Since the beginning of this year, there has been a strong demand in domestic and international markets, and tire companies have received good results in the first half of the year.

According to Wind Information data, among the 9 listed tire companies in the A-share market (classified by Huaan CSI All Share Investment Banking & Securities Industry), 8 companies achieved growth in net income in the first half of this year, and Qingdao Doublestar (000599.SZ) narrowed its loss.

Global expansion has become a focus for leading domestic tire companies in recent years. Companies such as Sailun Group (601058.SH), Linglong Tire (601966.SH), and Jiangsu General Science Technology (601500.SH) continue to expand overseas production capacity by 2024 to meet strong overseas demand. "Currently, the semi-steel and all-steel products at our Cambodia base are still in short supply," said Tao Guozhong, General Manager of Jiangsu General Science Technology Cambodia Company, to Caixin.

Impressive performance in the half-year report

In the first half of this year, the tire industry continued its high prosperity from last year, with a strong market demand. Among the 9 listed tire industry companies, 8 achieved year-on-year growth in net income.

Sailun Group disclosed that in the first half of the year, the company's tire production and sales both increased by over 30% year-on-year, reaching a new high for the same period. The production reached 35.4106 million tires, a year-on-year increase of 37.89%; the sales volume reached 34.5437 million tires, a year-on-year increase of 37.56%. The company achieved revenue of 15.154 billion yuan in the first half of the year, a year-on-year increase of 30.29%; the net income attributable to shareholders of the listed company reached 2.151 billion yuan, a year-on-year increase of 105.77%.

Qingdao Sentury Tire (002984.SZ) and Linglong Tire also achieved an increase of more than 50% in net income, while Triangle Tyre (601163.SH) achieved a net income of 0.612 billion yuan, although the growth rate was relatively low.

Caifliao Agency noticed that the overseas capacity accounted for a high proportion of the tire industry's listed companies, and the performance growth rate was more rapid. General Science and Technology achieved a year-on-year increase of 393.32% in net income attributable to the parent company in the first half of this year, ranking first in the sector.

The relevant person in charge of General Science and Technology stated that the company relies on the layout advantage of the 'overseas dual base' in Thailand and Cambodia, and overseas capacity has grown rapidly, with a large increase in tire production and sales in the first half of the year. At the same time, the company continues to promote quality improvement and efficiency enhancement, achieving significant improvement in profitability. Currently, the company's orders are still sufficient and the products are in short supply. The relevant person in charge of Linglong Tire also told Caifliao Agency that 'semi-steel tires have been in short supply' so far this year.

Chen Qingqing, a tire industry analyst at Zhuochuang Information, said that in the second half of the year, the overseas supply gap still exists, and the export orders for semi-steel tires may remain strong, supporting sales to a certain extent. However, the growth rate of domestic demand for semi-steel tires in the second half of the year may shrink. Relative replacement market changes are not significant and will mainly focus on stable progress.

Acceleration of globalization

With the advantages of intelligent manufacturing and cost-effectiveness, the globalization wave initiated by Chinese tire companies will accelerate in 2024, and the overseas capacity layout of related listed companies will continue to improve.

Sailun Tire stated that in the first half of 2024, the company actively promoted the construction of tire production projects in Cambodia, Mexico, Indonesia, and other countries, while increasing production capacity and effectively diversifying risks caused by factors such as trade barriers.

On August 8th, Linglong Tire announced that the company plans to carry out overseas (Serbia) investment and expansion projects. According to preliminary investment estimates, the total investment of the project is 0.645 billion USD (approximately 4.621 billion RMB). After the project is completed, it will achieve an annual output of 1.1 million sets of various high-performance radial tires, including 0.8 million sets of TBR (all-steel radial tires), 0.05 million sets of engineering radial tires, 0.15 million sets of agricultural radial tires, and 0.1 million sets of retread tires.

As for General Science and Technology, the second phase of the company's base in Thailand has already been put into production, and the second phase of the factory in Cambodia achieved its first tire production in August, rapidly increasing overseas capacity.