Performance of listed PIY companies in 2021

Recently, listed companies successively released their annual reports for 2021. Among the mainstream suppliers of polyester industrial yarn industry, current listed enterprises include Unifull, Hailide, Sanwei, Hengli, Billion and Guxiandao (a wholly-owned subsidiary of listed company Gpro Titanium Industry). Polyester industrial yarn is the main businesses of Unifull  (stock code: 002427) and Hailide (stock code: 002206). It can be seen from the annual reports of Unifull and Hailide over the years that PIY is the core business of the two listed companies. Among them, Unifull's PIY business income accounted for more than 50%;  PIY took up above 50% of Hailide's operating income in 2018 and before, which still occupied above 40% in recent years after the cord fabrics integrated increased and the proportion of PIY dropped. However, PIY remained Hailide's major business. In addition, Zhejiang Sanwei (stock code: 603033) stepped into PIY industry in 2021. The operating income of PIY did not account for the first place but ranked third, while PIY was still one of the main businesses. The following part will have a brief analysis on the financial data of Unifull, Hailide and Sanwei in terms of PIY industry.

The total operating revenue of Hailide, Unifull and Sanwei increased significantly in 2021 compared with 2020, mainly due to the increase in the sales price. The net profit of the three enterprises was quite different.

The net profit of Hailide in 2021 was up to 575 million Yuan, with a year-on-year growth of 128.53%. The net profit and its YOY change in 2021 were the highest since listing. There were two main reasons: on one hand, the performance base was relatively low due to the impact of COVID-19 pandemic in 2020; on the other hand, company saw good operation in 2021, especially with booming supply and demand of cord fabrics. Hailide witnessed greatly increasing sales ratio and improving profitability.

Unifull's net profit was below zero and the net profit obviously fell year-on-year. There were many reasons for changes in performance, which involved the PIY were as following: under the influence of new capacity, intensified competition in the industry, skyrocketing sea freight, epidemic situation and other factors, the sales price of PIY and its ancillary products increased weakly, and the gross profit margin decreased compared with the same period of last year.

Although the net profit of Sanwei was profitable, the profit also fell a lot year-on-year. Among its main business in 2021, although the gross profit rate of rubber V-belt, conveyor belt, concrete sleeper, concrete turnout sleeper and track slab was positive, it still declined by 11.07%, 4.89%, 1.78%, 2.85% and 5.3% respectively compared with 2020; The gross profit rate of PET fiber chip and PIY was even lower, which was at -0.38% and -7.96% respectively.

The gross profit rate and average cash flow of ordinary and high-tenacity PIY in Unifull was positively correlated, while that in Hailide was not completely positively correlated, and the gross profit rate of PIY in Hailide was basically higher than that of Unifull (except 2018). This was because, on the one hand, Unifull is dominated by conventional PIY, while Hailide has a higher proportion of differentiated PIY. Among differentiated PIY, automotive industrial yarn, including tire cord fabric, airbag yarn, seat belt, etc., accounted for more than 50%, and the profit of differentiated fiber was often higher than that of conventional PIY; on the other hand, Unifull's PIY is mainly sold domestically, while Hailide is mainly sold abroad, and Hailide is one of the only two PIY factories that export to the European Union with an anti-dumping duty rate of zero. The export price of its PIY, especially the price of some differentiated products, would be higher than that of the peers. Therefore, when selecting the cash flow of ordinary high-tenacity PIY in the domestic market as a comparison, the positive correlation of Unifull's gross profit margin of PIY was higher than that of Hailide, while the gross profit margin of Hailide was often higher than that of  Unifull. In addition, as a company newly entering PIY industry 2021, Sanwei's PIY is mainly conventional ordinary high-strength one. Its gross profit rate of PIY in 2021 was 7.96%, which just confirmed that the cash flow of ordinary high-tenacity polyester industrial yarn 1000D in 2021 was negative.

Generally speaking, the cash flow trend of ordinary high-tenacity PIY could roughly reflect the benefit change of PIY industry.