Core Insights - U.S. companies are learning to adapt to tariffs and are finding ways to manage the associated costs [1] Group 1 - The global head of fixed income at JPMorgan, Michelle, emphasizes that U.S. corporations are developing strategies to absorb the impact of tariffs [1] - Companies are increasingly focused on understanding the implications of tariffs on their supply chains and pricing strategies [1] - There is a growing recognition among businesses that adapting to tariffs is essential for maintaining competitiveness in the market [1]

Investment Rating - The report maintains a "Buy" rating for both Sailun Tire and Senqilin, with target prices of 16.44 and 26.91 respectively [9][28]. Core Insights - The tire industry is approaching a turning point due to tariff digestion and cost improvements, with Chinese tire companies expected to expand their market share despite current tariff challenges [1]. - Raw material costs have significantly decreased, with the price index for semi-steel and all-steel tires dropping by 15% and 14% respectively as of June 6, 2025, indicating a recovery in profitability for the tire industry expected by Q3 2025 [2]. - Demand for semi-steel tires in North America and Europe remains strong, with a year-on-year growth of 3% and 5% respectively in early 2025, enhancing the competitiveness of Chinese products in these markets [3]. - Leading companies are actively expanding their overseas presence, with Sailun Tire increasing its brand investment and establishing production facilities in Indonesia and Mexico, while Senqilin is set to ramp up production in Morocco [4]. Summary by Sections Tariff and Cost Dynamics - Tariff impacts are gradually being absorbed, allowing Chinese tire companies to leverage their cost advantages and enhance market penetration [1]. - The cost pressure from raw materials has eased significantly, with expectations of improved profitability in the upcoming quarters [2]. Market Demand and Competitiveness - The semi-steel tire demand in North America and Europe continues to grow, with a notable increase in imports from China [3]. - Chinese tire manufacturers are positioned to benefit from their competitive pricing and quality, leading to increased market share in international markets [3]. Company Recommendations - Sailun Tire is recommended due to its strong brand development and successful overseas production initiatives, with a projected revenue growth of 22% year-on-year [32]. - Senqilin is also recommended for its high-end product positioning and expected production ramp-up in Morocco, contributing to its market share growth [32].