Quanjing Finance: CIMC Vehicles Took the Global Lead for 9 Consecutive Years, Hitting a New Record High in 2021 Creating Profitable Growth Space with the Momentum Like Tigers Coming down a Hill
In the evening of March 24, 2022, CIMC Vehicles, the global leader in sophisticated manufacturing of semi-trailers and specialty vehicles, delivered its first annual results after its dual listing in “A+H” share markets.
In the evening of March 24, 2022, CIMC Vehicles, the global leader in sophisticated manufacturing of semi-trailers and specialty vehicles, delivered its first annual results after its dual listing in “A+H” share markets.
At the annual results conference held by CIMC Vehicles through the roadshow platform of P5W on March 25, 2022, Li Guiping, CEO and President of CIMC Vehicles, said, “In the new year, we are confident to improve our business in North America, and we can handle a series of challenges caused by the international operation. The business in North America will gradually return to the normal circumstance. Light Tower Pioneer Business has sufficient production capacity and has a stable performance of sales and marketing; “Light Tower” plants manufacturing network will fully support the intercontinental operation and cross border management flexibly and efficiently.”
2021 OPERATING REVENUE HIT A NEW RECORD HIGH
CIMC Vehicles entered the semi-trailer industry in 2002, was listed on the main board of HKEX in July 2019 and listed on the ChiNext board of SZEX in July 2021, becoming the first sophisticated manufacturing company of semi-trailers and specialty vehicles listed in “A+H” share markets.
In 2021, the global economic growth g r a d u a l l y p i c k e d u p, a n d t h e g l o b a l automobile manufacturing industry, logistics, and transpor tation demand gradually revived. However, due to the aggravation of global inflation, increasing prices of raw materials and commodities, congestion at the ports worldwide, rising costs of shipping price, and short-term market demand falling for heavy trucks after the implementation of China VI Emission Standard, CIMC Vehicles’ core business suffered and under the pressure on both cost and revenue.
Facing with the complex macro environment, CIMC Vehicles achieved operating revenue of RMB27.65 billion in 2021, up 4.3% on a yearon-year basis, hitting a new record high, but its net profit fell to RMB990 million, mainly due to the increasing prices of raw materials, overbuying by the implementation of China VI Standard Emission, and the rising cost of the shipping price.
The company sold over 200,000 vehicles in various types worldwide, up 3.0% on a yearon-year basis; achieved steady growth of the semi-trailer business in the four major markets globally and increased its operating revenue to RMB15.28 billion, representing 12.5% increase compared to the year of 2020; the overseas business rebounded rapidly, operating revenue in North American market and European market increased by 14.9% and 27.6% respectively.
It is worth mentioning that CIMC Vehicles’ operating revenue mainly comes from the production of semi-trailers in the global market, truck bodies for specialty vehicles, lightweight van truck bodies, and other vehicles.
In 2021, CIMC Vehicles achieved steady growth in the semi-trailer business in the four major markets globally. The revenue from the global semi-trailer business increased to RMB15.276 billion, up 12.5% on a yearon-year basis, accounting for 55.25% of the operating revenue, increased by 4.0 percentage points.
The continuous aggravation of global inflation, the increasing prices in commodity and transportation costs, and the releasing demand of consumers brought great pressure to the global supply chain, resulting in the congestion at the ports worldwide as well as the continuous rising costs of the shipping price. In 2021, due to the rising costs, CIMC Vehicles’ gross profit margin fell to 11.02%.
In terms of the truck bodies for specialty vehicles business in China, CIMC Vehicles achieved a revenue of RMB9.21 billion from the production of truck bodies for specialty vehicles and sales of finished special vehicles in China last year, accounting for 33.31% of the total operating revenue. In addition, CIMC Vehicles achieved a revenue of RMB311 million from the production and sales of lightweight van truck bodies in China.
