The top 10 listed Chinese tyre companies 2022
Chinese listed tyre companies have successively released their 2021 annual reports in recent weeks. Here, Tyrepress analyses these annual reports’ comparing developments in revenue, operating conditions and overseas factory strategy. And the short story is Linglong remains the largest tyremaker amongst the top 10 listed Chinese tyre companies and that Sailun is the fastest growing.
At present, there are 11 listed tyre manufacturers in China. Linglong, Sailun, Triangle, Aeolus, Jiangsu General, Huayi (the holding company of Double Coin), and Giti have listed companies on the Shanghai Stock Exchange. Doublestar, Guizhou Tyre and Sentury chose to list on the Shenzhen Stock Exchange. Prinx Chengshan is listed in Hong Kong. Giti has only listed its Fujian plant on the Shanghai Stock Exchange, which cannot reflect the tyre manufacturer’s considerably larger overall situation. Therefore, this article removes Giti data and focuses on the 10 companies with more representative annual reports. Similarly, the largest Chinese tyremaker, ZC Rubber, isn’t included in this ranking because it is not listed on the stock market.
Overall ranking order not significantly changed
Based on full-year 2021 revenues, the top 10 companies are Linglong, Sailun, Double Coin, Triangle, Prinx Chengshan, Guizhou Tyre, Aeolus, Sentury, Jiangsu General and Doublestar. Compared with 2020, there are only three minor changes in this ranking: Prinx Chengshan surpasses Guizhou Tyre to take fifth place and Jiangsu General and Doublestar exchange positions. Double coin has moved too.
The figures show that Chinese listed tyre companies’ revenue still maintains a three-ladder state. Linglong and Sailun are in the first echelon, with revenue of more than 17.8 billion yuan (above £2.1 billion). The second echelon includes Double Coin, Triangle, Prinx Chengshan, and Guizhou Tyre, with operating revenue ranging from 7.3 billion to 9.5 billion yuan (approximately between £870 million and £1.13 billion). Aeolus, Sentury, Jiangsu General and Doublestar are in the third echelon, with revenue of less than 5.6 billion yuan (less than £668.6 million).
Among the 10 listed tyre companies, eight companies’ revenue increased in 2021 compared with the 2020 data and the two companies whose revenue declined are Aeolus and Doublestar. Aeolus’s revenue in 2021 is about 5.558 billion yuan (about £663.6 million), a slight decrease of 0.38 per cent. Doublestar’s annual revenue is 3.925 billion yuan (about £468.7 million), down 11.22 per cent from 4.421 billion yuan in 2020.
Sailun the fastest growing listed Chinese tyremaker
According to Tyrepress’s analysis, Sailun reported the most significant annual revenue growth among the 10 companies, an increase of about 2.593 billion yuan (roughly £309.6 million). Jiangsu General’s volume is not large, but the growth rate is fast, and its revenue in 2021 has increased by 23.43 per cent. There is a positive correlation between tyre sales and the tyre companies’ revenue. Consistent with the revenue situation, except for Aeolus and Doublestar, eight listed tyre companies’ tyre sales in 2021 have increased compared to the previous year. The manufacturers with better tyre sales are Double Coin and Jiangsu General, which increased by 18.1 per cent and 13.95 per cent respectively.
There are six companies whose revenue includes other items, such as machinery manufacturing, from a specific business perspective. The tyre products of these companies accounted for 99.88 per cent (Sentury), 99.22 per cent (Triangle), 98.53 per cent (Guizhou Tyre), 98.3 per cent (Linglong), 95.48 per cent (Doublestar) and 89.4 per cent (Sailun) of the revenue.
