. Although the global market demand will pick up after the overseas epidemic situation is controlled to a certain extent in the second half of the year, the market scale will still decrease 1 1.7%. Judging from the performance of overseas tire giants, although the average year-on-year decline in revenue of eight overseas tire companies, including Bridgestone, Michelin, Goodyear and Mainland China, was slightly narrower than the -22% in the first half of the year, it still maintained the level of 12.5% for the whole year.

At the same time, although the profit level of overseas tire enterprises is divided, the overall trend is downward. At the same time, capital expenditure has obviously slowed down in the past three years, and its expansion is at a standstill. For China tire enterprises, this means unprecedented development opportunities.

According to the forecast of Zhitong Finance APP, the tire sales in China market will be about 320 million in 2020, with a year-on-year decrease of only 3.4%, which is in sharp contrast with the decreases of 13.2% in Europe and1.2% in North America respectively. The remarkable recovery of China market is mainly due to the rapid recovery of downstream automobile consumption, and the huge number of cars in China ensures the demand for market upgrading.

The rapid recovery of China market is accompanied by the excellent performance of leading tire enterprises. Judging from the core financial indicators of Purin Chengshan in 2020, the annual operating income is about 6.283 billion yuan (RMB, the same below), with a year-on-year increase of about 65,438+02.4%; The net profit was about 604 million yuan, an increase of 26. 1% compared with the same period of last year, and the overall gross profit margin steadily increased to 22.3%, showing a rapid development trend.

It can be seen that in the face of the impact of the COVID-19 epidemic, the company withstood the downward pressure of the economic environment, made a "quality" improvement and a "quantity" increase against the trend, and achieved performance exceeding expectations by relying on the scale effect brought by the increase in operating rate and the release of new capacity.

According to the sales data, during the year, Princhengshan sold about 65,438+0,565,438+million tires, an increase of about 22.4% compared with the same period in 2065,438+09. Among them, the sales volume of all-steel radial tires is about 6.4 million, an increase of about 265,438+0.6% compared with 2065,438+09; The sales volume of semi-steel radial tires is about 865,438+10,000, which is about 27.4% higher than that in 20 19.

From the perspective of sales structure, all-steel tires still contribute more than 75% of the company's sales. At the same time, the sales contribution of semi-steel tires has greatly increased, and the sales volume of bias tires has continued to shrink, which is in line with the direction of the continuous improvement of radial rate of industrial tires in recent years and the transition from all-steel tires to semi-steel tires.

Divided by channels, new changes have taken place in the year when Pulin became a mountain. The company mainly distributes products through three channels, namely, international marketing, domestic supporting and domestic substitute market. During the year, the sales revenue of domestic distributors, international distributors, auto parts and OEM customers of Princhengshan reached 65.438+95 billion yuan, 2.36 billion yuan, 65.438+75 million yuan and 230 million yuan respectively, accounting for 36.5438+0.0%, 37.6%, 27.8% and 3.6% of the total revenue respectively.

Since the second quarter of 2020, thanks to the rapid recovery of domestic automobile manufacturing industry, the supporting business of Princhengshan has also developed rapidly. In the whole year, * * * cooperated with more than 30 automobile manufacturers on 45 supporting projects, and the income of supporting business increased by about 43.0% compared with 20 19. The breakthrough of Princhengshan in supporting business will help to enhance the brand's awareness in the retail market and increase its share in the replacement market.

At the same time, since the second half of the year, the international supply chain has shifted to the China market, and orders from overseas have continued to increase. Purin Chengshan has strengthened the development of overseas markets in areas less affected by the epidemic and made every effort to open up new customers. During the period, 32 overseas distributors were newly developed, and their income increased substantially, up by about 25.9% compared with the same period of last year.

During the year, the domestic replacement market recorded a slight decline of 6.5% year-on-year, mainly because the production capacity could not fully meet the customer's demand in the second half of the year. In terms of priority distribution of internal channels, the domestic supporting market is relatively higher than the alternative market, so it is not that the demand of the domestic alternative market is weakened, but that Princhengshan has made some adjustments to the production capacity, which has affected the growth of some channels.

