GTC(000589) Huachuang Securities·2024-10-30 21:07Investment Rating - The report maintains a "Strong Buy" rating for Guizhou Tire (000589) with a target price of 7.20 CNY, compared to the current price of 5.13 CNY [1][5]. Core Views - The company reported a revenue of 7.843 billion CNY for the first three quarters of 2024, reflecting a year-on-year increase of 11.45%. However, the net profit attributable to the parent company decreased by 10.76% to 560 million CNY [1]. - In Q3 2024, the company achieved a revenue of 2.668 billion CNY, which is a year-on-year increase of 2.80% but a quarter-on-quarter decrease of 2.43%. The net profit for Q3 was 134 million CNY, showing a significant decline of 53.63% year-on-year and 38.98% quarter-on-quarter [1][2]. Financial Performance Summary - The average gross margin for Q3 2024 was 16.5%, down 7.2 percentage points year-on-year, while the net profit margin was 5.1%, down 6.2 percentage points year-on-year [2]. - The comprehensive cost index for tire raw materials averaged 98.74 points in Q3, indicating a year-on-year increase of 12.6% and a quarter-on-quarter increase of 2.4% [2]. - The average operating rate for domestic all-steel tires in Q3 2024 was 57.1%, down 5.9 percentage points year-on-year and 3.9 percentage points quarter-on-quarter [2]. Future Outlook - The report anticipates a gradual recovery in profitability due to a decrease in raw material costs and shipping fees, alongside price increases in domestic sales [3]. - The company is actively advancing its third phase of production in Vietnam, which is expected to enhance production capacity and support revenue growth [4]. - The product structure is continuously optimized, with new product developments in non-road tires and plans for significant investment in semi-steel tire production in Vietnam [4]. Financial Forecasts - The net profit forecasts for 2024, 2025, and 2026 have been adjusted to 694 million CNY, 939 million CNY, and 1.239 billion CNY, respectively, reflecting a decrease in expected profitability [5][6]. - The projected price-to-earnings (PE) ratios for 2024, 2025, and 2026 are 11.5x, 8.5x, and 6.4x, respectively [5].