Summary of Zhongce Rubber Conference Call Company Overview - Zhongce Rubber has production capacities by the end of 2024 for 22 million all-steel tires, 72 million semi-steel tires, 7 million cross-ply tires, and over 120 million two-wheeler tires, with a product structure primarily focused on all-steel and semi-steel tires, contributing over 80% of revenue [2][4] Financial Performance - In 2024, all-steel tires contribute 46% of the company's revenue and approximately 40% of gross profit, while semi-steel tires account for 35% of revenue and about 40% of gross profit. The gross margin for semi-steel tires is 22.8%, compared to 17.1% for all-steel tires [2][5] - The overall gross margin for Zhongce Rubber has maintained a range of 15% to 20% over the past few years, projected to be 19.5% in 2024, influenced by raw material costs, market competition, and overseas tariffs [2][6][7] Market Position - By the first half of 2025, Zhongce Rubber is expected to achieve the highest revenue and net profit in the domestic tire industry, with a global market share exceeding 10% for all-steel tires and over 4% for semi-steel tires [3][10] International Sales - In 2024, overseas sales account for 48% of total revenue, with North America contributing 17%, other Asian countries 11%, and Europe 10%. The profit contribution from overseas sales is expected to exceed 44%, as the profit level from international sales is higher than domestic [2][8] Management and Control Structure - The actual controllers of Zhongce Rubber are Qiu Jianping and Qiu Fei, who collectively hold 42.25% of the voting rights. The management team, led by Shen Jinrong, is responsible for the company's operations [2][9] Competitive Advantages - Zhongce Rubber leads domestic peers in scale and net profit, with the largest all-steel tire capacity and third-largest semi-steel tire capacity as of the end of 2024. The company maintains a high operating rate of over 90% for all-steel tires and controls sales and management expenses at around 5% [2][10] Future Expansion Plans - Following a successful IPO, Zhongce Rubber raised 4.1 billion yuan to expand production capacity, including projects in Zhejiang, Jiangsu, Tianjin, and Thailand, expected to add 44 million semi-steel and 7 million all-steel tires over the next two to three years [2][11] Profit Forecast and Valuation - Projected net profits for Zhongce Rubber are expected to reach 4.25 billion yuan in 2025 and 4.94 billion yuan in 2026, with corresponding price-to-earnings ratios of 10.5 and 9.1, which are favorable compared to the industry average of around 12. A target price of 63 yuan is set, indicating a potential upside of 22.9% [2][12]

Core Viewpoint - Zhongce Rubber's IPO marks a significant milestone for the company and the "Juxing System," further enhancing the influence of its owner, Qiu Jianping, in the capital market [2][6]. Company Overview - Zhongce Rubber officially listed on the Shanghai Stock Exchange on June 5, 2023, with an opening price of 46.50 CNY, rising 22.58% to 57 CNY on the first day, resulting in a total market capitalization of approximately 50 billion CNY [1]. - The company is a leading player in the domestic tire industry, involved in the research, production, and sales of various tire products, including all-steel tires and semi-steel tires, with well-known brands such as "Chaoyang" and "Good Luck" [1][7]. - In the 2024 China Tire Company Rankings published by the China Rubber Industry Association, Zhongce Rubber ranked first, and it was also listed among the top ten global tire manufacturers by Tire Business magazine [1][8]. Financial Performance - The total funds raised from the IPO amount to 4.066 billion CNY, primarily aimed at enhancing production capacity and technological advancement through projects like the high-performance radial tire green 5G digital factory [2][10]. - Zhongce Rubber's revenue for 2021, 2022, 2023, and the first half of 2024 was 30.601 billion CNY, 31.889 billion CNY, 35.252 billion CNY, and 18.518 billion CNY, respectively, with net profits of 1.375 billion CNY, 1.225 billion CNY, 2.638 billion CNY, and 2.540 billion CNY during the same periods [7][9]. Strategic Moves - Qiu Jianping, known as the "merger and acquisition maniac," acquired a 46.95% stake in Zhongce Rubber for 5.798 billion CNY in 2019, becoming the actual controller of the company [3][4]. - The acquisition was part of a strategic layout, as Qiu Jianping recognized the potential for growth in the tire industry, aiming to elevate Zhongce Rubber to a billion-dollar company [4][5]. Market Position and Competition - Zhongce Rubber's market share remains strong, but it faces increasing competition from rivals like Linglong Tire and Sailun Tire, which have also entered the capital market [8]. - The company has established long-term partnerships with major automotive manufacturers such as BYD and Geely, further solidifying its market position [8]. Future Outlook - The IPO is expected to enhance Zhongce Rubber's global competitiveness and support its expansion into international markets, including projects in Thailand [10]. - The company aims to leverage the funds raised to reduce its high debt ratio, which was 62.62% in the first half of 2024, compared to the industry average of 49.69% [9].

Core Viewpoint - Zhongce Rubber has demonstrated impressive performance with significant revenue and profit growth, positioning itself as a leading player in the global tire industry [2][3]. Financial Performance - In 2024, Zhongce Rubber achieved a revenue of 39.255 billion yuan, representing a year-on-year increase of 11.35% - The net profit reached 3.787 billion yuan, with a remarkable growth rate of 43.57% compared to the previous year [2]. Production Capacity and Global Layout - By the end of 2024, Zhongce Rubber's annual production capacity exceeded 227 million tires, covering various product types including all-steel tires, semi-steel tires, bias tires, and motorcycle tires - The company has established production bases in China, Thailand, Indonesia, and Mexico, forming a "domestic + overseas" dual circulation layout - In 2024, the sales volume of major products was approximately 216 million tires, with a capacity utilization rate of 95.17% and a sales-to-production ratio of 99.61% [3][5]. Product Breakdown - In 2024, the production and sales data for different tire categories are as follows: - All-steel tires: Production 22.2493 million, Sales 22.2544 million, Utilization 99.59%, Sales-to-Production 100.02% - Semi-steel tires: Production 72.2740 million, Sales 69.4658 million, Utilization 99.61%, Sales-to-Production 96.11% - Bias tires: Production 6.4483 million, Sales 6.4291 million, Utilization 95.25%, Sales-to-Production 99.70% - Motorcycle tires: Production 115.7598 million, Sales 117.7398 million, Utilization 91.83%, Sales-to-Production 101.71% [5]. Brand and Market Presence - Zhongce Rubber owns multiple well-known brands such as "Chaoyang," "Haoyun," "Weishi," and "Goodride," with products sold in over 160 countries and regions - The company has a strong presence in the automotive aftermarket with 40,000 offline distribution stores and supplies tires to over 40 mainstream automotive brands [6]. Technological Innovation - Zhongce Rubber has established a technological moat with its "Tianji System," integrating eight core technologies and twelve key technologies to enhance tire performance - The company is investing 4.85 billion yuan to build a 5G digital factory, significantly reducing energy consumption per product to below the national average [9]. Fundraising and Expansion Plans - In its IPO, Zhongce Rubber plans to raise 4.85 billion yuan, focusing on five key areas including the construction of a green 5G digital factory for high-performance tires and expansion projects in Thailand [11][13]. Subscription Information - Zhongce Rubber (603049) will conduct online and offline subscriptions on May 23, 2025, with an issue price of 46.5 yuan per share and a maximum subscription limit of 26,000 shares [14].