Linglong Tire (601966): Release of production capacity and falling costs help third-quarter results exceed expectations

Linglong Tire (601966): Release of production capacity and falling costs help third-quarter results exceed expectations

Pre-investment points: The company’s net profit attributable to its mother increased annually in the first three quarters.

38%, exceeding expectations.

The company released the report for the third quarter of 2019, and achieved operating income of 41 in Q3.

99 ppm, an increase of 10 in ten years.

43%; net profit attributable to mother 4.

890,000 yuan, an increase of 35 in ten years.

80%; gross margin 27.

52%, an annual increase of 4.

75 units; net interest rate 11.

65%, an annual increase of 2.

18 units.

The company achieved revenue of 125 in the first three quarters of 2019.

09 million yuan, an increase of 13 in ten years.

26%; realized net profit attributable to mother 12.

140,000 yuan, an increase of 37 in ten years.

38%; gross margin 26.

00%, net interest rate 9.

71%.

The growth rate of the company’s performance in Q3 and the first three quarters exceeded our expectations.

The release of overseas production capacity and the decline in raw material costs are preliminary results that exceed expectations.

According to the company announcement, Q1 2019 will produce 1574 tires.

220,000 articles, an increase of about 16 in ten years.

60%; 1470 tires sold.

500,000, an increase of about 10 in ten years.

85%; the average price of a single tire is 282.

81 yuan, basically 重庆耍耍网 the same as last year.

The company produced 4,480 tires in the first three quarters.

400,000 articles, an increase of about 10 in ten years.

94%; 4,228 tires sold.

250,000 articles, an increase of about 8 in ten years.

74%; the average price of a single tire is 293.

03 yuan, increased by 11 last year.

91 yuan.

Domestic car production and sales declined (the first three quarters of 2019 were 1814 respectively.

90,000 and 1837.

10,000 vehicles, down 11 every year.

4% and 10.

Under the unfavorable situation of 3%), the company’s tire production and sales and the average price of single tires have achieved good growth. We may be due to the third phase of the Thai plant’s full production capacity in the middle of the year, and export tires increased. The company announced that in the third quarter, the overall prices of the five main raw materials of natural rubber, synthetic rubber, carbon black, steel cord, and cord fabrics fell year by year.

70%, contributing to the high growth rate of quarterly performance.

Passenger car tires and the new Serbian plant will provide strong guarantees for continued higher growth in the future.

The company has started to provide main tires for first-class models of the FAW Jetta brand in the middle of this year. From the two models of VA3 that Jetta launched in September, the total sales of VS5 exceeded 1 that month.

10,000 vehicles to judge, in the future, the brand is selling well and exceeding the market’s expected probability deviation.

On August 26, the company announced a comprehensive strategic cooperation agreement with Geely Automobile Research Institute. The future supporting of Geely Automobile should be worth looking forward to.

Construction of the Serbian factory invested by the company has begun, and production is planned to be completed by the end of 2020, mainly for the European market.

Entering the huge market for passenger car tires (the annual sales of passenger cars in China is about 6 times that of commercial vehicles), and the completion and commissioning of a new plant in Europe and Serbia will provide the company with rapid development in the next few years, providing a lot of benefitsFoundation and guarantee.

Investment suggestion: The company ‘s performance in the first three quarters exceeds expectations, and as the industry gradually picks up and orders for passenger car tires are gradually released, performance growth may accelerate.

Therefore, we raised the company’s expected earnings forecast for 2019 to 2021 to 1.

36 yuan, 1.

66 yuan and 1.

87 yuan, corresponding to 15 net asset income.

6%, 17.

3% and 17.

6%.

Maintain “Buy-A” investment rating.

Risk warning: the recovery of automobile production and sales is lower than expected; the expansion of supporting new customers is lower than expected; the price of raw materials has risen sharply.