In the first half of 2021, the company realized operating income of 4.54 billion yuan, + 18% compared with the same period last year, and realized net profit of 350 million yuan,-24% compared with the same period last year. Affected by the sharp rise in raw material prices, the level of gross profit margin and net profit margin decreased in the first half of the year compared with the same period last year. For a long time, we are optimistic that the company will achieve performance growth under the double-wheel drive of the release of new domestic capacity and the layout of overseas capacity. It is predicted that the company's EPS from 2021 to 2023 will be 0.95, 1.28 and 1.64 yuan respectively, maintaining the target price of 20 yuan and the "buy" rating.
Revenue increased steadily in the first half of the year, shipping restrictions and other factors led to a decline in the rate of production and sales. In the first half of 2021, the company realized operating income of 4.539 billion yuan, + 17.6% compared with the same period last year, and realized net profit of 347 million yuan,-23.9% of the same period last year.
Corresponding to the second quarter, the operating income was 2.267 billion yuan, + 10.6% compared with the same period last year, and the net profit returned to the mother was 154 million yuan,-48.1% compared with the same period last year. In the first half of the year, the cumulative output of tires was 12.98 million, + 25.4% compared with the same period last year, and the sales volume of tires was 12 million, + 17.7% over the same period last year. In the second quarter, the output of tires was 6.5 million, + 12.0% compared with the same period last year, and the sales volume of tires was 5.74 million, + 7.4% over the same period last year. Demand in the domestic market was weak in the second quarter, and the foreign trade market was also affected by export shipping capacity restrictions. in that quarter, the tire production and sales rate dropped to 88.3%.
Affected by the sharp rise in raw material prices, profitability declined in the first half of the year. In the first half of 2021, the company's average tire sales price was 376 yuan per piece, + 0.9% compared with the same period last year; the average sales price in the second quarter was 392 yuan per piece, + 5.2% compared with the same period last year, and + 8.6% compared with the same period last year. However, due to natural rubber, synthetic rubber, steel cord, carbon black and other major raw material prices rose sharply over the same period last year, the company's profitability declined. In the first half of the year, the company's gross profit margin was 18.7%, year-on-year-7.1pcts; net profit rate was 7.7%, year-on-year-4.2pcts. Second-quarter gross profit margin 17.6%, year-on-year-11.3pcts, month-on-month-2.2pcts; net profit 6.8%, year-on-year-7.7pcts, month-on-month-1.7pcts.
The new production capacity has been released steadily and is optimistic about the long-term development of the company. At present, the company has a tire production capacity of more than 24 million. In 2020, the Huamao factory added 700000 full steel tyres, and the Huayang plant added 2.8 million semi-steel tires, further improving the level of production automation. The company's American factory is currently carrying out land formation and plant design, which is expected to further improve the company's tire production and sales after it is completed and put into production in the future, and is optimistic about the company's long-term development.
Layout of aviation tire business to achieve zero breakthrough in technology. The company has established aviation tire laboratory and aviation radial tire production line, has the ability of small batch trial production, and has achieved breakthroughs in key technical fields such as material, formula, structure, equipment and technology of aviation radial tire. The civil aviation radial tire 30 × 8.8R15 specification product (the front tire of A320 airliner) developed by the company in June 2020 passed the dynamic simulation test.
Risk factors: sharp drop in product prices; risk of fluctuation in raw material prices; lower-than-expected production capacity release; risk of international trade frictions; less-than-expected epidemic control dragging down demand.
Investment suggestion: the company is the domestic commercial tire leader. We are optimistic that the company will achieve long-term growth under the release of new domestic capacity and the two-wheel drive of overseas capacity layout. Taking into account that the sharp rise in raw material prices has led to a decline in the company's short-term gross profit margin more than expected, the company's home net profit forecast for 2021 EPS in 2022 is reduced to 762 million yuan (the original forecast is 1.266 billion yuan), and maintains the 2023 home net profit forecast of 1.31 billion yuan, corresponding to the 2021-2023 EPS forecast of 0.95 million 1.28pm 1.64 yuan respectively. Maintain the target price of 20 yuan (corresponding to 2021 21xPE, reference industry comparable company average valuation level), maintain the "buy" rating.