\u3000\u3000 Sailun Group Co.Ltd(601058) (601058)
Event: on February 14, 2022 Beijing time, Sailun Group Co.Ltd(601058) released the feasibility report of Cambodia’s annual output of 1.65 million all steel radial tires project. The report pointed out that the total investment of the project is 1425.85 million yuan, of which the proportion of self owned funds is 50%, and the loan is proposed to apply to relevant financial institutions; After the completion of the project, the annual average operating income is 179.129 million yuan and the annual average net profit is 309.08 million yuan; The construction period of the new plant project is 17 months in total; The target market positioning of the project is mainly international market (North America and Europe).
Comments:
Another overseas project was launched, and the company’s internationalization pace was steady. At present, the company’s Vietnam phase I, phase II and Cambodia semi steel tire projects have been completed and put into operation. The Vietnam phase III project is under construction. We expect that the annual output of Vietnam phase III semi steel tire project will reach 2 million sets in 2022, 3 million sets in 2023, and 1 million sets of all steel tires in 2022. The Cambodian all steel tire project newly arranged by the company is located in the south of Cambodian Highway 1. There is no need to open the cabinet for inspection when passing through Vietnam. The company can make full use of the existing tire production technology and human and material resources, combined with the characteristics of Cambodia’s own low tax rate, improve the company’s international market share and help the company occupy a more favorable competitive position.
U.S. port congestion control is expected to release transport capacity and stabilize freight. According to the data of the Los Angeles port website, after the treatment began in mid October 2021, the overstocked empty containers in the port are speeding up, the unloading turnover efficiency of the port is improved, the number of container ships waiting in line to enter the port is more than half of the peak in November, and the delivery time from Asia to the United States is shortened. Therefore, the problem of port congestion in the United States is expected to return to its normal state in previous years before the summer, and the freight rate is expected to fall accordingly after the transportation capacity is no longer tight.
Profit forecast and investment rating: we expect the company’s operating revenue to reach 18.522 billion yuan, 24.944 billion yuan and 29.876 billion yuan respectively from 2021 to 2023, with a year-on-year increase of 20.23%, 34.676% and 19.78%. The net profit attributable to the shareholders of the parent company is 1.522 billion yuan, 2.518 billion yuan and 3.224 billion yuan respectively, with a year-on-year increase of 2.06%, 65.43% and 28.03%. The diluted EPS from 2021 to 2023 will reach 0.50 yuan respectively, 0.82 yuan and 1.05 yuan. The corresponding PE in 2022 is 13 times, giving a “buy” rating.
Risk factors: 1. The new production capacity is not put into operation as expected. 2. The risk of sharp fluctuations in rubber prices.
