Linglong Tire (601966) 2018 Annual Report Review: Supporting High Growth “5 + 3” Strategy Steady Progress

Profits grew steadily, and the performance was in line with expectations. The company achieved revenue of 153 in 18 years.

02 trillion, with an increase of 9.

94%, net profit attributable to mother 11.

810,000 yuan, an increase of 12.

73%, deducted non-net profit attributable to the mother 11.

62 ppm, an increase of 14 per year.

71%. The difference between the net profit and the performance report is the litigation compensation expense of 65.69 million yuan, which will not affect the company’s future operations.

Against the backdrop of declining car sales, the company’s cumulative sales in 2018 were 5,345.

330,000 (+8.

85%), in which the output of semi-steel radial tires increased by +10.

76%, production and sales achieved steady growth, and performance was in line with expectations.

Three fees are stable, exchange rate gains are reduced as the three fee report for financial expenses.

40%, slightly decreased in one year.

Of which selling expenses are 5.

94%, an increase of 0.

48pct, due to the increase in advertising fees, transportation and storage service fees, and management fee expenses2.

94%, an increase of 0.

32pct, financial expenses1.

52%, a decrease of 0.

95pct, mainly due to the devaluation of RMB, realized exchange gains of 86.9 million yuan.

The company’s gross profit margin is 23.

70%, basically the same every year.

Supporting development is progressing smoothly, ASP increased the market income of supplementary supporting market which can be expected to increase16.

12%. In September 2018, the joint venture brand-Ford New Furuis main tires will be provided, and North American Ford F150 will realize the supply of full-size spare tires.

Volkswagen’s new sub-brand Jetta VS3 / VS5 / VS7 with 19 years of main tires has been unveiled at the Shanghai Auto Show recently.

We believe that the company’s spare tires have entered mainstream car companies such as Dongfeng Nissan, Volkswagen, Ford, etc. The product has a significant price advantage. Under the background of OEMs’ cost reduction and efficiency improvement, the main tires can break through and it is expected to usher in the aftermarket brand image and ASPContinuous improvement.

Advancing the “5 + 3” strategy, the production capacity continued to expand. The company’s production capacity in 2018 was 64.45 million, of which 55.5 million were semi-steel tires, 8.95 million were all-steel tires, and 1 million were skew tires.

The company has four major bases in China: Shandong Zhaoyuan, Shandong Dezhou, Guangxi Liuzhou and Hubei Jingmen. The Serbian project construction was started this year to steadily advance the “5 + 3” development strategy.

In 19, it is expected to add 8 million semi-steel and 2.05 million all-steel, an increase of 16% over 2018, and continued to expand.

Domestic semi-steel tyre leader, maintaining the overweight rating, we expect the profit in 19/20/21 will be 1 respectively.

17/1.

41/1.

81 yuan, corresponding to a dynamic price-earnings ratio of 16.

2/13.

4/10.

5x, with a one-year target price of 21.

06 yuan-23.

40 yuan to maintain the overweight level. Risk warning: The sales volume of the automotive industry 杭州桑拿 is declining, the prices of raw materials are rising rapidly, and the progress of supporting facilities exceeds expectations.