◎ Si Xianchao
From February 25 when the newly listed company Prinx Chengshan published its annual report for the first time to April 28, additional 10 listed companies successively completed performance disclosure.
Operating Income & Tire Sales Volume
It can be seen from Table 1 that among the listed tire enterprises, the operating income of two enterprises broke through Ten Billion Yuan and that of 7 enterprises broke through Five Billion Yuan. Linglong Tire is the only enterprise realizing year-by-year growth in operating income, profit and output and sales volume from 2016 to 2018 among 11 enterprises.
Table 1: Sales Volume and Operating Income Conditions of Listed Tire Companies in 2018
| Company | Operating income, Hundred Million Yuan | Year on year, % | Sales, Ten thousand tires | Year on year, % |
| Linglong Tire | 153.02 | 9.94% | 5345 | 8.85% |
| Sailun Group | 136.85 | -0.88% | 3634 | 3.46% |
| Double Coin | 77.59 | -3.60% | 957 | -4.28% |
| Triangle Tire | 75.11 | -5.17% | 1676 | -9.90% |
| Guizhou Tyre | 68.25 | -1.93% | 563 | 11.27% |
| Aeolus Tire | 62.19 | -14.86% | 559 | -22.70% |
| Prinx Chengshan | 52.06 | 7.60% | 1109 | 4.40% |
| Jiangsu General | 38.47 | 2.16% | 687 | 4.32% |
| Qingdao Doublestar | 37.45 | -6.31% | 948 | 14.34% |
| Giti Tire | 33.69 | -2.56% | 1507 | -8.88% |
| Fengyuan Tire | 12.05 | 20.70% | 718 | 10.98% |
Note: Giti Tire only gets listed in A share market as Fujian Giti.
Seen from the growth rate, 4 enterprises realized positive growth in operating income, accounting for about 36%, which reflects that most of the enterprises had a fall in operating income in 2018, and the fall in operating income of 6 enterprises was basically less than 7%, which can be said to belong to the scope of small or slight fall.
According to the analysis in combination with the sales volume of the enterprises, based on the common sense, there is a positive correlation between the sales volume and the operating income; with the product price unchanged or increased, the growth in sales volume surely will drive the growth in operating income. 8 enterprises conformed to the change rule that the sales volume drives the operating income, in which 4 enterprises had a growth in operating income, which are Linglong Tire, Prinx Chengshan, General Science Technology and Fengyuan Tire respectively; Double Coin Tyre, Triangle Tyre, Aeolus and S Giti had a reduction in both sales volume and operating income.
The rest 3 enterprises are some special, Sailun Group, Guizhou Tyre and Qingdao Doublestar had a growth in annual sales volume but different degrees of fall in operating income. As reported, the reduction in overall operating income belongs to “influences of non-main business”. Non-tire business of 3 enterprises was adjusted correspondingly in 2018, for example, Sailun sold Sairuite Logistics Company to focus on its main business; Qingdao Doublestar reduced the trade of raw materials for its risks, etc. With all these influences removed, the income of tire business of three enterprises is in a growth or flat state.
Net Profit Attributable to Shareholders & Gross Profit Rate
It can be seen from Table 2 that among 11 enterprises, 10 enterprises realized profit, 4 enterprises realized a profit close to or breaking through 500 Million Yuan, Linglong Tire realized a net profit breaking through 1 Billion Yuan, and Double Coin Tyre, the only company with loss, also reduced the loss by 30% through effective operation this year.
Table 2: Profit Conditions of Listed Tire Companies in 2018
| Company | Net profit, Hundred Million Yuan | Year on year, % | Gross profit margin, % | Year on year, % |
| Linglong Tire | 11.81 | 12.73% | 23.61% | -0.08% |
| Sailun Group | 6.68 | 102.54% | 20.12% | 3.16% |
| Double Coin | -3.1 | Turnround 30% | 11.56% | 0.79% |
| Triangle Tire | 4.83 | -0.09% | 21.15% | 2.21% |
| Guizhou Tyre | 0.88 | 139.77% | 17.39% | 7.15% |
| Aeolus Tire | 0.18 | Make up the deficits and get surpluses | 18.96% | 9.27% |
| Prinx Chengshan | 4.78 | 174.70% | 19.30% | 3.40% |
| Jiangsu General | 1.48 | 0.46% | 14.56% | -0.01% |
| Qingdao Doublestar | 0.28 | -74.83% | 8.40% | -11.59% |
| Giti Tire | 0.89 | 45.36% | 16.17% | 3.68% |
| Fengyuan Tire | 0.02 | Make up the deficits and get surpluses | 11.91% | 4.91% |
Among 11 enterprises, ranking top 3 in gross profit rate are Linglong Tire, Triangle Tyre and Sailun Group, 6 enterprises realize a gross profit rate close to or exceeding 20%, and the enterprises with the largest growth in gross profit rate are Guizhou Tyre and Aeolus making up the deficits and getting surpluses.
As for 10 enterprises getting listed on the main board, the average gross profit is 17.12% while that of last year is 15.22%, with an increase of 1.9 percentage points, which proves that the profits of the industry recovers slightly to some extent.
In 2017, the price of the raw materials such as natural rubber fluctuated dramatically, the profit level of the whole industry declined generally and Guizhou Tyre, Aeolus, Double Coin Tyre and Fengyuan Tire had deficit; however, in 2018, the price of natural rubber was in a stable low state, the price of carbon black and steel cord also had no sharp fluctuation, and the raw material cost for tire production declined slightly.
Decline in raw material cost directly raised the gross profit rate level, meanwhile, all these enterprises actively carried out adjustments of product specification and capacity and increased the production of the products with high profit level and good sale, 3 of 4 enterprises above made up the deficits and got surpluses, and the scale of losses of Double Coin Tyre was reduced sharply.
Qingdao Doublestar with a relatively large change in its profit project explained in its annual report that Doublestar Dongfeng Tire Factory had stopped production in the third quarter for transformation and upgrading, which affected the sales conditions to some extent; in addition, it set aside the provision for impairment for the inventory and set aside the provision for bad debt for partial customer accounts receivable in 2018, thus the net profit fell sharply.
