Following the publication of the annual report, GSP recently convened a meeting to brief investors on the business situation and performance for 2021 while also addressing their concerns.

The data indicates that GSP's primary business is the development, manufacture, and marketing of automotive chassis systems. The main products include constant velocity universal joints, drive shaft assemblies, hub bearing units, rubber shock absorption and other series, is one of the few domestic manufacturers of automotive transmission system parts that can meet the one-stop procurement needs of customers.

Overall growth in performance

According to GSP, under the circumstance of the worldwide epidemic, China has emerged as one of the primary sources of supply for international auto components with steady inflow of orders from abroad and the robust market demand. In this regard, the company aggressively carried out numerous tasks, planned ahead, optimized core capabilities while promptly responding to short-term macroenvironment changes. So that it produced a notable development in 2021.

The annual report suggests that in 2021, GSP has achieved revenue of 2.487 billion yuan, an increase of 35.09% year-on-year, and achieved a net profit attributable to the mother of 117 million yuan, an increase of 27.11% year-on-year, and the growth rate of net income hit a five-year high.

By product category, six key items, which include drive shafts, CV joints, wheel hub assembly, and other product categories all saw significant revenue increase in 2021, with growth rates ranging from 27% to 66%. By region, the largest proportion of the business revenue in Europe increased by 45.71% year-on-year, North America and Asia and Africa revenue increased respectively by 40.91% and 8.26% year-on-year. Domestic business revenue was about 198 million yuan, up 44.02% year-on-year.

From the perspective of financial indicators, while the revenue in 2021 achieved a 35.09% increase, the total amount of expenses during the period increased by only 15.74% year-on-year, reflecting a strong cost control ability. Accounts receivable turnover, fixed assets turnover, and total asset turnover rates are much higher than the industry average for publicly traded companies that have filed their annual reports, and they have also significantly increased year over year, indicating stronger operating efficiency.

The global marketing network continues to be improved, and the expansion of production capacity improves production efficiency

Zhou Longsheng, general manager of GSP, said at the performance briefing that the counter-trend growth of the number of orders in 2021 benefited from the solid foundation of the construction of the global marketing network.

It is reported that the global marketing network of GSP currently covers more than 120 countries and regions overseas. And the new Mexico warehousing center, and the local operation team have lay a solid foundation for further penetrating the Latin American market in the future. In addition, the new distribution and processing center was added in Europe to further consolidate the company's market position in Europe. At the same time, with the further expansion of the new product line, the company has set up a China supply chain center in Ningbo, and the global comprehensive service capability has been further improved.

Zhou Longsheng added that in order to ensure the delivery of orders, , GSP increased investment in advanced equipment, further strengthened asset strength, actively expanded production capacity, and increased the inventory of best-selling products in 2021 to ensure the delivery of orders while effectively guaranteeing the inventory order satisfaction rate. The total assets of GSP increased by 15.98% year over year to 2.625 billion yuan at the end of 2021.

While introducing a number of sets of high-tech equipment at home and abroad, the content of product standardization is combed through from several dimensions such as product model specifications and product packaging. On the other hand, GSP supports lean production improvement initiatives, including quick changes, packaging, logistics design, and other aspects of optimization, to guarantee the factory's output capacity.

Go deep into Multi-production lines and multi-service synergy

It is reported that GSP will multi-product line collaboration, AM market (automotive aftermarket) and OEM vehicle supporting synergy as part of the future development strategy. GSP believe that based on rich overseas operations and many years of manufacturing experience, the company has a deep understanding of customers and manufacturers bilaterally, and will gradually form a multi-level, structured product matrix on the basis of the original, and promote the loading of product lines in stages. “The global marketing network will support the AM market's multi-product synergy strategy and encourage future performance growth” according to GSP relevant personnel.

According to the explanation of Zhou Jiaru, chairman of GSP, at the performance briefing, in the AM automotive aftermarket, the marketing network of GSP covers more than 120 countries and regions around the world, with deep regional market local service capabilities. And in the domestic market, it has formed cooperation with major mainstream platforms and maintenance chains in the domestic aftermarket such as CAR/ZONE, Tuhu, Jmallcm and Baiyuan.

GSP is also actively expanding cooperation with OEM, especially new energy one. And the growth rate of the vehicle supporting market in 2021 has reach 139.4%. It can be seen that this part of the business may become an important source of growth in the future.

GSP said that in the future, on the basis of China’s existing auto parts supply chain resources, the company’s advantages and experience in technology research and development, manufacturing operations, supply chain management, marketing channels, capital, etc. According to the characteristics of different product lines and manufacturer resource capabilities, continue to explore cooperation models, cooperate with more outstanding Chinese manufacturers to go to sea, narrow the distance between manufacturers and customers in various markets around the world to achieve multi-product line collaboration, and jointly create an auto parts supply chain ecosystem.

Digital intelligence empowers efficiency and optimizes global supply chains

In 2021, GSP and JD.com reached a strategic cooperation, hoping to better and rationally use the data and industry experience accumulated by GSP for many years through JD mature big data processing and AI intelligent means, starting from multiple links and comprehensively improving the company's core capabilities.

Regarding the cooperation with JD, Zhou Longsheng, president of GSP, said in response to investors’ questions that the cooperation between the company and JD is extensive and comprehensive. JD's big data-based dispatching command center system can help the company build a global smart supply chain network. At the level of global warehouse network system cooperation, the company’s largest warehouse in the future, the China Supply Chain Center in Ningbo, will fully entrust JD to do operation management, providing the world's top technology and services from hardware to software, helping the company improve its supply chain capabilities and consolidate industry barriers.

GSP attach great importance to the potential of digital intelligence. It claimed that by empowering digital intelligence, it can greatly improve its capacity for planning forecasts, intelligent scheduling, inventory management, and promote the development of automated, intelligent, and digital production lines. It also claimed that by creating CNAS national laboratories and cooperating with domestic and international third-party scientific research institutions, it can enhance its overall capacity for R&D and quality control and advance the development of electronic systems.

The first quarter of 2022 saw the company achieve revenue of 610 million yuan, an increase of 18.16% year over year, and a net profit attributable to the mother of approximately 25.1016 million yuan, an increase of 22.64% year over year. This indicates that the company's strong growth trend continued in the first quarter of 2022.

What worth mentioning is that about 91.92% of the company's revenue in 2021 came from abroad. As an export-oriented enterprise, GSP may benefit from the decline of the CNY against the USD caused by the FRS entering the interest rate hike channel in the future. Powel confirmed expectations of "rates hike ahead" and a tightening of monetary policy on April 21. Experts predict that the Fed's interest rate increase will be one of the main factors influencing the trend of the CNY exchange rate, and that the CHY exchange rate will decline from the second quarter of this year until the end of the year as the difference in interest rates between China and the United States widens.

As introduced in the annual report of GSP, the current auto parts orders flow to the country with better epidemic control. Considering the existing trend of increasing global car ownership, as well as the exchange rate fluctuation factors, the future increase in the auto parts market has a prosperous future. GSP would uphold the mission and actively support the business' continued growth.