In addition, the markets that these companies focus on are different. Companies such as Sailun, Triangle, Sentury and Prinx Chengshan rely more on exports. The domestic sales of Linglong, Doublestar, Guizhou Tyre, Double Coin, Aeolus and Jiangsu General account for a more significant proportion of revenue. It is worth noting that Linglong, Triangle, Jiangsu General, and Prinx Chengshan balance the Chinese and foreign markets while other companies focus on a single marketing channel. Sentury is an obvious example of relying on overseas markets, and this manufacturer’s overseas revenue accounted for 87.33 per cent of its overall revenue in 2021. In the previous year, the proportion even reached 93.27 per cent. Although it has dropped by nearly six percentage points, Sentury’s focus on overseas markets has not changed. Another point worth noting is that the overseas market revenue of all nine tyre companies increased compared with 2020 (Double Coin is in the same statement as the parent company Huayi, and specific figures cannot be obtained). Companies that perform well in this regard include Jiangsu General (up 102.09%), Guizhou Tyre (up 52.71%) and Prinx Chengshan (up 69.96%).
Tyre companies need to enhance profitability
The increase in revenue does not seem to be transmitted to the profit side, and many companies’ net profit declined compared with 2020. Among them, Aeolus and Doublestar lost money, and the net profits attributable to shareholders are -120 million yuan (about £14.3 million) and -320 million yuan (about £38.2 million). After deducting non-recurring gains, Jiangsu General’s net profit is also negative. In 2021, Jiangsu General benefited more than 60 million yuan from government subsidies and disposal of non-current assets. How to increase net profit while increasing operating revenue has become an urgent problem for many tyre companies.
According to the many companies’ annual reports, the increase in raw material prices is an important reason for the decline in the tyre companies’ net profit. In 2021, almost all raw materials required for tyre production, such as rubber, carbon black, steel cord, and cord fabric, have experienced price increases to varying degrees. Guizhou Tyre believes that the prices of primary raw materials continue to rise, and the price of rubber fluctuates wildly, making it more difficult to control the raw material cost. The annual report of Aeolus shows that various chemical auxiliary products were affected by the power and production limit policy (measures taken by the Chinese government to protect the environment) in the time since November 2021, for example, the price has increased by 30-100 per cent. The production restriction policy has also had an impact on some tyre companies. In response to the government’s environmental protection requirements, Aeolus’s Jiaozuo base limited production for more than 50 days (affecting the production capacity by more than 200,000 pieces), and the Taiyuan base restricted output for more than 20 days (affecting the production capacity by nearly 50,000 units) in 2021.
In addition, the demand for tyres in the Chinese market is relatively sluggish, which has hindered the tyre price increases to a certain extent and squeezed tyre companies’ profit margins. Chip shortages have led to a decline in China’s auto production, affecting tyre companies’ OE business. Meanwhile, the frequent occurrence of regional epidemics has affected the logistics and transportation industries, reducing tyre consumption and weakening tyre companies’ retail business.
Compared with the downturn in the Chinese market, the demand for tyres in the European and American markets in 2021 is strong. However, skyrocketing shipping costs have increased Chinese tyre companies’ foreign trade costs. It is reported that the shortage of shipping containers and rising shipping costs have continued throughout 2021, severely restricting the tyre products exportation from Chinese and Southeast Asian factories to European and American markets. Aeolus said that the freight on some routes has increased by more than 10 times, which once restricted the confirmation and delivery of export orders.
At general, Chinese tyre companies have experienced severe challenges in 2021, with profits being squeezed by the upstream and downstream of the industrial chain. Upstream companies in tyre manufacturing raise the supply price of raw materials, increasing the tyre factories’ production cost. The weak demand in the downstream sales market prevents tyre companies from raising prices blindly. As a result, many Chinese tyre manufacturers experienced increased revenue in 2021, while profits have fallen sharply.
Manufacturers focus on overseas factories
At present, overseas factories’ advantages in global trade are still relatively obvious. The 2021 annual report shows that many tyre companies have included overseas projects in their investment plans.
Most tyre companies choose to build overseas factories in Southeast Asia. The investment location for Guizhou Tyre and Doublestar is Vietnam. Guizhou Tyre’s Vietnam plant has not been fully operational, designed to produce 1.2 million all-steel radial tyres per year. According to the tyre maker, the epidemic in Vietnam has delayed equipment installation and trial production progress. After Guizhou Tyre adjusts its plan, the Vietnam project is scheduled to be completed in June 2022. Doublestar’s overseas project is to cooperate with Kumho and invest in the Kumho Vietnam factory in 2021 through a Hong Kong subsidiary. This investment is mainly used to expand production capacity. According to the annual report, the annual production capacity of passenger car tyres at the Kumho Vietnam plant is expected to increase to 12.5 million units in April 2023.
