Linglong 上海夜网论坛 Tire (601966): Raw materials released to reduce production prices, Q3 results continued high growth

Investment Highlights: Company Announcement: The company released the third quarter report of 2019, and the company achieved operating income of 125 from January to September.

09 million yuan (+13 compared with the same period last year).

26%), achieving net profit of return to mother 12.

1.4 billion (+ 37% YoY).

38%), of which Q3 achieved operating income of 42.

9.9 billion (+ 10% year-on-year.

43%, QoQ -1.

77%), achieving net profit attributable to mothers4.

8.9 billion (+ 35% YoY).

81%, quarterly +11.

13%), and performance was in line with expectations.

The cost of raw materials in Q3 further decreased, and the release of production capacity helped the performance to reach a single quarter high.

The company’s tire output in the third quarter of 2019 was 1,574.

220,000 articles (+16 compared with the same period last year).

60%, quarterly +7.

74%), the increase in production mainly benefited from Thailand’s Linglong and Liuzhou Linglong successively entering full-load production, and the production capacity continued to be released; the domestic passenger car market decreased, but the company achieved sales of 1470 by actively expanding the sales market.

500,000 (+10 compared to the same period last year).

85%, +6 from the previous quarter.


The average price of Q3’s tires was basically flat compared to the same period last year, and the overall price of raw materials continued to fall7.

70%; According to our price tracking, the average price of Q3 tires is slightly lower than Q2. The average prices of main raw materials such as natural rubber, synthetic rubber, carbon black, and cord fabrics are 1%, 3%, 6%, 5% lower than Q2.Falling prices of raw materials led to a further increase in gross profit margin to 27 in the third quarter.

52%, an increase of 4 per year.

75 units, an increase of 1 from the previous quarter.

34 units.

In addition, the company’s total sales, management, R & D and financial expenses in the third quarter.

09 million yuan, accounting for about 14% of operating income.

50%, basically the same as Q2.

The increase in the company’s production and sales volume, combined with the increase in the gross profit brought by the price reduction of raw materials, is the most important factor for a single quarter of performance.

The progress of projects under construction is in line with expectations, and guarantees are provided for subsidiaries to accelerate construction.

The company’s announcement will provide loan guarantees for Hubei Linglong, Guangxi Linglong and Singapore companies not exceeding RMB 800 million, USD 20 million or equivalent RMB and USD 25 million or equivalent RMB, respectively, so as to accelerate the subsidiary’s liquidity requirements and accelerateConstruction project construction.

Q3’s capital expenditure is 4.

4 trillion, year-to-date accumulated to 9.

8.7 billion, mainly invested in the first phase of the Jingmen project and the Serbian project.

It is estimated that in November this year, the 1 million sets of all-steel tires and 3.5 million sets of semi-steel tires in the first phase of Hubei Jingmen will be put into production, which will effectively increase the company’s market share in central China.The factory plans to form an annual production capacity of 12 million sets of semi-steel tires, 1.6 million sets of all-steel tires, 20,000 sets of engineering tires and agricultural radial tires. The first phase of the project is expected to be put into production by the end of 2020.

The successive commissioning of Jingmen and Serbian factories will become the company’s continuous growth driver.

Supporting FAW-Volkswagen continues to strengthen brand building.

This year, the company successfully supplied FAW-Volkswagen Jetta main tires, Changan Ford Fores main tires, and FAW Red Flag L5 passenger car civilian version gas-deficient tires. The company’s product performance and product grades are rapidly improving.

With the company’s continuous deep cultivation and innovation in core technology research and development, emerging market development, brand value building, and diversified services, the company has successively entered the supporting facilities of Audi, Volkswagen, GM, Ford, Renault Nissan, Red Flag, Geely, Great Wall and other first-class automobile factoriesThe supply system reflects the improvement of the company’s brand power and the optimization of its product structure.The company repurchased 22 million shares in the first half of the year for equity incentives, while boosting market confidence, it is planned to give the company’s backbone and core management, technology, and research and development personnel partial equity to promote the common growth of employees and the company and achieve long-term sustainable development of the company.
The company’s controlling shareholder, Linglong Group, promised not to reduce its shareholding in 2019, demonstrating the leadership’s confidence in the company’s future development prospects.

Earnings forecast and investment grade: raised 2019 earnings forecast to 16.

00 ppm (15 before adjustment.

10,000 yuan), maintaining the profit forecast for 2020-2021 to achieve net profit attributable to mothers17.

48, 20.

05 ppm, corresponding to PE 16X / 14X / 13X, maintaining the “overweight” level.