SAILUN GROUP(SH:601058) Southwest Securities·2024-08-21 08:11Investment Rating - The report maintains a "Buy" rating for Sailun Tire (601058) with a target price of 20.15 CNY over the next six months [1]. Core Views - The tire industry has a significant market potential of approximately 190 billion USD, with domestic brands expected to increase their market share due to improved performance and cost advantages. Sailun, as a leading domestic tire manufacturer, is well-positioned to benefit from this trend [2]. - The company's "Liquid Gold" tire products have shown exceptional performance and high added value, with production expected to ramp up in 2023. The company has also planned substantial production capacity expansions for various tire types [2][3]. - Sailun's ongoing global expansion includes the establishment of production bases in Mexico, Cambodia, and Indonesia, which will enhance its ability to meet international demand and mitigate trade barriers [3][12]. Summary by Sections Company Overview - Sailun Tire is recognized as a leading player in the domestic tire industry, with a stable shareholding structure and effective management practices. The company has been expanding its production capacity and global footprint steadily since its inception in 2002 [18][34]. Market Potential - The global tire market is projected to be around 190 billion USD, with China accounting for over 20% of this market. The demand for tires is recovering, particularly in the semi-steel and all-steel segments, driven by the resurgence of economic activities [2][11]. Product Development - The "Liquid Gold" tire series, which addresses the industry's challenges, has been successfully launched and is expected to become a key growth driver for the company. The company has also been expanding its non-road tire production capabilities [3][28]. International Expansion - Sailun has established a strong international presence with production facilities in Vietnam, Cambodia, and Mexico, which are strategically located to serve key markets and reduce exposure to tariffs. The company plans to further increase its production capacity in these regions [11][12][24]. Financial Projections - The report forecasts significant growth in revenue and net profit for the years 2024 to 2026, with expected earnings per share (EPS) of 1.35 CNY, 1.55 CNY, and 1.85 CNY respectively. The company is projected to maintain a favorable price-to-earnings (PE) ratio [9][12].