The world's leading supplier of overall solutions for tire production

The company has been deeply involved in the rubber machinery industry for more than 20 years, continuously grasping downstream tire production expansion and industry intelligent and green development opportunities, continuing technological innovation and broadening product categories. Currently, it can provide intelligent equipment and system software services for 80% of tire production. The rubber machinery business has ranked first in the world for two consecutive years. Benefiting from the wave of Chinese tires going overseas, the company's order demand increased rapidly. As of 2024Q3, the company's contract liabilities increased 20% year-on-year to 4.75 billion yuan. At the same time, the company continues to explore in the field of new rubber materials to create a second growth curve for “liquid gold”.

Industry beta: tires are going overseas at an accelerated pace, and the equipment side is booming

In an environment of high inflation and high interest rates, high-quality and inexpensive Chinese tires are increasingly favored by European and American consumers, and Chinese tires are speeding up “global replacement” due to cost performance. In order to enhance the ability to withstand risks such as trade barriers and seize the two major consumer markets in Europe and the US, China's leading tire companies have successively expanded their production capacity from Southeast Asia to North America, Europe, Africa, etc., and entered a stage of global expansion. In the next 2-3 years, China's overseas tire production capacity will exceed 100 million units. Strong demand for expanded production is expected to drive a large amount of equipment demand, and opportunities for tire equipment development have arrived.

Self α: Domestic equipment is the world leader, and the global share continues to increase

China's rubber machinery's technological innovation capabilities and product performance are comparable to international ones. The products have been widely recognized by domestic and foreign tire companies, and the global market share increased from 27.2% in 2018 to 44.5% in 2023. The company has obvious advantages in the launch of high-quality products, the agility of project delivery, the timeliness of after-sales service, and the professionalism of technical personnel. The price of some products is about 1/2 to 2/3 of similar foreign products, and more orders were obtained during the upward period of the industry boom. The sales CAGR for 2018-2023 was 17.2%, which is significantly higher than that of leading overseas companies.

Self α: “liquid gold” creates a second growth curve

EVEC glue uses the world's first chemical mixing technology to solve the “devil's triangle” problem that has plagued the industry for many years, and has both economic and social benefits. Liquid gold tires are positioned in the high-end market. The product performance and price are comparable to the international market, and the promotion is strong. In the future, along with the release of liquid gold tires, EVEC's other application fields will continue to be developed, and EVEC's production, sales and profitability are expected to grow, opening up the company's new materials business.

Profits increased steadily, and the first coverage gave it an “increase in holdings” rating

We expect the company's revenue for 2024-2026 to be 7.5/9.5/10.7 billion yuan, with year-on-year growth rates of +32%/+28%/+12%; net profit to mother of 0.49/0.73/0.85 billion yuan, respectively, with year-on-year growth rates of +47%/+49%/+17%; EPS of 0.48/0.72/0.84 yuan/share, respectively, and a 3-year CAGR of 37%. Comparable company PE was 16.1x in 2025. Considering that the company is a scarce global supplier of overall solutions for tire production, it is expected that it will fully benefit from the “Go Overseas 2.0” of Chinese tires, and “liquid gold” opens up room for growth, giving it an “gain” rating for the first time.

Risk warning: Risk of tire expansion falling short of expectations, risk of tires falling short of expectations, risk of repayment of accounts receivable, risk of exchange rate fluctuations, risk of market competition.