Linglong Tyre(SH:601966) Southwest Securities·2024-09-25 10:08Investment Rating - The report maintains a "Buy" rating for Linglong Tire (601966) with a target price of 22.95 CNY over the next six months [1]. Core Insights - The tire industry shows steady demand, with an increasing market share for Chinese automotive tires. In the first half of 2024, global tire sales reached 900 million units, a year-on-year increase of 2.7%. The share of domestic tire production in global demand rose from 34.7% in 2016 to 44.0% in 2023, an increase of 9.3 percentage points [2][22]. - The company has improved its product structure and profitability, with sales gross margin and net margin reaching 22.7% and 8.9% respectively in the first half of 2024, up 4.9 and 2.8 percentage points year-on-year [2][24]. - The "7+5" and "3+3" global strategies are being actively implemented, providing upward potential for performance. The Serbian project is being expanded, offering tax and transportation advantages. The planned capacity for non-road tires is 331,000 tons per year, with expected annual revenue of 10 billion CNY upon reaching full capacity [2][20]. Summary by Sections 1. Strategic Layout - The company is executing the "7+5" strategy, aiming to establish seven domestic and five overseas production bases by 2030. This includes the "3+3" layout for non-road tires, with three domestic and three overseas factories planned [20][22]. 2. Demand and Supply Dynamics - Demand for semi-steel tires remains robust, while the non-road tire market is seen as a blue ocean opportunity. The global tire demand is gradually recovering, with a projected increase in sales [2][33]. - The company is enhancing its supply chain and optimizing its product structure to improve profitability [2][28]. 3. Financial Performance - The company reported a revenue of 201.7 billion CNY in 2023, a year-on-year increase of 18.6%, and a net profit of 13.9 billion CNY, up 376.9% [22][24]. - For the first half of 2024, revenue was 103.8 billion CNY, with a net profit of 9.3 billion CNY, reflecting a year-on-year increase of 12.4% and 65.0% respectively [22][24]. 4. Market Position and Brand Strategy - Linglong Tire has a diversified product range and a multi-brand strategy, with products sold in 173 countries. The brand value reached 98.14 billion CNY in the first half of 2024 [19][29]. - The company is focusing on high-end tire products and expanding its overseas market presence, particularly in Serbia and Thailand [28][29].