Core Insights - The Chinese tire industry is at a critical juncture, facing significant challenges despite holding a 35% share of the global market, with over 50% of companies experiencing a decline in net profits [1][2] - The industry is grappling with issues such as overcapacity, trade barriers, and a general decline in profitability, with profit margins dropping from 5.3% in 2020 to less than 3% in 2023 [2][3] Industry Challenges - The tire industry is facing unprecedented challenges, including overcapacity leading to fierce competition, complex international relations creating trade barriers, and a situation where revenue growth does not translate to profit [2] - In the high-end passenger car original equipment market, China's market share is less than 10%, highlighting a structural imbalance [2] - The domestic market is suffering from severe overcapacity, with some production facilities operating at less than 60% capacity, and a rise in the number of tire stores closing due to credit issues [2] Brand Development and Market Positioning - The industry must shift its focus towards brand building rather than competing solely on price, as foreign brands dominate nearly 80% of market profits [3][4] - Continuous investment in research and development, product quality improvement, and service system establishment are essential for enhancing brand competitiveness [4] Opportunities in New Energy Vehicles - The growth of the new energy vehicle (NEV) market presents a new opportunity for the tire industry, with predictions of significant sales increases in the commercial NEV sector by 2025 [5] - Tire companies are encouraged to focus R&D efforts on NEVs and high-end passenger car tires to capture emerging market opportunities [5] Technological Advancements and Smart Transformation - A digital revolution is underway in tire manufacturing, with leading companies implementing smart manufacturing solutions that significantly enhance efficiency and reduce defect rates [6][7] - The integration of digital capabilities across the supply chain and production processes is becoming a core competitive advantage for tire companies [7] Global Strategy and Market Expansion - Chinese tire companies are adjusting their global strategies, moving from product export to brand establishment in international markets [7] - The establishment of production bases in regions like Africa demonstrates the industry's commitment to global expansion and competitiveness [7] Innovation and Performance Improvement - Innovations in tire performance, such as the development of liquid gold tires that improve fuel efficiency and reduce braking distances, are crucial for maintaining competitiveness [8] - The industry is encouraged to collaborate across the entire value chain to address international market challenges and enhance its influence in standard-setting [8]

Core Viewpoint - Linglong Tire, a leading domestic tire manufacturer established in 1994, is seeking to expand its global presence by applying for a listing on the Hong Kong Stock Exchange, marking a significant step in its nearly ten-year journey since its Shanghai Stock Exchange debut [1]. Group 1: Company Overview - Linglong Tire's product portfolio includes a wide range of passenger and light truck tires, truck and bus tires, and off-road tires, with various specifications to meet different application scenarios [1]. - The company has established a brand matrix that includes Linglong, Lio, Yufeng, Atlas, Green Line, and Ruijie [1]. - By 2024, Linglong Tire is projected to be the largest OE tire manufacturer in China and the third largest globally, with a notable position in the new energy vehicle sector, being the largest OE tire manufacturer for five consecutive years [1]. Group 2: Financial Performance - From 2022 to 2024, Linglong Tire's revenue has shown a compound annual growth rate (CAGR) of 13.9%, with revenues of 17.006 billion RMB, 20.166 billion RMB, and 22.058 billion RMB respectively [3][4]. - The passenger and light truck tire segment has been the largest revenue contributor, increasing from 9.709 billion RMB in 2022 to 14.430 billion RMB in 2024, with its revenue share rising from 57.1% to 65.4% [3][4]. - The company's gross profit has also improved significantly, with gross profits of 1.871 billion RMB, 3.601 billion RMB, and 4.344 billion RMB for the years 2022 to 2024, leading to gross margins of 11%, 17.9%, and 19.7% respectively [6][7]. Group 3: Market Strategy - Linglong Tire has implemented a "7+5" strategy, aiming to establish seven domestic factories and five overseas factories, with two overseas bases already operational in Thailand and Serbia [2][10]. - The company is also focusing on a "3+3" strategy for off-road tire production, planning to establish production capabilities in three domestic and three overseas bases [10]. - The global tire market is expected to grow steadily, with a projected CAGR of 3.9% from 2020 to 2024, and the penetration rate of new energy vehicle tires is anticipated to rise significantly, particularly in China [8][10]. Group 4: Geographic Revenue Distribution - The domestic market has been the primary revenue source for Linglong Tire, contributing 51.1%, 52.2%, and 50.8% of total revenue from 2022 to 2024, while overseas revenue has been steadily increasing, reaching 49.2% by 2024 [5][6]. - The overseas revenue primarily comes from North America, Europe, Asia, and other regions, with North America being the largest contributor [5].