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Prinx Chengshan Announces 2020 Interim Results

Date:2020-08-29    views:202

Results Highlight

. Revenue amounted to approximately RMB2,844.0 million, representing a decrease of 1.0% over the same period last year

. Gross profit amounted to approximately RMB 606.3 million, representing an increase of approximately 9.9% over the same period last year

. Profit attributable to the shareholders was RMB 265.2 million, representing an increase of approximately 1.6% over the same period last year


(28th August 2020——Hong Kong)The board (the “Board”) of directors (the “Directors”) of Prinx Chengshan (Cayman) Holding Limited (the “Company” or “Prinx Chengshan”; Stock code: 1809) and its subsidiaries (the “Group”) is pleased to announce the interim results of the year ended June 30, 2020 (the “Period” or “Reporting Period”).


During the Reporting Period, in the face of the unexpected COVID-19 pandemic (the “pandemic”), the Group took up the challenge by promptly taking counter-measures and created favourable results in the adversity. The sales revenue was approximately RMB 2,844.0 million, representing a decrease of approximately 1.0% over the same period in 2019. The gross profit was approximately RMB606.3 million, representing an increase of approximately 9.9% and the profit was approximately RMB265.3 million, representing an increase of approximately 1.6% over the same period in 2019.


During the Period, the Company sold approximately 6.26 million tires, representing an increase of approximately 3.1% over the same period in 2019. Among the total number of tires sold, approximately 2.94 million of All Steel Radial Tires, 3.11 million of Semi-Steel Radial Tires, and 0.21 million of Bias Tires, were sold and accounted for 78.7%, 19.1% and 2.2% of the revenue of the Group respectively. In term of sales classified by channel, the revenue from sales to domestic distributors, international distributors, OE customers and private label customers were RMB981.4 million, RMB855.7 million, RMB881.6 million and RMB125.3 million and accounted for 34.5%, 30.1%, 31.0% and 4.4% of the revenue of the Group respectively.


The Group had a high penetration rate in China’s all steel radial tire replacement market. The sales team worked closely with distributors to strengthen support for distributor channels, and acted based on appropriate market positioning and promotion plan, which resulted in an improvement in the Group’s market share in the domestic all-steel replacement market. In terms of building semi-steel radial tire distribution network, during the Period, the Sichuan direct-sale stores were established and commenced operation, and the Group implemented fine management for the national sales network, dividing the network coverage from 3 regions to 6 regions. In terms of international market,faced with the outbreak of the pandemic overseas in late March 2020, the Group timely increased the sales in Africa, Latin America and other markets with less impact from the pandemic, and added 31 new overseas distributors, so as to expand the brand influence of the Group. Moreover, the Group had also steadily developed the North American market and achieved phased results in the construction of sales channels, laying a solid foundation for the sales of Tire Production Base in Thailand in the second half of the year.


During the Reporting Period, the Group improved its market competitiveness and channel customer stickiness by enhancing its business cooperation with automobile manufacturers. As the demand from domestic automobile manufacturers revived rapidly in the second quarter of 2020, during the Period, sales volume from the OE customers increased by 29.0% compared to the same period of 2019.


During the Period, the Group’s first overseas production base -the Tire Production Base in Thailand, which was part of the Group’s international advantageous deployment, went into production as scheduled. The construction progress was in line with the expectation, and the civil construction, equipment installation and commissioning of phase I project were basically completed. The all steel radial tire rolled off the production line on March 25, 2020, and the semi-steel radial tire rolled off the production line on April 18, 2020. The trial production of nearly 100 products was completed, and 30 products were put into pre-production. Meanwhile, the all-steel and semi-steel products of the Tire Production Base in Thailand for sale in North America were being put into production in an orderly manner as planned. 35 all-steel products and 175 semi-steel products will be mass-produced and sold in the North American market in the second half of the year. The production capacity was expected to be maximized at the end of 2020. The Group also intended to initiate the planned Phase II expansion projects of 1.2 million sets of all steel tires in Thailand by the end of August 2021. It was expected to maximize the production capacity four months after that.


In view of the current production capacity and future tire demand, the Group expects to experience a serious shortage of supply. The Group intended to implement an expansion plan in respect of Prinx Chengshan (Shandong) Tire Limited with annual production capacity of semi-steel radial tires increased by approximately 2.8 million sets and all-steel radial tires increased by 1.05 million sets. The project would be implemented from the second half of 2020 to 2021.


Looking ahead to the second half of 2020, more uncertainties will emerge in the external environment due to China-US trade frictions and the pandemic. Market scale is shrinking, competition intensifies, customer demand changes faster, new models emerge frequently, the domestic small and medium-

sized tire enterprises speed up liquidation and winding up, and industry concentration is accelerating due to the impact of the pandemic. With resolute implementation of four core development strategies: cost leadership, efficiency driven, competitive differentiation and global operation, the Group will integrate resources, set up strategic planning and new business development departments, develop distributor channels, and optimize the deep cooperation mode with the dealers. In addition, the Group will actively explore new business models, carry out forward-looking technology research and reserve, so as to create new drivers for growth.