BENEFITED FROM THE ADVANTAGE OF INTERCONTINENTAL OPERATION, OVERSEAS BUSINESS INCREASED BY 23%
In order to achieve a further breakthrough in market share of different business segments, and to enhance the global leading position, CIMC Vehicles mentioned in its annual report that it would establish six major businesses or groups to remove internal barriers in operation and form all-round management from strategy, operation to coordinated development.
CIMC Vehicles’ six major businesses or groups include “Champion Tanker Business Group”, “Light Tower Pioneer Business”, “TB Business Group”, “Urban Dump Truck Business”, “North American Business” and “European Business”.
In terms of overseas market, CIMC Vehicles achieved annual revenue of RMB4.84 billion from North American business last year, among which, the revenue from refrigerated trailers in Nor th America increased to RMB1.52 billion by 122.3%, ranking the third place in refrigerated semi-trailer market in North America; the revenue from van semi-trailers in North America increased by RMB1.95 billion by 11.0%, ranking top in the van semi-trailer market in North America.
The European business consists of LAG and SDC, the Company’s wholly owned subsidiary in Europe. According to the data from the Society of Motor Manufacturers and Transportation, SDC ranked first in the market of the United Kingdom, with its market share increasing to approximately 27.5%, representing a year-on-year increase of 4.8 percentage points. During the Reporting Period, CIMC Vehicles achieved high-quality growth with revenue of RMB2.37 billion from European Business, representing a highquality growth.
Li Guiping, CEO and President of CIMC Vehicles, said that in the past two years, due to the flare-ups of the pandemic, the global semi-trailer market was affected by the sharp increase in shipping costs, the prices of raw materials entered a long-term inflation channel, there was a shortage in the global supply chain, and there were periodic.
production stoppage and supply chain tension in overseas markets. The semi-trailer production enterprises in the world suffered from a huge impact on their production and operation, and some competitors in overseas markets withdrew due to various factors.
production stoppage and supply chain tension in overseas markets. The semi-trailer production enterprises in the world suffered from a huge impact on their production and operation, and some competitors in overseas markets withdrew due to various factors share. CIMC Vehicles achieved revenue of RMB9.0 billion from overseas business, representing a 23% increase compared to 2020. The year-on-year decline in gross profit margin was mainly affected by the huge inflation squeeze of raw materials, but the range was completely controllable and reasonable.” Li Guiping added.
Mr. Li Guiping said that benefiting from the advantage of intercontinental operation, CIMC Vehicles deepened the philosophy of “I ntercontinental Operation, Local Manufacturing”, provided convenience for customers by strengthening local manufacturing and local procurement, actively optimized global supply chain management and global logistics distribution system, and created long-term development opportunities for the company in the external circular economy.
MARCH TOWARDS DEEP WATER A R E A O F S O P H I S T I C A T E D MANUFACTURING
Compared with North American and Europe markets, China’s semi-trailer market is still in its early stage. Taking the year 2017 as an example, the sales volume of highly specialized semi-trailers such as van trailers and refrigerated semi-trailers in China accounted for only 4%, far lower than 77% in the United States.
Compared with North American and Europe markets, China’s semi-trailer market is still in its early stage. Taking the year 2017 as an example, the sales volume of highly specialized semi-trailers such as van trailers and refrigerated semi-trailers in China accounted for only 4%, far lower than 77% in the United States.
In 2014, CIMC Vehicles began to develop the “sophisticated manufacturing system”, in which the “Light Tower” plants were a key initiative for efficiency improvements and digital transformation
According to the research report issued by Citic Securities, the “Light Tower” plants can significantly improve the efficiency of production by reducing the cost of each vehicle by about RMB1,000, reducing the need for production staff by 29%, and increasing per capita output by 32%. It can be considered a paradigm for the transformation of specialty vehicle production from laborintensive to technology-intensive.
Light Tower Pioneer Business is deeply involved in the Chinese mar ket for semi-trailer products. As the Chinese government’s “Carbon Peaking and Carbon Neutrality” policy continues to advance, China’s semi-trailer industry is facing upgrading and iteration, which also brings new opportunities for the high-quality development of the Chinese semi-trailer enterprises.
