The tire industry is booming, and models are expected to fully benefit
The operating rate of semi-steel tires has been rising since 2021 and has now reached an all-time high. The operating rate of half-steel tires in June 2024 was 78.42%, up 8.06 pct from the same period last year. As an upstream enterprise in the tire industry, its demand is closely related to the scale of tire production. It is expected that the tire mold industry will fully benefit from the boom in the tire industry, and the market share of Homai molds exceeds 30%. Currently, the company's tire mold business has full orders and high production load, which will drive the company's performance to grow steadily.
The company's CNC machine tool business has achieved rapid growth and is expected to start a second growth curve
Haomai's CNC machine tool business achieved rapid growth. The business achieved revenue of 308 million yuan in 2023, an increase of 111.76% over the previous year. The company's CNC machine tool business has now formed product systems such as direct-drive turntables, precision machining centers, five-axis laser machining centers for superhard tools, vertical five-axis machining centers, horizontal turning and milling composite machining centers, and horizontal five-axis machining centers. At present, the company's machine tool business is still in its early stages. The company is committed to improving product performance and brand building. The investment in R&D and sales is high, so the gross margin and net margin are low. It is expected that as the overall revenue of the company's CNC machine tool business increases by leaps and bounds, the gross margin and net margin of the business will benefit from the growth effect of scale.
The release of production capacity at the Mexican plant will facilitate the company's overseas expansion to achieve overseas revenue of 3.314 billion yuan, an increase of 9.45% over the previous year. The share of overseas revenue increased from 45.59% in 2022 to 46.25% in 2023. At the same time, the gross profit margin of overseas business in 2023 was 44.18%, higher than the domestic 18.87pct, that is, as the company expands overseas business in the future, the company's overall profitability will increase. The company has successively set up subsidiaries in the United States, Thailand, Hungary, India, Brazil, Vietnam, Mexico, Cambodia, etc., forming a relatively complete global production and service system. Construction of the Mexican plant began in 2023, and orders began to be received in April 2024. Production capacity will be released one after another as the factory construction is completed, which is conducive to the company's further expansion in overseas regions in the future.
Profit forecasting
The company's revenue for 2024-2026 is 82.17, 94.05, and 10.662 billion yuan, respectively, and EPS is 2.32, 2.64, and 2.99 yuan respectively. The current stock price is 16, 14, and 12 times PE, respectively. Considering that the company's tire mold business benefits from the high boom cycle of the tire industry, the profitability of the CNC machine tool business has increased, and overseas production capacity has been fully released, giving a “buy” investment rating.
Risk warning
Economic environment risk; exchange rate fluctuation risk; market competition risk; raw material price fluctuation risk; tire industry sentiment fluctuation risk, etc.