\u3000\u3 China Vanke Co.Ltd(000002) 984 Qingdao Sentury Tire Co.Ltd(002984) )
The company focuses on the replacement market of large-size tires in Europe and America, and its profitability is better than that of its peers. The company’s product structure is mainly large-size high-performance passenger cars and light truck tires with rim size of 17 inches and above. In 2021, the company’s three independent brands ” Qingdao Sentury Tire Co.Ltd(002984) sentury”, “road Airlines landsail” and “delinte delinte” accounted for 2% of the replacement market in the United States, and the company’s total tire products accounted for about 4.5% of the replacement market in the United States and more than 4% of the replacement market in Europe. From 2016 to 2020, the gross profit margin and net profit margin of the company were higher than those of comparable listed companies.
The company’s price rise transmits cost pressure, and its profitability is expected to improve marginally in 2022. Although the crude oil price remains high at present, the price of some raw materials in 2022q1 is lower than that in 2021q4. In terms of sea freight, China’s export container freight rate index has recently been corrected compared with the beginning of the year, with a correction range of about 10% compared with the high point in February. Since last year, the company has raised product prices for many times to transmit cost pressure to the downstream. If the subsequent raw material prices and sea freight gradually decline, the profitability of the company is expected to be repaired.
Thailand’s phase II production will bring performance increment, and a new round of expansion cycle has arrived. The second phase project of the company’s Thai plant has been basically completed, and it is expected to realize large-scale release of production capacity in 2022; At the same time, the company is accelerating the construction of European intelligent manufacturing base and striving to start construction before the end of 2022. In 2022, the company’s tire increment will mainly come from the second phase project in Thailand. It is expected that the second phase project will achieve the output of 3 million semi steel tires and 1 million all steel tires throughout the year. The growth rate of the company’s tire sales in 2022 is expected to be between 25% – 30%.
Investment suggestion: it is estimated that the basic earnings per share of the company from 2022 to 2023 will be 1.75 yuan and 2.31 yuan, and the current share price corresponds to 16 times and 12 times PE. The recommended rating will be given for the first coverage.
Risk tip: the uncertainty of the situation in Russia and Ukraine may lead to the rise of crude oil price and the risk of increasing tire cost pressure; The decline of sea freight is less than expected or continues to rise; Risk of weakening overseas demand; The capacity release of Thailand phase II project is less than the expected risk, and the start-up progress of European project is less than the expected risk; The product encounters the risk of “double anti” sanctions; The construction and sales of aviation tire production line are less than expected risks; The risk of intensified industry competition; Natural and man-made disasters and other force majeure events.