Prinx Chengshan and Double Coin’s overseas factories are located in Thailand. According to Prinx Chengshan’s annual report, the Thailand factory’s second phase has been completed in the first quarter of 2022. At this stage, Prinx Chengshan’s overseas factory can produce 1.2 million all-steel radial tyres and 4 million semi-steel radial tyres per year. The designed annual production capacity of the Double Coin Thailand plant is 1.2 million all-steel radial tyres. In 2021, Double Coin’s overseas factory fully released its production capacity, and the capacity utilisation rate has reached 108 per cent.
Jiangsu General, Sailun, Linglong and Sentury all have more than one overseas factory. Jiangsu General and Sailun’s plants are in Southeast Asia, and Linglong and Sentury also include Europe in their investment plans.
Jiangsu General’s overseas factories are located in Thailand and Cambodia. According to the plan, Jiangsu General’s Thailand plant can produce 1.3 million all-steel radial tyres (the production line of 300,000 all-steel radial tyres is under construction) and 6 million semi-steel radial tyres per year.
As of the end of 2021, all-steel tyres’ production capacity utilisation rate at the Thailand plant was 64.05 per cent, while the capacity utilisation rate of semi-steel tyres reached 68.96 per cent. Another Jiangsu General tyre factory in Cambodia is under construction and is expected to roll off the first tyre by 2022. The planned annual production capacity of the Jiangsu General Cambodia plant is 900,000 all-steel radial tyres.
Sailun fully controls two overseas factories in Vietnam and Cambodia and established the ACTR tyre factory in Vietnam as a joint venture with Cooper. The Sailun Vietnam plant is expanding its production capacity, including 1 million all-steel radial tyres, 4 million semi-steel radial tyres, and 50,000 tons of off-highway tyres. All construction work is expected to be completed in 2023. By that time, Sailun’s factory in Vietnam will produce 2.6 million all-steel tyres, 16 million semi-steel tyres, and 100,000 tons of off-highway tyres per year. The Sailun Cambodia plant intends to make 9 million semi-steel radial tyres and 1.65 million all-steel radial tyres per year. The semi-steel tyre project has entered the mass production and sales stage, while the all-steel tyre project is under construction. In addition, Sailun indirectly holds a 65 per cent stake in the ACTR factory. It is reported that ACRT’s all-steel radial tyre project has reached production, with an annual output of 2.4 million.
Thailand (Southeast Asia) and Serbia (Europe) are the locations of Linglong’s overseas factories. Linglong’s factory in Thailand has been put into operation and can produce 15 million semi-steel radial tyres and 2.2 million all-steel radial tyres per year. The tyre manufacturer’s Serbian plant, which is not fully completed (but will open soon), is designed to have an annual capacity of 12 million semi-steel radial tyres and 1.6 million all-steel radial tyres. Two overseas factories are not Linglong’s ultimate goal. According to the annual report information, the company will speed up the inspection and site selection of its third overseas production base.
As early as 2014, Sentury built a factory in Thailand, operating a project with an annual output of 10 million semi-steel radial tyres. According to the tyre manufacturer, the second phase of the Sentury Thailand plant, which is planned to produce 6 million semi-steel radial tyres and 2 million all-steel radial tyres per year, has been completed and is scheduled to be put into large-scale production in 2022. Sentury also included establishing a tyre production base in Spain in its development strategy. According to Sentury’s annual report, the Spanish plant, with a yearly output of 12 million radial tyres for high-performance cars and light trucks, plans to start construction by the end of 2022. In December 2021, the tyre maker said that the Spanish base is expected to have an annual production capacity of 6 million tyres in 2024 and increase the annual production capacity to 12 million in 2025.
|The top 10 Chinese tyremakers by turnover
|2021 revenue (yuan)
|2021 revenue (£)
|2020 revenue (yuan)
|2020 revenue (£)
|Source: Stock exchange filings; T&A research