21st Century Net-"21st Century Business Herald": Sany Heavy Industry responds to the dispute over the sales model

Source: 21st Century Network - "21st Century Business Herald" Author: Wang Jie

Entering the construction machinery industry in 2012, the start was sluggish. According to the statistics of the China Construction Machinery Industry Association, in January this year, the sales of excavators, loaders, bulldozers and road rollers fell by 53.1%, 49.8%, 66.6% and 53.3% year-on-year respectively, and the month-on-month data decreased by 38.5%, 64.3%, 18.7% and 35.0% respectively.

After the international financial crisis in 2008, with the gradual implementation of the national 4 trillion investment stimulus plan, the rapid development inertia of the construction machinery industry has also begun to weaken. In 2011, the industry's operating income exceeded 500 billion yuan, a year-on-year increase of about 17%. Su Zimeng, secretary-general of the association, expects that in 2012, the trend of China's construction machinery will show a trend of low and high, and the annual sales revenue will still grow steadily, an increase of about 12% over 2011.

On March 29, Sany Heavy Industry (600031. SH) released its 2011 annual report, achieving an annual operating income of 50.776 billion yuan, a year-on-year increase of 49.54%; operating profit was 9.847 billion yuan, a year-on-year increase of 42.78%; net profit attributable to shareholders of listed companies was 8.649 billion yuan, a year-on-year increase of 54.02%.

"Net profit has maintained a 50-60% growth rate every year." Zhao Xiangzhang, director and vice president of Sany Heavy Industry, said that the sales of the pumping division exceeded 30 billion, the sales of the excavator division exceeded 10 billion, and the market share of the excavator jumped to the domestic market * 5656.

Analysis of the 2012 direction

Sany's performance is in line with the previous forecast, although it is slightly lower than the expectations of some brokerages in the industry, but its growth remains the first in the industry.

Zoomlion (000157. SZ) achieved operating income of about 46.323 billion yuan last year, a year-on-year increase of 43.89%, and net profit attributable to the parent company of about 8.066 billion yuan, a year-on-year increase of 72.88%; XCMG Machinery(000425. SZ) expects that the net profit attributable to shareholders of listed companies last year increased by 15.12% over the same period last year to 3.378 billion yuan, and Liugong's annual report shows that the total operating income in 2011 was 17.878 billion yuan, an increase of 16.35% over the same period last year, and the net profit attributable to shareholders of listed companies was 1.321 billion yuan, down 14.41% from the same period last year.

Although Sany Heavy Industry did not give a growth target, but Sany Group's established strategic goal in 2012 proposed to achieve 100 billion sales, assuming the same 2011 contribution ratio of 67.7% (Sany Group's sales revenue in 2011 was 75 billion yuan, a year-on-year increase of 49%), the revenue of listed companies needs to achieve at least 33.5% year-on-year growth.

Zhao Xiangzhang said: "The growth in 2012 we are mainly in four areas, one is the global layout after the international growth will be faster, especially in the field of concrete equipment acquisition of elephants, the recovery of the international market is also better." First, the total market of excavators may not necessarily expand, but the competitiveness can be improved. ”

As Sany's flagship product, its concrete pump trucks currently occupy most of the Chinese market, especially in February this year, when it acquired the *5656 brand Putzmeister in Germany. Sany's flagship product, excavator, also jumped to the domestic market in 2011 in annual sales of 5656.

From June 2011 to February 2012, Sany beat Komatsu in the domestic excavator market for 9 consecutive months.

"We had a market share of excavators that were close to 13% in 2011 and strive to increase to about 20% in 2012." Zhao Xiangzhang said, "In addition, oursTruck cranesLast year, the market share was third, in a flat state, the next step is to achieve a small growth in a larger growth space, as well as the company's whole industry chain construction, including profit growth in the field of core parts manufacturing. ”

Zhao Xiangzhang said that in 2012, Sany will also focus on the field of truck crane business and industrial chain construction, and "the proportion of international income will also increase".

Sany responds to the dispute over the sales model

International "lane"

Sany has been closely related to the international market. In 2011, Sany's exports were about 5 billion yuan, and from the annual reports of 2010 and 2011, its international revenue currently accounts for only about 7%, and according to estimates, this proportion needs to reach 20%-30% in the next five years.

At the end of January this year, with the *5,656 major international acquisitions of Putzmeister, Sany completed the leapfrog development of entering the international market, shortening the internationalization process by 5 to 10 years. Putzmeister's concrete pump truck has a global market share of about 40% for a long time, and more than 90% of its sales revenue comes from overseas, with sales of 570 million euros in 2011.