Thanks to the establishment of a mature and perfect global sales network covering major tire markets, intensive channel construction in the early stage played a strong anti-risk ability during the year, and diversified market layout played a role in risk hedging. The reasonable proportion of China and overseas markets has improved the scale of operation to a certain extent.

In terms of production cost, at present, the price of tire products has risen steadily, while the price of raw materials has fluctuated slightly but is still at the bottom. Although the price of natural rubber will rise due to the tightening of short-term supply in 2020, the company will also conduct the fluctuation of downstream raw materials by raising the price of products. In addition, with the warmer weather, Yunnan, Hainan, Vietnam and other producing areas have reduced production and prospered production, so it is difficult for natural rubber to have a large upward cycle in the short term, and the company's profit is expected to remain stable.

From the medium and long-term development trend, at present, the relative competitive advantage of China's tire enterprises has been strengthened, and the double pressure from the commercial supporting end and the retail channel end has been superimposed under the influence of the epidemic situation. China tire products with excellent quality, high cost performance and good profit-making effect are expected to take this opportunity to enter the supporting system of more mid-to high-end automobile enterprises and seize the domestic retail market sold by overseas tire enterprises. China tire leader ushered in a rare performance release and brand promotion window. At present, the global tire industry is gradually reshaping, and China is expected to have several global tire leaders in the future, among which Princhengshan is a strong competitor.

Innovative R&D superposition capacity improvement

While the sales have achieved excellent results, the company is also promoting the process of R&D innovation and capacity expansion in an orderly manner.

In 2020, Princhengshan actively researched and developed new products and optimized the product structure, and * * * completed the research and development of 357 products, including 42 all-steel radial tires, 365,438+04 semi-steel radial tires and 65,438+0 bias tires. Compared with 20 19, the number of new product development has greatly increased, further improving the market competitiveness and market share. At the same time, the company reserves and develops 12 all-steel radial tires and 7 semi-steel radial tires with new patterns and new products according to the demand of supporting markets, the development trend of alternative markets and the expansion of overseas markets.

In terms of capacity expansion, during the year, the Thai factory, the first overseas production base of Princhengshan, was put into production as scheduled in the first half of 2020, and in the fourth quarter, it reached 800,000 pieces of all-steel and 4 million pieces of semi-steel products, including 35 pieces of all-steel products and 0/75 pieces of semi-steel products. The factory was built according to the Industry 4.0 standard, which not only effectively avoided trade barriers, but also made full use of raw material resources in Thailand, bringing considerable cost advantages to enterprises.

At the same time, the company has completed the product combination planning of European all-steel radial tires and the product line planning of semi-steel "Pulin" brand, and the reserve development of related products is proceeding in an orderly manner. It is expected to enter the EU market in the second half of 20021and further expand the North American market, laying a sales foundation for the subsequent capacity release of the Thai factory.

According to the forecast of sales demand, Pulin Chengshan has started the second phase project of Thailand with 6,543.8+0.2 million bars/year in the second half of 2020, and plans to start the semi-steel production with 4 million bars/year in the first half of 2026. In the second half of 2020, the expansion projects of 6,543,800+0,500 pieces/year all-steel and 2,800,000 pieces/year half-steel in Shandong Plant started to improve the delivery level and meet the development needs of the market and enterprises.

In 2020, when the Hang Seng Index continued to be under pressure, Princhengshan was able to grow steadily against the trend and hit a new high of HK$ 9.68 in 2020. However, compared with the valuation of comparable peers listed in A-share market, about 7.7 times of PE in Princhengshan in the past year has been underestimated all the year round, and the rise in stock price is also a reflection of the company's embarking on the road of valuation repair.

In addition to the company's own stable performance, there are also factors such as the company's insistence on dividends and continuous feedback to shareholders since its listing. The release of transcripts in 2020 directly rose by 6.53% the day after the performance, which shows that the rapid growth of its market value has become an established trend and there is still great potential for development in the future.

At present, the company's brand value and productivity advantages are still on the rise, and its competitive advantage is gradually expanding. Under the background of paying more attention to refined operation, cost control and product strength improvement, Princhengshan is expected to further build a moat based on core technology research and innovation, double expansion of production and sales scale, drive sustained and rapid growth of performance, and give shareholders more ideal long-term returns.