Linglong Tire (601966): Why Linglong is expected to become a global tire giant from a strategic perspective
In discussing the investment value of Linglong Tire, we need to solve two logical issues, one is whether China can produce a global tire giant, and the other is to look at China and who will kill the siege and become the new representative of Chinese manufacturing.
When we put together the answers to these two questions, it can cause complications: Linglong will become the new global tire giant.
Regarding the first question, the comparison between Chinese tires and global tire counterparts, in our report “Linglong Tire Depth Four: Linglong VS Han Thai: Pulling Cocoons and Mining Core Competitiveness” and “Linglong Tire Depth Five: Global Tire Industry”There will be great benefits brought about by the integration in “Great Changes”. Here I will leave more pen and ink on the second question, that is why Linglong is far ahead in the domestic race.
1 strategy to win, from the choice of three tracks to see Linglong’s leading edge.
Chinese tire companies encountered three major choices in the development process: Track 1: All-steel and semi-steel tires, Track 2: Domestic market and overseas layout, Track 3: Matching and replacement.
Specifically, in 2000, tire companies faced the choice of developing all-steel tires or semi-steel tires; in 2008, they faced the environment of external trade frictions to choose whether to expand overseas; and the rise of independent brand cars is easy to grow in the future.Time will face the choice of developing supporting or replacing the market.
The choices of the above three different periods interact with each other and have caused the current differences of the tire companies. Based on the comparison of the above three tracks, we believe that Linglong makes timely replacements in the above three tracks and has corresponding capabilities.At present, it is at the core of the forefront of the industry. Due to the systemic 杭州桑拿网 nature of this corporate strategy, Linglong has a long lead position.
2 Whether domestic tire companies can breed a global tire giant The domestic tire industry is in a special period, which can provide favorable conditions for the Chinese tire industry to breed a global tire giant.
Specifically, it is reflected in the following aspects: 1) In terms of technology, tire technology is in a declining period, and Chinese companies can afford value to seize the market. At the same time, the market share of foreign giants is declining; 2) The automotive industry has completed its transfer to China, The advantages of tire companies in the region, 3) due to the later establishment of factories, domestic enterprises scale equipment advantages; 4) due to equipment life, domestic tire companies are about to usher in the reshuffle cycle, some companies are expected to further strengthen; 5) Compared with overseas companies, domestic companies have obvious cost advantages in terms of labor.
3 Profit forecast We estimate that the company’s net profit attributable to mothers in 2019-21 will be 16 respectively.
08 and 22.
57 trillion, EPS is 1.
59 and 1.
88 yuan / share, corresponding to PE of 15.
21 and 11.
16 times, maintaining the “highly recommended” level.
4 Risks: Trade friction impacts, exchange rate changes, changes in raw material and product prices, increased industry competition, less-than-expected cumulative expansion, market expansion beyond expectations, product quality risks, production base safety and environmental protection, and political turmoil risks.