Sailun Tire (601058): Significant advantages in overseas bases, new production capacity brings profit growth

Sailun Tire (601058): Significant advantages in overseas bases, new production capacity 四川耍耍网 brings profit growth
The company is in a leading position in the industry, and its net profit increased significantly in the first half of 2019.The company’s main products are all-steel radial tires, semi-steel radial tires, off-road tires and other tire products, retreaded tires, tread rubber, rubber powder, steel wire and other recycled products.In the first half of 2019, the company achieved operating income of 70.92 ppm, a ten-year increase of 8.03%, achieving net profit attributable to shareholders of listed companies.07 million yuan, an increase of 59 in ten years.34%. The concentration and profitability of the tire industry is expected to usher in improvement.1) The country has continued to eliminate backward production capacity, and the tire industry has accelerated its transition and upgrade.Affected by blind low-level 武汉夜生活网 investment and construction, some low-end tire products have structural overcapacity. According to Sina’s Beijing News News statistics, a total of 25 tire companies went bankrupt in 2018.2) The overseas layout of domestic companies can effectively avoid trade frictions and has cost advantages. At least 12 domestic tire companies have established production bases overseas.3) The possibility of preferential tax refund policies in China.Since November 1, 2018, the tax refund rate for tire series products has increased from 9% to 13%. The existing car ownership is steadily rising, and the future demand for replacement tires can be expected to increase.1) In 2016, the number of thousand-person vehicles in China reached 140, which did not reach the global average. Compared with foreign development, the number of domestic thousand-person vehicles was still at a level.With the continuous increase of car ownership, the replacement tire market is expected to usher in rapid growth in the future.2) The expected rapid growth in the use of domestically-branded cars is expected to provide opportunities for local tire brands with the best value advantages to enter the supply chain of vehicle manufacturers. The profitability of Vietnam’s factories has grown significantly, and overseas operations have achieved success.Vietnam’s operating income for the first half of 2019 was 17.610,000 yuan, an increase of 37 in ten years.79%, accounting for 24 of total operating income.8%; net profit is 3.2.5 billion, an annual increase of 50.27%, accounting for 64 of total net profit.1%.The share repurchase also shows the company’s confidence in the future development, and the company plans to set the repurchase price at no more than 5.Under the condition of 3 yuan / share, the number of repurchased shares shall not be less than 10 million shares and not more than 135 million shares. The upper limit of the number of repurchased shares shall be 5% of the company ‘s total share capital. Earnings forecasts and investment advice.We estimate that the net profit of racing tires in 19-21 will be 980, 1275, and 1461 million yuan, and the corresponding EPS will be 0.36 yuan, 0.47 yuan, 0.54 yuan.Considering that the company’s capacity under construction has not been released, through the commissioning of the plant and the release of new capacity, we believe that the company’s profitability will increase.Taken together, we have given the 19-year wheel tires a 16-19 multiple interval, corresponding to a reasonable value interval of 5.76-6.84 yuan.Covered for the first time, giving “Youyou” investment rating. risk warning.Trade frictions have led to continued increases in tariffs; the progress of production capacity under construction has gradually exceeded expectations; the prices of rubber and carbon black raw materials have fluctuated significantly.