“ D e p e n d i n g o n t h e a d v a n t a g e s o f sophisticated manufacturing system and green manufacturing of the “Light Tower” plants, we maintained the total annual production capacity utilization rate at a higher level, which consolidated the leading position in Chinese domestic market.” Li Guiping added. Looking to the future, in the domestic cycle and the domestic circular economy, the development certainty of Chinese semitrailer business is further enhanced.
In fact, in the past year, CIMC Vehicles accelerated the digital upgrading of the Light Tower Pioneer Business, optimized technology and product innovation, transformed the traditional manufacturing factory into the “Light Tower” plants, and deepened the niche market. During the reporting period, the operation revenue of Light Tower Pioneer Business reached RMB6.398 billion, and the sales volume of container chassis trailers in Light Tower Pioneer Business increased significantly by 48.5% year-on-year.
LOOKING FORWARD TO 2022, THE COLD CHAIN LOGISTICS IS EXPECTED TO USHER IN NEW DEVELOPMENT OPPORTUNITIES
In addition to semi-trailers, truck bodies for specialty vehicles and other businesses, CIMC Vehicles’ lightweight van truck bodies business is also worth looking forward to.
Since 2020, the spread of pandemic has stimulated the global demand for the cold chain of medical and biological products. More people purchase fresh food through e-commerce, and fresh logistics enter a growth period, which will also boost the demand for refrigerated van truck bodies in China.
Since 2020, the spread of pandemic has stimulated the global demand for the cold chain of medical and biological products. More people purchase fresh food through e-commerce, and fresh logistics enter a growth period, which will also boost the demand for refrigerated van truck bodies in China.
Estimated by Qianzhan Industry Research Institute, from 2019 to 2023, the compound growth rate of the market size of China’s cold chain logistics industry will reach 22.3%.
Compared with other markets around the world, both the absolute and relative number of refrigerated van trucks in China are low: By the end of 2018, the United States and Japan had 580,000 and 250,000 refrigerated vehicles, respectively, and 1.76 and 1.95 refrigerated vehicles per 1,000 people, while China had only 180,000 refrigerated vehicles and 0.13 refrigerated vehicles per 1,000 people; at present, the proportion of chilled and fresh meat in meat transportation in China is only 20%, while Europe and the United States has reached 90%, and the per capita meat consumption in China is only 65% of that in developed countries. The proportion of domestic chilled and fresh meat transportation will rise significantly in the future.
In the annual results conference, Li Xiaofu noted, “Both the cold chain planning and transportation planning for the “14th FiveYear” period attach importance to the cold chain business development; under the impact of the COVID-19 epidemic, the cold chain has attracted extremely high attention in all aspects, so TB Business Group is the forwardlooking layout of CIMC Vehicles, and we will continue to follow up with industry trends.
In the annual results conference, Li Xiaofu noted, “Both the cold chain planning and transportation planning for the “14th FiveYear” period attach importance to the cold chain business development; under the impact of the COVID-19 epidemic, the cold chain has attracted extremely high attention in all aspects, so TB Business Group is the forwardlooking layout of CIMC Vehicles, and we will continue to follow up with industry trends trucks to the market, actively optimize the production line and capacity of Zhenjiang factor y, complete the construction of Jiangmen factory, and put the products into the market.
Looking ahead to 2022, in the current reform on the industry, CIMC Vehicles will practice the core measure of “sophisticated manufacturing system”, further enrich the connotation of sophisticated manufacturing system on the four cornerstones including upgrading of “product module”, improvement of “Light Tower” plants, construction of new retail, and continuous promotion of organizational development, add the fifth cornerstone “building of digital supply chain center”, develop further upgrading measures, and comprehensively implement the sophisticated manufacturing system strategy.
For the future, Li Guiping said: “In 2022, CIMC vehicles will unleash greater strengths and long-suppressed potential with the help of breaking points, creating room for profitable growth with courageous momentum, turning passivity into the initiative and creating more development opportunities".