Sailun overtakes Linglong into pole position in China: Analysing the 2022 annual reports of listed Chinese tyremakers

Recently, Chinese listed companies have released their 2022 annual reports. Tyrepress China conducted a statistical analysis of the annual report data of 10 tyre companies. Among the companies included in the analysis list, Sailun, Linglong, Triangle, Huayi (the parent company of Double Coin), Aeolus, and Jiangsu General are listed on the Shanghai Stock Exchange. Guizhou Tyre, Doublestar, and Sentury are listed companies on the Shenzhen Stock Exchange. The data of Prinx Chengshan comes from the Hong Kong Stock Exchange.

Maintaining the three-echelon structure

Calculated by revenue in 2022, the rankings of the top 10 companies are Sailun, Linglong, Double Coin, Triangle, Guizhou Tyre, Prinx Chengshan, Sentury, Aeolus, Jiangsu General and Doublestar. Compared with the previous year’s list, Sailun surpassed Linglong in revenue and ranked first. Guizhou Tyre surpassed Prinx Chengshan and returned to fifth place. At the same time, the positions of Sentury and Aeolus were switched.

Specifically, the pattern of the three echelons has remained the same. Sailun and Linglong are still in the first echelons of China’s listed tyre companies, and their annual revenue of more than 17 billion yuan makes it difficult for competitors behind them to challenge. Double Coin, Triangle, Guizhou Tyre and Prinx Chengshan maintain the second echelon, with annual revenue between 8 billion and 10.5 billion yuan. The gap of more than 6.5 billion yuan between the first and second echelon also shows that unless there is a significant change, even for Double Coin, which is in third place, it seems to be challenging to reach the top two positions.

As the leader of the third echelon, Sentury is far ahead with revenue of 6.292 billion yuan and has widened the gap with the remaining three tyre manufacturers at this level. However, Sentury’s revenue is still far from the second echelon. Prinx Chengshan, which ranks ahead of Sentury, had a revenue of 8.15 billion yuan in 2022. With a nearly 2 billion yuan gap, it is still tricky for Sentury to enter the second echelon quickly.

Compared with its revenue in 2021, Aeolus, Jiangsu General and Doublestar have no significant changes, maintaining the third echelon. The 2022 revenue of the three tyre manufacturers is between 3.5 billion yuan and 5 billion yuan.

Six of the 10 Chinese listed tyre companies had higher revenue in 2022 than the previous year. The revenue of Sailun and Sentury exceeded 20 per cent year-on-year. Guizhou Tyre, whose revenue in 2022 increased by about 15 per cent, also stands out.

Linglong and Aeolus’s revenue declined significantly compared with 2021. In 2022, Linglong’s revenue was 17.005 billion yuan, about 1.57 billion yuan less than that in 2021. Compared with the previous year, the revenue of Aeolus fell by 10.26 per cent, but it turned losses into profits.

The 2023 annual report information shows that some listed tyre companies have other businesses besides tyre manufacturing. In 2022, the business of Doublestar, Sailun, Sentury, Triangle and Guizhou Tyre included other products besides tyre products. Doublestar’s annual report does not reveal that the “other businesses” account for 5.6 per cent of its revenue. Sailun settles the “tyre trade” as a separate business. Sentury’s “other businesses” accounted for a small proportion of total revenue, only 0.12 per cent. In addition to tyres, Triangle generates part of its revenue from transportation and financial planning. Guizhou Tyre’s business includes rubber compounding.

Relying on overseas markets

Of the ten companies, Triangle and Sentury performed outstandingly in the item “net profit attributable to shareholders of listed companies”. In particular, Sentury earned a net profit of 801 million yuan through revenue of 6.292 billion yuan. In contrast, Sailun’s revenue of 21.902 billion yuan created a net profit of 1.332 billion yuan.

Focusing on the international market is an important reason for Sentury’s high net profit in the past year. The 2022 annual report shows that export and overseas business accounted for 87.85 per cent of the tyre manufacturer’s total trade. In 2021, this overseas business accounted for a similar 87.33 per cent.

Not only Sentury, but the key to the profitability of many Chinese tyre manufacturers in the past year is also overseas business and export. Taking Aeolus as an example, compared with 2021, the proportion of the company’s export business in 2022 increased from 36 to 54 per cent. At the same time, the tyre maker significantly reduced the proportion of OE business. The company’s annual report shows that its international market revenue increased by 22.2 per cent year-on-year in 2022, which has already exceeded the domestic business revenue. Aeolus revealed that it “optimised the market structure, actively expanded overseas customer channels, and boosted the overall profitability by increasing the proportion of export market revenue with a higher gross profit rate.”

