Linglong Tyre(SH:601966) Xin Lang Cai Jing·2025-05-08 12:29Core Viewpoint - The domestic tire industry, particularly Linglong Tire, is facing challenges due to trade friction, rising raw material costs, and insufficient demand, prompting the company to enhance its global layout and address investor concerns regarding its new projects [1][2]. Group 1: Company Strategy and Investments - Linglong Tire plans to invest 8.71 billion RMB to establish a base in Brazil, expected to start construction in Q3 2025, with projected annual revenue of 7.758 billion RMB and net profit of 1.213 billion RMB upon completion [1]. - The construction of the Brazilian project will follow a "light debt, long cycle" principle, with a total construction period of 7 years divided into three phases, in collaboration with local distributor SUNSET to reduce direct capital investment [1]. Group 2: Financial Performance - In Q1 2023, Linglong Tire reported a gross margin of 14.92%, a decrease of 8.51 percentage points year-on-year and 1.16 percentage points quarter-on-quarter, with a net profit of 341 million RMB, down 22.78% year-on-year [2]. - The decline in profitability is attributed to rising raw material costs, affecting all nine listed tire companies in China, leading to reduced gross and net margins [2]. Group 3: Future Growth and Operational Efficiency - Linglong Tire aims to enhance production efficiency and product quality through smart and digital transformation initiatives by 2025, while also accelerating the construction and capacity release of its factories in Changchun and Serbia, alongside the Brazilian project [2]. - The company anticipates an increase in overall capacity utilization rate to 88% in 2024, with further improvements expected in 2025 [2].