Linglong Tire (601966) In-depth Report: Industry Polarization Leads Linglong

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Linglong Tire (601966) In-depth Report: Industry Polarization Leads Linglong

Category : 桑拿

Linglong Tire (601966) In-depth Report: Industry Polarization Leads Linglong

The company is a leading company in the domestic tire industry, with the following characteristics: 1) Scale: Among domestic tire companies, the company ranks second in revenue scale, ranks first in profit scale, and has profitability ahead of other peers; 2) Product structure: company productsSemi-steel radial tires are the main products. The output of semi-steel radial tires accounts for 84%, which is beneficial to the company’s competition in the passenger car tire market, especially the retail market. 3) Sales structure: domestic and overseas revenues are halved, with domestic market supporting 6 Success, mainly overseas retail.

The increase in overseas prices for supplementary raw material costs has dropped, the gross profit margin expansion trend has been reorganized, and the company’s profit has accelerated.

The company’s gross profit margin in 17-18 years is at a low stage.

In the early days, Michelin and other overseas tire giants raised prices, and the cost of raw materials for mergers and acquisitions fell slightly. The company’s average product price increased by 6 in the first half of the year.

66% to 300 yuan, gross margin increased by 1 in ten years.

4 points to 25.

23% (q2 gross margin 26.

18%), gross margin expansion trend improved.

The four elements of R & D, branding, sales, and manufacturing build an exquisite moat.

1) R & D: R & D investment 淡水桑拿网 is ahead of domestic counterparts, and product performance tests have repeatedly achieved good results, laying a foundation for supporting and retail market expansion.

2) Brands: diversified brand portfolios and precise positioning of target groups for sports marketing; 3) Sales: supporting markets, the company expands from independent brands to joint ventures, derivative brands, enters the German Volkswagen supporting chain, and realizes the new models of FAW-VW and Changan FordMain tire matching; retail replacement market, domestic and overseas retail sales have achieved double-digit growth.

4) Manufacturing: “5 + 3” strategic planning production base. The company’s semi-steel radial tire factory is large in scale, low in employment costs, and low in raw material procurement costs, making the company’s gross profit margin higher than its domestic counterparts.

The supply side has contracted, domestic tire production has fallen, the company’s production and sales have steadily increased, and its market share has continued to increase.

The polarization of the tire industry, Sino-U.S. Trade frictions, domestic environmental audits and other incidents have accelerated the tire industry’s de-capacity and deleveraging.

China’s tire output in 2018 decreased by 23% from its 13-year high, while the company’s output increased by 53% during the same period.

The company’s China plant output is currently total.

68%, and it is increasing year by year.

Collaborative layout to prevent risks, the Thai plant has become an engine of performance growth, and Serbia has started construction to add momentum.

In order to avoid the suppression of US trade, Linglong Tire established a factory in Thailand earlier. The Thai factory has now become the engine of overseas revenue and profit growth.

The start of the Serbian plant will give the company additional impetus.

Earnings forecast and forecast: Net profit is expected to be 15 in 19/20.

4.8 billion, 19.

07 million yuan, the corresponding growth rate is 31.

08%, 23.


The 19/20 EPS were 1 respectively.

29 yuan, 1.

59 yuan, corresponding to the current sustainable 16 times, 13 times PE.

Give a target price of 25 yuan, corresponding to 15 times PE in 20 years.

Cover for the first time and give a “highly recommended” rating.

Risk warning: Domestic OEM customers increase sales of new cars, supporting business exceeds expectations; the Sino-U.S. Trade war expands, the U.S. resumes anti-reverse investigations on the tire industry; the cost of major raw materials such as rubber increases, gross margin shrinks;Meet expectations.