In 2022, Sailun’s international market revenue accounted for nearly 80 per cent of the total revenue. Compared with a year ago, Sailun’s overseas revenue increased by an astonishing 31.1 per cent year-on-year. Similarly, 69.3 per cent of Prinx Chengshan’s revenue was sold through international distributors. A year ago, the figure was 53.2 per cent. During the reporting period, Jiangsu General’s overseas revenue increased by 45.31 per cent year-on-year, while domestic fell by 39.92 per cent. Meanwhile, the international revenue of Triangle increased by 13.68 per cent, while the domestic revenue decreased by 10.45 per cent. Doublestar’s domestic sales dropped from 63.99 per cent in 2021 to 48.73 per cent in 2022, while its foreign sales share increased from 36.01 per cent to 51.27 per cent.

The Chinese market remains the focus of Guizhou Tyre, concentrating about two-thirds of the company’s business in 2022. It is worth noting that the business strategy of this tyre company is also shifting to overseas markets, and overseas business has proliferated in the past year. Compared with 2021, Guizhou Tyre’s overseas business has increased by 40.8 per cent.

To sum up, many Chinese listed tyre companies have adjusted their business strategies in 2022, taking exports and overseas markets as growth points for net profit.

Capacity layout

In the 2022 annual report, tyre companies disclosed the production capacity layout and the situation of tyre production in 2023. Tyrepress China ranked 10 tyre companies according to their 2023 production and sorted out their existing production capacity. The content of this article only counts the information in the 2022 annual report. Investment decisions made by some listed tyre companies in 2023 are not included. For example, Jiangsu General’s decision to invest in a tyre factory in Inner Mongolia, China, is not shown in the following analysis.

If calculated according to the tyre production in 2023, the rankings of Chinese listed tyre companies are Linglong, Sailun, Triangle, Sentury, Prinx Chengshan, Huayi, Doublestar, Jiangsu General, Guizhou Tyre and Aeolus. Guizhou Tyre and Aeolus’s main products are all-steel radials and OTR tyres. The lack of semi-steel radial tyres with larger production volumes has caused these two companies to fall to a relatively low position in the production rankings.

In 2022, Linglong produced 65.71 million tyres. In terms of production capacity, the company’s Zhaoyuan base can make 30 million semi-steel radial tyres, 5.85 million all-steel radial tyres, and 250,000 OTR tyres. Linglong Dezhou factory can produce 7 million semi-steel radial tyres and 2.2 million all-steel radial tyres. The expansion project of the Dezhou production base involves an annual output of 1.2 million sets of all-steel radial tyres and is expected to be completed in 2023.

The current production capacity of the Linglong Guangxi factory is 60,000 OTR tyres, 10 million semi-steel radial tyres and 2 million all-steel radial tyres. Meanwhile, the Linglong Hubei factory can produce 7 million semi-steel radial tyres and 1.8 million all-steel radial tyres. Linglong revealed that the third phase of the semi-steel radial tyre project at the Hubei factory could be completed in 2023. Also to be completed in 2023 is the first phase of the semi-steel radial tyre project of Linglong Jilin Plant. Currently, the Jilin factory can produce 1 million all-steel radial tyres.

Linglong Thailand factory can now produce 1,500 semi-steel radial tyres and 2.2 million all-steel radial tyres annually. As for the Serbian factory, Linglong only disclosed in its annual report that in 2023, it would start mass production of all-steel radial tyres and trial production of semi-steel radial tyres.

Sailun produced 43.2078 million tyres in 2022. The Qingdao factory can make 3.2 million all-steel radial tyres, 10 million semi-steel radial tyres and 56,000 tons of OTR tyres annually. The plant’s under-construction capacity includes 300,000 all-steel radial tyres and 4,000 tons of OTR tyres.

Sailun’s Dongying Factory has a production capacity of 24 million semi-steel radial tyres and is building a production line with an annual output of 3 million. Sailun’s Shenyang factory can produce 4.5 million all-steel radial tyres annually and is building a production line of 500,000 all-steel radial tyres. Sailun Weifang can now make 1.6 million semi-steel radial tyres and 8,600 tons of OTR tyres per year and is building an OTR tyre production line with an annual output of 8,300 tons.

Among the three overseas Sailu factories, the Vietnam factory has a production capacity of 1.6 million all-steel radial tyres, 12 million semi-steel radial tyres and 60,000 tons of OTR tyres. Currently, the capacity under construction of this overseas factory includes 1 million all-steel radial tyres, 4 million semi-steel radial tyres and 40,000 tons of OTR tyres. Sailun’s joint venture factory ACTR in Vietnam can produce 2.65 million all-steel radial tyres annually. The Sailun Cambodia factory is currently capable of producing 4 million semi-steel radial tyres per year and is building a production line for 5 million semi-steel radial tyres and 1.65 million all-steel radial tyres.

