() The Record Form of Investor Relations Activities was released on July 25th, and the company was investigated by five institutions on July 21st, 2022. The types of institutions are fund companies and securities companies.
The main contents of investor relations activities are introduced:
Q: Please tell us about Guansheng’s business.
A: The company’s overseas business accounts for as high as 92%, and its main business is concentrated in the automobile aftermarket, which is not the same as the resource endowment of companies mainly concentrated in the OEM vehicle supporting market. In recent two years, the company’s strategic positioning is two-wheel drive in OEM and AM market. The core competitiveness mainly lies in the global smart supply chain wisdom system, and the connotation of this system mainly includes the following three aspects:
First, the construction of infrastructure global warehouse network system; We have two large storage centers in North America, two warehouses in Germany and Poland, and a storage center in Mexico.
In the future, we will accelerate the layout of the global warehouse network system. The construction of infrastructure is mainly for the sinking of the global market channel. Theoretically, the pulling effect of the global market channel on the gross profit margin is more obvious every level.
Second, the global marketing network; The company has realized localized distribution in many countries, and we have localized operation teams in North America and Europe, which solved the problems of poor information and communication cost, and showed the advantages of marketing network during the epidemic, and communication with overseas and customer maintenance were not affected. The areas where the channel end sinks are doing well at present are North America and Europe.
3. In the strategic agreement reached with JD.COM last year, Jinghui System provided a lot of help in accurate forecasting and intelligent production scheduling on the demand side. At the same time, we built a big data platform with JD.COM, and the data of our supply chain can be accumulated on the cloud platform. We and JD.COM have a China supply chain center in the global warehouse network system, which is currently fully entrusted to JD.COM for operation and management. At present, these three connotations are the main core competitiveness of the global smart supply chain system, and the construction of the global smart supply chain system can help the products of excellent domestic suppliers go to sea.
Sources of future growth: First, it comes from the loading of multiple product lines in AM market. According to our statistics, the compound growth rate of new product lines has reached 35% in recent five years. The second growth is in the domestic market. The average age of overseas cars, especially in developed countries, is between 10 and 11 years, and that of China is about 6.5 years. The replacement cycle of chassis parts is about 6 years. We have been laying the groundwork in the domestic market for a long time and will soon face the outbreak of the domestic AM market.
The second big growth comes from OEM market. Overtaking in corners refers to breaking the supplier system of traditional fuel vehicles. Last year, we cooperated with Jin Kang Celeste and Weimar, and we are still negotiating with the new energy manufacturers in the head. Although the proportion of OEM is very low, the growth rate last year has reached 139.4%.
Q: What was the proportion of the integration division in the total revenue last year, and did you start to engage in this part of the business after the establishment of the integration division?
A: Since its establishment, the company has been focusing on the auto parts industry. At the same time, the company has continuously expanded overseas markets and set up subsidiaries in the United States, Europe and Mexico. In 2013, the company has built a systematic marketing network and channels. Some excellent domestic suppliers do not understand the needs of foreign markets and customers, and the company hopes to promote the development of domestic industries.
Therefore, from this stage, the company began to cultivate the integrated product line, which was continuously developed and expanded by the integration working group and gradually hatched. Among the company’s six product series, Guansheng develops, produces and sells constant velocity universal joints, transmission shaft assemblies and hub bearing units; Shock absorber series, rubber parts series and suspension steering series are the cooperation between the company and some domestic high-quality suppliers, and use the company’s global smart supply chain system to empower these suppliers and help their products go to sea. The compound growth rate of these product lines in recent five years is above 30%. At present, the integrated business is gradually growing, accounting for less than one-third of the revenue, and will gradually increase in the future.
Q: According to the data disclosed by the company, the fixed assets have not increased in recent years, but the self-owned products have grown quite fast. What are the main reasons?
A: Fixed assets will be increased as planned, but it has been delayed to some extent by the epidemic. The utilization rate of our production capacity is above 90%, indicating that the utilization rate of production capacity tends to be saturated, which is the result of our increasing orders in hand and pursuing intelligent scheduling and lean production to continuously improve production efficiency.
Q: Can you introduce the supply chain empowerment again, and what additional value can it provide besides providing sales channels?
A: The global marketing network in the company’s global smart supply chain system covers more than 120 countries and regions. In many countries, it has localized distribution capabilities and localized operation teams. Global infrastructure construction includes warehouses in eastern and western North America, Germany and Poland, distribution processing Center in Germany and Ningbo Global Supply Chain Center, which meets customers’ flexible one-stop procurement needs. The company has built a data cloud with JD.COM, which is conducive to the accumulation of vertical market and accurate production scheduling on the data side. At the same time, Ningbo Global Supply Chain Center is handed over to JD.COM for operation and management by using the experience accumulated in unmanned warehouse technology and warehousing operation in JD.COM, which better solves the problem of product line loading. Secondly, at the product quality control and testing end, these excellent domestic suppliers can also be helped to meet the access standards of overseas distributors. Thirdly, the difference between Guansheng and other peers is that GSP headquarters has a professional product and data management team to collect information on all models in the global market. Therefore, Guansheng uses many years of manufacturing and management experience and channels to empower suppliers from multiple dimensions.
