The Zhitong Finance App learned that Guohai Securities released a research report saying that the competitiveness of domestic tire companies is increasing globally, the expansion of production capacity of domestic tire companies is expected to increase the prosperity of the tire equipment industry, and the global market share of domestic tire equipment is also increasing, maintaining the “recommended” rating for the tire equipment industry. The focus is on Soft Holdings (002073.SZ), Haomai Technology (002595.SZ), Saixiang Technology (002337.SZ), and Julun Intelligence (002031.SZ).
Guohai Securities's views are as follows:
Domestic tires are booming, and projects under construction are increasing year by year
The net profit of Chinese tire companies showed a clear upward trend in 2022 to 2023. Through an international layout, the trend of Chinese tire companies using cost advantages to rise globally is becoming more and more obvious, and capital expansion is also showing signs of acceleration. The ratio of A-share tire companies under construction to fixed assets also increased from 9.98% in 2012 to 28.5% at the end of the third quarter of 2023. According to incomplete statistics, by the beginning of 2024, the investment in tire projects under construction in China reached 22.117 billion yuan, of which all are expected to be invested and built in 2024-2025. Equipment investment reached 14.102 billion yuan, which is expected to bring opportunities to the rubber machinery industry; Chinese tire companies plan to build 78.5 million semi-steel tires and 3.15 million steel tires, accounting for 4.99% and 1.9% of total global demand in 2023, respectively. Chinese tire companies still have a lot of room for growth in the global market.
The profit situation of some international tire giants, represented by Michelin, declined sequentially in the second half of 2023. The profitability of global tire companies was divided, and equipment companies in the domestic tire industry chain benefited even more.
The tire processing equipment industry is booming
The contract liabilities of tire equipment companies such as Soft Holdings, Haomai Technology, Julun Intelligence, and Saixiang Technology all increased significantly from month to month in Q3 of 2023. According to the 2023 interim report of TKH Group, the parent company of VMI, by the end of June 2023, tire machinery manufacturing orders reached a record high of 598.5 million euros, an increase of 4.5% over 573 million euros at the end of 2022, and orders for passenger car and truck tire systems remained at a high level. It is expected that in the second half of 2023, benefiting from the high order volume and the easing supply of key parts in the tire machinery manufacturing system, the company's revenue will grow further.
Risk warning: Uncertainty about new tire companies' new projects, macroeconomic and trade policy risks, risk of exchange rate fluctuations, accounts receivable risk, focus on company performance falling short of expectations, and increased industry competition.