Triangle produced 22.4816 million tyres last year. The tyre maker currently has five factories, according to its annual report. The two plants produce PCR, with a designed production capacity of 12 million and 8 million and a capacity utilisation rate of 71.45 per cent and 106.91 per cent in 2022. Triangle has a TBR manufacturing base with a design capacity of 6.5 million tyres, and the capacity utilisation rate in the previous year was 78.07 per cent. The designed capabilities of the two OTR factories are 280,000 and 100,000, and the capacity utilisation rates are 74.07 per cent and 72.6 per cent respectively.

Sentury produced 21.9863 million tyres in 2022. The tyre manufacturer’s annual report shows that its existing design capacity is 28 million tyres, and its capacity utilisation rate in 2022 was 76.75 per cent. The company’s capacity under construction includes a project of 80,000 aircraft tyres (including 50,000 retreaded tyres) and a factory expansion project in Thailand (6 million semi-steel radial tyres and 2 million all-steel radial tyres). Sentury’s 2022 annual report has not yet incorporated the production capacity of the Spanish factory and Moroccan factories production capacity into the planning.

Prinx Chengshan did not disclose its tyre production 2022 in the annual report. The tyre maker said it sold 18.5 million tyres last year. However, based on data extrapolation, it is reasonable to estimate that Prinx Chengshan’s tyre production 2022 is less than Sentury’s 21.9863 million. Prinx Chengshan had a production capacity of 29.8 million tyres by the end of 2022, including 9.4 million all-steel radial tyres, 19.2 million semi-steel radial tyres and 1.2 million bias-ply tyres. Among them, the annual production capacity of the Thailand factory reaches 2 million all-steel radial tyres and 8 million semi-steel radial tyres. The production capacity of the Shandong factory is 7.4 million all-steel radial tyres and 11.2 million semi-steel radial tyres.

Huayi produced 12.9457 million tyres in 2022. Huayi has four manufacturing bases in China and an overseas factory in Thailand. The design capacity and capacity utilisation rate of each factory in 2022 are as follows: Jiangsu factory (3.6 million all-steel radial tyres; 86 per cent), Chongqing factory (2.5 million all-steel radial tyres, 73 per cent); Xinjiang factory (1.95 million all-steel Steel radial tyres, 99 per cent); Anhui factory (6 million semi-steel radial tyres, 76 per cent); Thailand factory (1.2 million all-steel radial tyres; 116 per cent).

Doublestar produced 12.4214 million tyres in 2022. Doublestar revealed through its annual report that it has three tyre production bases in Qingdao, Dongying and Shiyan. At the same time, the company holds a 42.409 per cent stake in Kumho Vietnam Factory through its Hong Kong subsidiary. In February 2023, Doublestar intended to establish a joint venture tyre factory in Cambodia.

Jiangsu General’s annual report shows they produced 8.6078 million tyres in 2022. Jiangsu General’s Wuxi plant has a designed production capacity of 6 million semi-steel radial tyres and 1.2 million all-steel radial tyres, with capacity utilisation rates of 55.42 per cent and 40.62 per cent. The capacity under construction of the Wuxi factory is the project of 3 million semi-steel radial tyres.

The current design capacity of the Jiangsu General Thailand plant is 1.3 million all-steel radial tyres (106.71 per cent capacity utilisation rate) and 6 million semi-steel radial tyres (74.49 per cent capacity utilisation rate). The plant has a capacity of 300,000 all-steel radial tyres under construction and is expected to be completed in the first half of 2023. In addition, Jiangsu General mentioned that the Cambodian production base will fully strive to release its production capacity by the end of 2024.

In 2022, Guizhou Tyre produced 7.245 million tyres. The tyre maker’s annual report shows that the first phase of the Vietnam project, with a yearly output of 1.2 million all-steel radial tyres, reached the design capacity in June 2022. In 2022, Guizhou Tyre increased the production capacity of agricultural radial tyres, engineering machinery tyres and pneumatic industrial tyres while eliminating some backward production capacity. At the end of 2022, Guizhou Tyre’s total production capacity was 9.2 million tyres.

Aeolus produced about 3.986 million tyres in 2022, a decrease of 25.6 per cent from the previous year. The reason given by Aeolus is “the decline in sales of domestic, commercial vehicles and the weakening of demand”. The tyre maker’s annual report shows its design capacity is 6 million all-steel radial tyres, 200,000 radial OTR tyres and 500,000 bias OTR tyres. In 2022, the capacity utilisation rates of all-steel radial tyres and bias OTR tyres were low, only 60.17 per cent and 34.2 per cent. The production capacity of Aeolus under construction is 80,000 radial OTR tyres, which is expected to be completed on June 30, 2024.