Q: What is the business logic and the logic of selecting product categories?
A: Every product we choose will undergo market research and comprehensive analysis. Taking rubber parts as an example, this product is scattered in the field of after-sales segmentation, and the factory is small in scale, but widely used. First of all, we will choose each product according to the market demand, and then we will make a detailed analysis of competitors. If the competition for a product has become fierce, the space for this product will be relatively small, so this is also an important factor in the selection. The reason why we can generate high revenue overseas is that we can judge which products are suitable for which regional markets from the supply chain side, which is the core of our entire business logic.
Q: What products are involved in the cooperation with SINOMACH and what are the specific advantages?
A: The cooperation with () lies in the layout of new energy vehicles in the future. The main strategic cooperation in the future is hub motor bearing products.
Q: Is the mode of cooperation with customers all over the world consistent?
A: The actual situation in each country is different, so the model we face in each market is different, which is also the main advantage of our overseas channels. The United States is relatively concentrated, mainly chain stores and large purchasing groups; In recent years, Europe has also begun to tend to this model.
Other regions are mainly local dealers, which is very different from the United States. Therefore, there are differences in the product line, because the labor cost in the United States will be more expensive, so it is mainly based on assembly, but other regional markets have both parts maintenance and final assembly products. Chain stores in the North American market do not account for all the sales, and more than half of the sales come from customers at a lower level, which is what distinguishes us from other foreign trade companies.
Q: From the public financial statements, we can see that our income this year is considerable. How much of this is the change brought by the business model? What is the composition of profit and what is the contribution of exchange?
A: The increase in profit is mainly attributed to the global layout of the company, the increase in gross profit margin, the internal lean production to reduce costs and increase efficiency, exchange rate factors, steel price fluctuations and other factors. The first company has a certain voice and bargaining power in the market; The second company has been promoting lean production, and the modern factory in Nanjing has a team dedicated to improving and continuously improving production efficiency; Third, the recent RMB depreciation has made some contributions; Fourth, the price of steel has dropped, but it is not much different from the same period last year. External factors are one of the reasons, and more is the change of our business model. With the increase of our scale and volume, including the increase of company informatization and lean improvement, the internal efficiency has also been continuously improved. On this basis, coupled with external factors, let our profit rate reflect better. When the situation is bad, we can improve, and when it is good, the improvement will naturally be more obvious. Therefore, the income growth is mainly caused by the improvement of core business and the change of business model.
Q: Which do you think we should pay more attention to in two years or so, AM market and OEM market?
A: The front-loading market is divided into two steps. For this part of OEM, we have taken a fancy to the rapid growth of new energy vehicles in China. In the short term, it is suggested to focus on the after-sales market first, because this is a very mature system and the OEM market is still in the stage of layout.
Q: Will the tram use the transmission shaft? Is it different from the performance requirements of traditional fuel vehicles if trams are also used?
A: All new energy vehicles and fuel vehicles will use the transmission shaft, but the performance requirements are really different, and the overall difference is not big. There is a cognitive bias in many markets that new energy vehicles don’t need a transmission shaft. At present, all new energy vehicles will also use the company’s three main products.
Q: What are the main supplies for Jin Kang Cyrus Huawei’s M5 model?
Answer: Mainly the products of transmission shaft assembly.
Q: Your main focus is still on exploring more front-loading markets and more new energy vehicle companies, right?
A: The front-loading market is a great force point for us in the future. To sum up, the source of growth is mainly divided into two parts, one is the after-sales market and the other is the supporting market. The after-sales market needs to be interpreted from two aspects. First, multi-product line loading, in addition to the existing own product line and loaded product line, will also load other products, and use the global marketing network built by the company to empower domestic excellent suppliers; Secondly, the outbreak period of automobile chassis system in the domestic market is related to the number of cars in China and the average age of the car, which is 6.5 years. Therefore, it is expected that there will be an outbreak period of replacement of chassis system components in the domestic market in the past two years. In the supporting market, we hope to cooperate with more new energy automakers, and we have taken a fancy to the future development direction of new energy vehicles.
Q: What guidance do we have for the future income growth of AM market?
A: The compound annual growth rate of our annual reports in the past five years is steady except for the epidemic in 2020. Due to the large initial investment and the loading of new products, it will continue to grow rapidly. The overseas market is increasing steadily, and the domestic market will also have a very high growth rate with the advent of the outbreak period in the past two years. Therefore, the growth logic of AM market has experienced some explosive growth in China, in addition to the loading of multi-product lines and the use of global smart supply chain system for empowerment.
Q: Do we have our own products or have a strong technical accumulation to meet the demand of this new energy vehicle?
A: The company’s main product line is still concentrated on the parts of the automobile chassis system.
Therefore, we have a deep accumulation in automobile chassis system parts. In the supply chain, product research and development, quality control, testing and other deep accumulation. At present, all new energy vehicles are still using these traditional mechanical keys, and some new parts will be produced. In the hub bearing unit, we recently reached a cooperation with SINOMACH in motor bearings.
