GTC(SZ:000589) Huachuang Securities·2024-03-06 16:00Investment Rating - The report maintains a "Strong Buy" rating for Guizhou Tyre (000589) with a target price of 9.20 CNY, compared to the current price of 5.88 CNY [1]. Core Views - Guizhou Tyre is entering the semi-steel tire market, which presents significant growth opportunities. The global demand for semi-steel tires is substantial, with sales reaching approximately 1.54 billion units in 2022, significantly outpacing the sales of all-steel tires [10]. - The company plans to invest approximately 228 million USD in a new project in Vietnam to produce 6 million semi-steel radial tires annually, which is expected to enhance its product line and market presence [10]. - The project is projected to generate an average annual revenue of 190 million USD and a net profit margin of 15.06%, with a payback period of approximately 6.88 years [10]. Financial Summary - Total revenue is forecasted to grow from 8,440 million CNY in 2022 to 13,754 million CNY by 2025, reflecting a compound annual growth rate (CAGR) of 15.5% [2]. - Net profit attributable to shareholders is expected to increase from 429 million CNY in 2022 to 1,426 million CNY in 2025, with a significant growth rate of 29.1% in 2025 [2]. - Earnings per share (EPS) is projected to rise from 0.36 CNY in 2022 to 1.18 CNY in 2025, indicating a strong upward trend in profitability [2]. Valuation Metrics - The price-to-earnings (P/E) ratio is expected to decrease from 17 times in 2022 to 5 times in 2025, suggesting an attractive valuation as earnings grow [2]. - The price-to-book (P/B) ratio is projected to decline from 1.1 in 2022 to 0.8 in 2025, indicating potential undervaluation relative to book value [2]. Projected Financial Performance - The company anticipates a steady increase in cash flow from operating activities, with a forecast of 3,005 million CNY in 2023 and 2,487 million CNY in 2025 [5]. - The total assets are expected to grow from 15,762 million CNY in 2022 to 23,299 million CNY by 2025, reflecting the company's expansion strategy [5].