Investment Rating - The report maintains an "Outperform" rating for Linglong Tire (601966) [1] Core Insights - The company achieved a total revenue of 18.16 billion yuan in the first three quarters of 2025, reflecting a year-on-year growth of 13.9%. However, the net profit attributable to the parent company was 1.17 billion yuan, down 31.8% year-on-year [5] - The decline in profit is attributed to high comparative figures from the previous year, including tax refunds and foreign exchange losses in Q3 2025 compared to gains in Q2 2025 [5] - Tire production and sales showed steady growth, with production reaching approximately 69.79 million units (up 6.2% YoY) and sales at 67.48 million units (up 10% YoY) [5] - The company is actively expanding its Serbian base, which is expected to contribute to revenue growth once customer certifications are completed [5] Financial Data and Profit Forecast - Total revenue projections for 2025 are estimated at 25.36 billion yuan, with a year-on-year growth rate of 15.0% [4] - The net profit for 2025 is forecasted to be 1.35 billion yuan, representing a decrease of 23.0% compared to the previous year [4] - The gross margin is expected to be around 16.1% for 2025, down from 22.1% in 2024 [4] - The company anticipates a gradual recovery in profitability, with net profits projected to reach approximately 1.97 billion yuan by 2027 [4][6]

Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The company has faced pressure on performance due to rising raw material prices, with a notable decline in earnings in Q4 2024 and Q1 2025. However, the "7+5" strategic layout is progressing steadily, with the Serbia project successfully commencing production [1][6][7] - The company reported a revenue of 22.1 billion yuan in 2024, a year-on-year increase of 9%, and a net profit of 1.75 billion yuan, up 26% year-on-year. In Q1 2025, revenue was 5.7 billion yuan, a 13% increase year-on-year, but net profit decreased by 23% [5][9] Summary by Sections Financial Performance - In Q4 2024, the company sold 24.11 million tires, a 6.6% increase year-on-year, but faced a 91% drop in net profit compared to the same quarter last year. The average price of tire products increased by 2.5% year-on-year [6] - The company’s raw material costs rose significantly, with a 14.8% year-on-year increase in the cost of key materials [6] Strategic Initiatives - The "7+5" global strategy aims to establish 7 production bases in China and 5 overseas, enhancing the company's competitiveness in international markets. The Serbia plant is the first tire factory built by a Chinese company in Europe and is expected to drive growth in sales and profits [7][9] Market Position and Sales - The company has established a strong marketing presence, supplying tires to over 200 production bases of more than 60 major automotive manufacturers globally. It has maintained a leading position in tire supply for domestic manufacturers and has made significant inroads into the electric vehicle market [8] Profit Forecast and Valuation - The report has adjusted profit forecasts for 2025-2026, expecting net profits of 2.08 billion yuan and 2.41 billion yuan, respectively. The EPS estimates for 2025-2027 are projected at 1.42, 1.64, and 1.90 yuan [9][11]