In-depth analysis of Linglong Tire (601966): Passenger car tires are upstart under optimized industry structure
Investment Highlights Leading domestic tire industry, leading in scale and profitability.
After more than 40 years of development, the company has grown into one of the largest tire manufacturing companies in China, and its products are sold in more than 180 countries and regions around the world, providing supporting services to more than 60 auto manufacturers at home and abroad.
From 2014 to 2015, the company ‘s performance has been short-term low due to the U.S. “double-anti” investigation and the Thai factory fire. Since 2016, with the breakthrough of new customers and the gradual release of new overseas plant capacity, the performance has returned to rapid growth; 2019H1Net profit attributable to mothers grows by 38 each year.
47%, gross margin 25.
23%, the average level of substantial industries.
The competition pattern of the industry has been initially optimized, and domestic leaders are expected to stand out.
The domestic tire industry as a whole still presents three major ills: “big but not strong, structural excess, low concentration”.
Under the pressure of “three big mountains” with stricter environmental protection, tighter funding and impeded exports, the sewage discharge capacity has been accelerated, and the market share will continue to be concentrated on leading companies with technological, capital and capacity advantages.
Compared with the early stage, the company has comparative advantages such as cost, capacity layout, brand, R & D, and cost control, which is expected to rise rapidly in the reshuffle of the industry structure.
Customer breakthrough + capacity expansion, product volume and price increase continued to bring performance flexibility.
The company’s supporting customers are expanding from independent brands to joint ventures / foreign brands. It has exclusively supported the owners and spare tires of three new cars of FAW-Volkswagen Jetta.
The company’s production 重庆耍耍网 capacity breakthrough increased from 64.45 million at the end of 2018 to 11.39 million in 2022, with an average annual growth rate exceeding 15%.
With the breakthrough of mid- to high-end supporting customers, the steady development of the retail market, the release of new plant capacity, the favorable situation of the company’s product volume and price rising gradually continued; maintaining low prices of raw materials such as natural rubber will further improve profit margins.
Investment suggestion: The company is a leader in the domestic tire industry, leading in scale and profitability.
The competition pattern of the portable tire industry is gradually optimized, and the market share of leading companies is expected to continue to increase.
The breakthroughs in supporting customers’ mid-to-high-end breakthroughs 杭州桑拿 and the increase in product volume and price brought by new capacity launches are expected to accelerate performance growth.
We forecast the company’s EPS to be 1 in 2019-2021.
26 yuan, 1.
51 yuan and 1.
At 92 yuan, the ROE is 14.
9% and 18.
Covered for the first time, giving “Buy-A” investment rating.
Risk reminder: The boom of the automotive industry further increases; the development of supporting customers is less than expected; the capacity release of new plants is less than expected; the price of raw materials is rising.