1. Pu Lin Chengshan: a Tire Company with History
Pu Lin Chengshan is a modern enterprise focusing on tire R & D, manufacturing and sales, and is one of the most influential tire enterprises in China. The company's history can be traced back to the establishment of Rongcheng Rubber Factory in 1976 and listed in Hong Kong in 2018.
All-steel tire is the main source of the company's performance, accounting for about 80% of the revenue and profit structure.
The company's revenue has grown steadily in recent years, with a compound income growth rate of 14% and a net profit compound growth rate of 43% in 15-18. We expect the company's performance to continue to grow as the tire industry trend improves and the company's own production capacity increases.
two。 Tire industry: concentration increases, domestic brands continue to grow
Capacity upgrading, increased concentration. The elimination of backward production capacity and the expansion of green high-end production capacity is the main theme of the current tire capacity development. In recent years, the output and concentration of the tire industry are constantly increasing, and eventually the stronger the stronger. At present, there are many tire companies in China. Due to the low entry threshold and serious capacity differentiation of the tire industry, there is still a lot of room for improvement in the concentration of the tire industry.
Sales of domestic brands are growing, and competition is still concentrated in the middle and low end of the market. With the upgrading of technology and the improvement of service quality, domestic brand tires are more and more recognized by domestic consumers. But at present, in the domestic tire market, the high-end market is basically occupied by foreign brands, and domestic brands can only compete in the middle and low end market. However, this situation is gradually improving, and some high-quality tire companies continue to improve their brand image by strengthening matching with mainframe factories and sponsoring all kinds of events.
3. The company's highlights: high-quality all-steel tire manufacturers, production and marketing gradually expand to open a new stage of development, overseas factories to avoid trade frictions. The company's first phase of full steel tire expansion has been completed in 19H1, with a new production capacity of 1.65 million pieces, while the first phase of semi-steel tire has entered the stage of commissioning and installation, and it is expected that 1.9 million pieces of new production capacity will be added this year. The company plans to build its first overseas plant in Thailand's East Coast Industrial Park, with an annual production capacity of 4 million semi-steel radial tires and 800000 all-steel radial tires, which are expected to be put into production by mid-2020.
The company leads the sales of all steel tires in China, and the demand for all steel tires is more stable. Before listing, among domestic all-steel tire manufacturers, the company ranked fifth in domestic sales and revenue, and third in the replacement market.
For commercial vehicles, because of their high average mileage and high complexity of the road surface, the tire replacement frequency is faster. In recent years, the average daily unit traffic volume of expressways shows an increasing trend, which will undoubtedly increase the replacement frequency of all-steel tires, and the replacement demand will be pulled.
Car companies cooperate to improve the performance of all-steel tire products and semi-steel tire sales channels. The company has established mature direct sales channels with Sinotruk, Jiangling Automobile, Dongfeng Liuqi, FAW Jiefang, SAIC Hongyan and Qingling Automobile, and the products are used in new vehicles produced by more than 30 automakers. Cooperation with a number of mature car companies can promote the improvement of the company's R & D level, and product performance can meet the needs of more users.
4. Financial comparison: the company's management level is the leading in the industry.
By comparing the financial data of the company with other high-quality companies in the tire industry, we find that Pulin Chengshan has excellent performance in profitability, solvency and operating ability.
We predict that the company's 19-21 net profit will be 517x626 million yuan, and EPS will be 0.80max, 0.92 and 0.99yuan per share. Compared with the valuation level of other auto parts companies in Hong Kong, the average PE in 19 years is 10.58 times. For the first time, the company was given a target price of 8.46 yuan, corresponding to 9.35 Hong Kong dollars, with an "overweight" rating.
Risk hint: the uncertainty of Sino-US trade friction, the lower-than-expected progress in the construction of production capacity, the risk of fluctuations in raw material prices, and the risk that product sales are not as expected.