"The transaction is still in the global antitrust review and approval stage, some countries have been approved, and some are still in the process. After the formal closing, we will carry out strategic integration and complement each other's advantages according to the deployment. ”

Zhao Xiangzhang said that the domestic Sany brand is the mainstay, and the elephant brand is still operating independently in the world. Due to the relatively single product of the German side, the future industrial chain cooperation, the two sides can further expand the field of their product coverage from concrete pump trucks to the development of mixer trucks, mixing plants and other fields.

Compared with this global high-profile acquisition, Sany Heavy Industry's subsequent cooperation with the "invisible * army" of the truck-mounted crane market, Austrian PALFINGER, is relatively low-key.

On February 28, Sany Truck Hoisting Machinery Co., Ltd., a wholly-owned subsidiary of Sany Heavy Industry, and Palfinger Asia Pacific Pte. Ltd. signed a joint venture agreement to jointly invest in the establishment of Sany PALFINGER Special Vehicle Equipment Co., Ltd., which mainly produces and sells truck-mounted crane products. The total investment is 900 million yuan. The registered capital is 300 million yuan, and the two parties each contribute 150 million yuan, accounting for 50% each.

At present, Sany's 10-year internationalization is still in the investment period, including 6 factories have just been put into production, and Sany India, which started early, has only achieved a flat profit and loss.

Respond to cash flow pressures

Due to the promotion of marketing and strategy, Sany Heavy Industry has given a "radical" attitude to the outside world, and the doubts about its cash flow pressure have not stopped.

In the 2011 annual report, the net cash flow generated by its operating activities was 2.279 billion yuan, although it decreased by 66.23% year-on-year.

An analyst said: "Most of the construction machinery industry is dominated by credit sales, and under the premise that the downstream industry is not good, many payments will be at risk." Therefore, the previous speculation that Sany Heavy Industry's operating net cash flow may be negative, and it is unexpected that it can be positive. ”

On the one hand, the factors for the year-on-year decline mainly lie in the "increase in inventory procurement and reserves, and the reduction of sales collection rate due to the current national macroeconomic regulation and control".

"As a high-growth company that maintains a year-on-year increase in net profit of more than 50% year-on-year, it may be normal for operating cash flow to be negative. However, our debt structure and benchmark ratio are also healthy. Zhao Xiangzhang said that in the horizontal comparison of the industry, Sany Heavy Industry's inventory and accounts receivable are at a low level.

According to Sany's 2011 annual report, by the end of 2011, a total of 5.7 billion shares had been given away, and 1.5 billion shares had been transferred; The funds raised from the capital market were 1.990 billion yuan, and the cumulative cash dividends reached 1.456 billion yuan. The Boston Consulting Group has issued a report that Sany Heavy Industry's shareholder return rate ranks first in the world, and ranks *5656 among global construction machinery companies. Its cash dividends accounted for 73.17% of the total financing in the stock market, compared with 15.39% for the other two construction machinery giants Zoomlion and 4.86% for XCMG.

Respond to sales model disputes

As of the end of March 2011, Sany Heavy Industry's mortgage sales accounted for 46.1% of sales, financial leasing sales accounted for 18.8%, and the combined proportion of the two was nearly 65%.

The unit value of construction machinery products is high, and customers generally have financing needs when purchasing products. However, the "sales contract disputes" or "mortgage loan disputes" related to Sany have been in the news from time to time, and the comparison between high-priced contracts and low-qualified lenders has also raised concerns in the industry about whether Sany's sales model is too aggressive.

Zhao Xiangzhang said: "At present, the four credit sales models commonly used by construction machinery enterprises are: mortgage sales, financial leasing, installment sales, and full sales (** payment sales). From the perspective of international experience, since 2004 and 2005, the leasing and mortgage ratio of Caterpillar, Komatsu and other companies has accounted for about 80%. ”

According to Zoomlion's information, at the end of 2010, mortgage sales accounted for 20%, financial leasing accounted for 31%, installment sales accounted for 16%, and full sales accounted for 33%. The two giants both accounted for more than 50% of mortgage and financing sales.

"There have been individual cases of some products, and individual customers have insufficient business experience and have failed to repay in time. But not universally. For mortgage sales, for example, we are in accordance with the regulations of the China Banking Regulatory Commission, and the down payment is generally between 20% and 30%. Zhao Xiangzhang said that Sany will continue to promote this sales model, but will maintain a consistent risk assessment. We have a risk control department, and the proportion, scope, and risk will be measured. There will also be a whole system to control the down payment, mortgage procedures, guarantee procedures, guarantee cycle and other links. ”