CIMC Vehicles Announces First Annual Results Net Profit Surges 7.7% to RMB 1.33 Billion in 2019
On March 26, CIMC Vehicles held the 2019 Annual Results Conference through live broadcast. CIMC Vehicles management representatives attended and answered questions from investors.
On March 25, CIMC Vehicles (Group) Co., Ltd. (“CIMC Vehicles” or “the Group”; stock code:1839.HK), a leader in the global semi-trailer industry, has announced its audited annual results for the year ended 31 December 2019.
CIMC Vehicles listed on the Main Board of HKEX on 11 July 2019, becoming the first semi-trailer manufacturing company in the Hong Kong stock market. The listing also marked a milestone in the rise of the semi-trailer industry. In 2019, as global economic growth gradually slowed down, the wave of globalization that has had propelled the expansion of the Group’s global semi-trailer business faced a strong headwind for the first time. As for the truck body for specialty vehicle business in China, it benefited from the Chinese government‘s vigorous promotion of “environmental protection” and crackdown on “overload vehicles”, which ushered a new era of standardized development. China’s fresh food logistics has also entered a long-term growth cycle, which has fundamentally boosted domestic demand for refrigerated trailers and refrigerated trucks.
In 2019, the Group seized development opportunities arising from the transformation and upgrade of the industry and delivered overall stable results. Revenue amounted to RMB23.22 billion. In 2019, net profit surged 7.7% year-on-year to RMB1.33 billion and profit attributable to owners of the Company climbed 5.9% to RMB1.21 billion. The Board has proposed the payment of final dividend of RMB 0.45 per share for the year ended 31 December 2019.
As at 31 December 2019, the Group maintained a healthy financial position with total assets and net assets amounting to RMB18.68 billion and RMB10.22 billion, respectively. The Group’s asset to liability ratio was lowered to 45.3%, while the return on equity excluding cash inflows from IPO proceeds was 15.8% in 2019. Net cash inflow from operating activities was RMB1.85 billion, representing a strong year-on-year increase of 70.4%. It also recognized RMB204.00 million from the relocation and compensation of the Yangzhou CIMC Tonghua in 2019.
During the year, the Group sold a total of 117,707 units of semi-trailers worldwide. A total of 46,267 sets of truck bodies for urban dump trucks and cement mixers and 4,455 units of refrigerated truck bodies were sold in China. The revenue from global sales of semi-trailers and specialty vehicle parts and components business amounted to RMB1.50 billion.
Although the global economy became highly complex, the Group’s global semi-trailer business nonetheless achieved its expectation, generating operating revenue of RMB13.55 billion. As the government of China enhanced restrictions on “over-limit and overload”, this stimulated demand in the second generation of semi-trailer market, with the gross profit margin of semi-trailer business in China increasing by 0.5 percentage point.
In 2019, the overall performance of the truck bodies for specialty vehicles business in China was exceptional. Revenue climbed by 10.9% year-on-year to RMB 7.38 billion. Segmental gross profit margin of the operation involved in the manufacturing and sale of truck bodies for specialty vehicles reached 20.1%. To seize market share, the Group first took the lead to launch the lightweight and durable cement mixer trucks, sold a total of 20,980 units of cement mixer trucks in 2019, the highest sales achieved among peers in China for three consecutive years. Benefiting from rising demand for vehicle replacement, the urban dump truck body business of the Group generated RMB1.59 billion of revenue in 2019, earning top ranking in the industry.
In 2019, frozen food transportation and professional cold chain distribution of fresh food have begun to show healthy growth momentum, which has boosted the performance of operations involved in the manufacturing of truck bodies for refrigerated trucks and sales of fully-assembled refrigerated trucks in China. CIMC Vehicles (Shandong) Co., Ltd. (“Shandong CIMC Vehicle”), a subsidiary of the Group, is a leading domestic manufacturer of refrigerated trucks in the country. Equipped with advanced panel-making technology derived from North American refrigerated trailers, it is also the only manufacturer in China to possess seamless board wet bonding technology, thus allowing it to be the first to launch refrigerated trailers for hanging frozen meats and center-axle carriers in the China market. The refrigerated van factory in Zhenjiang City, Jiangsu Province, commenced production in January 2019, and its products have been welcomed by customers in the Yangtze River Economic Belt and Southeast Asia.
As for the semi-trailer business in North America, it was affected to a certain degree by increased tariffs by the U.S. government in May 2019, hence delivered revenue of RMB5.15 billion in 2019. Both revenue and gross profit margin nonetheless aligned with expectations, owing mainly to the Group’s van trailer business, which has a long-established production base in North America, and was able to achieve steady growth with revenue reaching RMB2.33 billion. With regard to the refrigerated trailer business, since both production and marketing activities are conducted locally in the US, the impact of tariff increases was therefore mitigated. Consequently, it achieved a revenue of RMB1.34 billion, significantly exceeding expectations, and reached a high record. Total revenue of the semi-trailer business in Europe increased modestly by 1.9% year-on-year to RMB2.04 billion. LAG, an European tank trailers manufacturer, reported a profit for the third consecutive year, following several years of effective integration. The semi-trailer business in other markets saw stable growth.
The Group’s management has nevertheless stated that CIMC Vehicles will continue to adhere to a business philosophy of “Global Operation, Local Knowledge”. The Group will reinforce its solid position in the environmental friendly urban dump trucks market and its leading position in the light and durable cement mixer trucks market. Furthermore, it will continue to expand its manufacturing network for refrigerated truck bodies. It will also seize opportunities arising from the upgrade and replacement of semi-trailers in China, and actively promote the localized manufacturing of semi-trailers in North America and Europe, with the aim of reinforcing the Group’s leadership in the global semi-trailer market.