Q: The company’s past history was relatively stable, and this year’s performance was particularly excellent. Is it a performance of internal achievements in the past few years?
A: The company’s strategy formulation is more forward-looking. The company began to lay out overseas marketing networks and build overseas localization teams many years ago.
When economies of scale are not brought into play, the cost will be relatively high and the profit will be weak. When economies of scale come into play, when the cost of input will not increase greatly because of income, the profitability will increase accordingly.
Q: What are the advantages of the company’s products and overseas competitors? Made in China has risen very rapidly in recent years. The company has built a sales system to meet the needs of overseas markets and the dividends made in China. Is this the growth logic?
A: You can understand it this way. At present, China manufacturing is gradually replacing overseas manufacturing, and there will be several rapid growth periods in this process. Our new product loading will focus on products that have the trend of replacing overseas manufacturing in China.
In the market channel, we don’t position ourselves as a manufacturer in China, so the manufacturer in China is not our competitor, and our competitor is an overseas importer.
In the future, more newly loaded product lines will be manufactured by our partners, but product sales is not just an action of selling products. How to turn products into commodities is one of our core competitiveness. First of all, we have the next level of channels overseas and locally. We should have our own brand building, understand the foreign market before we can make reasonable pricing of products, and make a product catalogue, which is a very important threshold from manufacturers to markets. This sounds simple, but if there are thousands of varieties and models of products, there is not a one-to-one correspondence between the after-sales parts and the original parts. For example, one after-sales part product can correspond to several original parts. Although the original parts are one car and one model, the actual difference is not great, and the after-sales products can be directly docked. Whether the details of after-sales parts can be manual or automatic, and when the engine model was made, this is a very high threshold, and many China manufacturers do not have the ability to make their own catalogues. There is a very important measure here, which is to measure the vehicle coverage of manufacturers. Moreover, the sales volume of GSP’s own brand accounts for nearly half at present, and our brand can be found by searching product series in Amazon.com or ebey.
Q: How much cheaper are our overseas prices than competing products?
A: At the stage when China’s manufacturing has the potential to replace overseas manufacturing, Europe and the United States spend two or three hundred dollars each, while China can achieve fifty or sixty dollars. Therefore, before the United States imposed tariffs, it didn’t play a role for China manufacturers, because the entire industrial chain in China is already very complete, and the price range is also very different. In the future, we should find products with such potential, and do marketing empowerment and market empowerment, so that we can participate in this replacement process.
Q: We have accumulated experience through the product of transmission shaft. At present, we are making simultaneous efforts in category expansion and channel sinking. Does the channel sinking company have any plans? Did it go well?
A: At present, the channel sinking in the United States and Europe has been completed, and the localization operation in Mexico and Poland was completed last year. Next, we will choose the top 20 countries in the world to set up a marketing network. These top 20 countries have nearly 78% of the car ownership, which can radiate nearly 90% of the car ownership market.
So far, it’s going well. We’ve opened points in Mexico and Poland. Before our channels sank, for example, the United States and Germany were developed countries, while Poland and Mexico were developing countries. This model is still no problem. It will be enough to continue horizontal loading in the future, and the successful experience we have can be replicated simultaneously.
Q: The replacement demand of domestic new forces for localization in OEM market is very close. At present, the company has cooperated with Jin Kang Sailis and Weimar, which is equivalent to being recognized by the core enterprises. How fast will it enter other new energy vehicle customers? Are the products supplied still the three main products?
A: The products supplied are not limited to these categories. At present, we have cooperation with SINOMACH.
The future will be considered in two steps. Now, to be an OEM supplier, one must have a quantity, and the other must have an industry position in the pre-installation market. The company’s three main products can generate sales volume, and also gain industry status in the front-loading market. In addition, we are still making some layouts for new energy vehicles in the future. The biggest difference of new energy vehicles is not only the increase in quantity, but also the new technological innovation, which will breed many new parts. These technologies can be manufactured by traditional fuel manufacturers but need new technology investment. For example, recently, we cooperated with SINOMACH in hub motor bearings. Its key technology lies in its extremely fast speed and its ability to meet the characteristics of electric erosion. Once we have this ability, the price can be raised several times. At present, the direct competitors of this product are SKF and Schaeffler. They sell for two or three hundred yuan each, and we can reduce the cost to less than one hundred.
The specific selling price will be combined with the sales volume of the product, and the profit of the product will be relatively rich in theory.
Q: When can we expect to see the products cooperated with SINOMACH?
A: It is still uncertain;
The main business of Wenzhou Guansheng Auto Parts Group Co., Ltd. is the research and development, production and sales of automotive transmission system parts. The company’s main products are constant velocity universal joint, transmission shaft assembly and hub bearing unit. Further, the company’s products are sold in six continents: Europe, North America, South America, Asia, Oceania and Africa, and its marketing network covers more than 120 overseas countries and regions. The company has also won the honorary titles of "National Automobile Parts Export Base Enterprise", "Advanced Customs AEO Certification Enterprise" and "China Automobile Parts Industry Famous Enterprise".
Details of participating institutions are as follows:
