The incident company released a semi-annual report. In the first half of 2024, it achieved operating income of 4.11 billion yuan, an increase of 16.21% over the previous year, and realized net profit to mother of 1.077 billion yuan, an increase of 77.71% over the previous year. Among them, 24Q2 achieved revenue of 1.995 billion yuan in a single quarter, up 6.16% year on year and 5.70% month on month; realized net profit of 0.574 billion yuan to mother, up 61.11% year on year and 13.88% month on month.

Tire sales and profitability both increased. The company's 24H1 performance achieved a new high of 15.0971 million tire sales during the same period, an increase of 10.35% over the previous year. Among them, the sales volume of semi-steel tires and all-steel tires was 14.6121 and 0.4849 million bars respectively, up 9.06% and 71.28% year on year, respectively. 24H1's semi-steel tires are highly cost-effective and competitive in the European and American markets. Orders continue to be in short supply, but insufficient production capacity limited the increase in sales to a certain extent; Thailand's Phase II production capacity release led to a significant year-on-year increase in all-steel tire sales. In terms of profitability, 24H1's gross sales margin and net sales margin were 33.24% and 26.21% respectively, up 10.84 and 9.07 percentage points from the previous year, respectively. In January 2024, Morikirin Thailand obtained a separate minimum tax rate of 1.24% from the US Department of Commerce in the first annual administrative review of the anti-dumping investigation against Thai passenger car and light truck tires, a significant decrease from the original tax rate of 17.06%. The decline in anti-dumping duty rates may be the main reason for the sharp year-on-year increase in the company's profitability in the first half of the year. On a quarterly basis, 24Q2 achieved 7.49 million tire sales, down 1.54% from month to month; among them, sales of semi-steel tires and all-steel tires were 733.18 and 0.1581 million bars, respectively, with changes of 0.71% and -51.62%, respectively. 24Q2 overseas markets have relatively sufficient stocks of all-steel tires. Combined with factors such as shipping cost pressure, sales weakened month-on-month due to weak market demand. In terms of profitability, the 24Q2 company's gross sales margin and net sales margin were 35.27% and 28.76% respectively, up 3.94 and 4.94 percentage points from month to month, or related to factors such as the company's increased cost and expense control capabilities, and successive receipt of partial tax refunds from US Customs.

The cost performance advantage of domestic brand tires is prominent, and the market share tends to rise. Despite the intensification of competition in the global tire market, against the backdrop of high overseas inflation and high interest rates, the cost performance advantage of domestic brand tires is prominent, and they are gradually seizing the global tire market share. 24H1 US imports of semi-steel tires and all-steel tires were 82.48 and 29.26 million bars respectively, up 7.47% and 26.77% year-on-year respectively. Among them, imports of semi-steel tires from Thailand accounted for 24.60%, an increase of 4.35 percentage points over the previous year; imports of all-steel tires from Thailand accounted for 29.04%, an increase of 3.05 percentage points over the previous year. EU semi-steel tires are mainly imported from China; all-steel tires are mainly imported from Southeast Asia, especially after the EU initiated anti-dumping sanctions against Chinese truck and bus tires in 2018. 24H1 EU imports of semi-steel tires and all-steel tires were 0.602 and 0.2865 million tons respectively, up 9.20% and 1.39% year-on-year respectively. Among them, imports of semi-steel tires from China accounted for 55.45%, a year-on-year decrease of 0.15 percentage points; imports of all-steel tires from Thailand accounted for 18.55%, an increase of 0.45 percentage points over the previous year.

Continuing to promote the global production capacity layout, scale expansion enables growth. The company currently has dual bases in Qingdao and Thailand, involving semi-steel tires, all-steel tires, aviation tires, etc. 1) At the Qingdao base, the production capacity of semi-steel tires is 120C per year. After intelligent transformation, the production capacity has increased to 14.5-15 million ties/year. In addition, the company's 0.08 million/year aviation tire (including 0.05 million/year refurbished tires) project has been completed, and customer development in related fields is being steadily promoted. 2) At the Thai base, the Thai plant (Phase I) has a production capacity of 10 million bars/year; the production capacity of semi-steel tires and all-steel tires at the Thai plant (Phase II) is 6 million bars/year, respectively, and has been put into operation in 2023. Currently, the company is continuing to promote the construction of the “Morikirin (Morocco) 12 million/year high performance car and light truck radial tire project” at the African base and the “12 million/year high performance car and light truck radial tire project in Spain” at the European base. Among them, the Moroccan factory is scheduled to be put into operation in the fourth quarter of 2024, and aims to achieve full production as soon as possible; the Spanish project has obtained EIA approval from the Spanish government. As the above projects under construction are gradually put into operation, the company's business scale is expected to continue to expand, and overall competitiveness and profitability are expected to further increase.

The investment proposal estimates that the company's revenue in 2024-2026 will be 9.274, 11.339, and 13.021 billion yuan; net profit to mother will be 2.132, 2.366, and 2.716 billion yuan, respectively, up 55.78%, 10.99%, and 14.77% year-on-year; EPS will be 2.07, 2.30, and 2.64 yuan, respectively, corresponding PE will be 11.13, 10.03, and 8.74 times, respectively, maintaining the “recommended” rating.

Risks indicate the risk of increased international trade friction, the risk of a sharp rise in raw material prices, the risk of declining product sentiment, and the risk of new construction projects falling short of expectations.