The company released semi-annual results. 2024H1 achieved operating income of 4.11 billion yuan (YoY +16.2%), gross profit margin of 33.2% (YoY +10.8pct) and net profit of 1.08 billion yuan (YoY +77.7%); of these, 24Q2 revenue was 1.99 billion yuan (+6.2% YoY, -5.7% YoY), gross profit margin 35.3% (YoY +12.8pct, month-on-month +3.9pct), net profit to mother 0.57 billion yuan (YoY) ( (YoY +61.1%, month-on-month +13.9%). The company plans to distribute a cash dividend of 2.1 yuan (tax included) for every 10 shares to all shareholders.

Comment:

Tire production and sales were strong in the first half of the year, and the company adhered to the strategic direction of high-end support. With high-quality and high-performance products, the company continues to show its cost-effective advantages in the European and American markets, and the two major bases in Qingdao and Thailand are in short supply. In 2024, H1 achieved tire production of 16.087 million bars, up 18.9% year on year; of these, half steel tire production was 15.596 million, up 17.9% year on year; all-steel tire production was 0.491 million, up 62.8% year on year; the company achieved tire sales of 15.097 million bars, up 10.4% year on year; among them, half steel tire sales were 14.612 million bars, up 9.1% year on year; full steel tire sales volume 0.485 million The year-on-year increase was 71.3%. The company adheres to the “fight high” strategy in the supporting market. It has now become a qualified supplier to the German Volkswagen Group, German Audi, Renault, and Stellantis Group. Thailand's anti-dumping duty rate of 1.24% has been implemented, and the Moroccan factory is about to be put into operation. After the first annual administrative review of the anti-dumping investigation of Thai passenger car and light truck tires by the US Department of Commerce, the company applied a separate tax rate of 1.24%, making it the company with the lowest tax rate in the Thai industry, improving the company's bargaining power. During the reporting period, the company accelerated the total 12 million semi-steel tire project in Morocco. Currently, the company is making every effort to put into operation in the fourth quarter of 2024. Stronger comprehensive advantages have made the demand for orders from the Moroccan factory stronger. In the future, along with the increase in production capacity at the Moroccan factory, the needs of the company's high-quality customers can be better met. In addition, the company is steadily advancing the “Spanish project to produce 12 million high-performance cars and light truck radial tires per year”. The new production capacity plans for Africa and Europe are an important step for the company to implement the “833plus” strategic plan to further implement the global development strategy.

Investment advice: With cost-effective product positioning and intelligent manufacturing production models, the company actively practices overseas products and production capacity. Considering the significant increase in the company's order profitability in the first half of the year, we raised the company's profit forecast. We expect 24-26 revenue of 9.3/11.2/12.9 billion yuan (originally 9.2/11.7/13.4 billion yuan), net profit to mother of 2.15/2.55/2.73 billion yuan (originally 1.97/2.17/2.5 billion yuan), corresponding PE is 11X/9X/9X, maintaining a “buy” rating.

Risk warning: Production falls short of expectations, raw material prices fluctuate, and market demand falls short of expectations