Linglong Tire (601966): Increasing holding by controlling shareholders demonstrates confidence in the company’s long-term development

Linglong Tire (601966): Increasing holding by controlling shareholders demonstrates confidence in the company’s long-term development

Event: On February 4, the company received a notice from the controlling shareholder Linglong Group, 厦门夜网 intending to increase the company’s shares within 3 months from the date of the announcement. The scale of the increase plan is no more than RMB 1 million and no more than RMB 400 million.

Investment Highlights The company issued a plan to increase its holdings, demonstrating long-term development confidence: Linglong Group was the company’s controlling shareholder. Before the implementation of this increase, Linglong Group held 604,200,000 shares, accounting for 50 of the company’s total shares.

35%.

Based on the recognition of the company’s future development confidence and value, and in order to maintain continued stability and shareholders’ interests, Linglong Group intends to increase the company’s shares within 3 months from the date of the announcement, and the scale of the increase plan is RMB 100 million?
4 million 武汉夜生活网 US dollars, and there is no fixed price for the price of the shares to be increased this time, and the price range may gradually decrease.

At the same time, Linglong Group promised not to reduce its holdings of the company’s shares during the increase and within 6 months after the completion of the increase.

Helping to prevent and control the epidemic and bear social responsibilities: Since the epidemic was released, Linglong Tire has donated 5 million yuan to the Red Cross Society of Wuhan, Jingmen and other places through its subsidiaries in Hubei to fully support the epidemic prevention and control work.

At the same time, the Wuhan sales network of Linglong Tires was urgently deployed to provide tire services free of charge for vehicles built by Vulcan Mountain Hospital and other rescue vehicles.

The new factory in Hubei has been put into production, and the “5 + 3” strategy has been further improved: Linglong Hubei Factory is Linglong’s fourth factory in China. It took one and a half years to complete the construction of truck and bus tires. After it is fully completed, it can achieve an annual output of 12 million setsSemi-steel radial tires, 2.4 million sets of all-steel radial tires and 60,000 sets of engineering radial tires.

The commissioning of the Hubei plant means that Linglong Tire’s “5 + 3” strategy is a big step forward. The commissioning of more production capacity is expected to continue to accelerate the release of the company’s performance.

Supply-side reforms are not over yet, and companies at the top of the tires are expected to grow from strength to strength: Looking at the global market, Bridgestone, Michelin and Goodyear have been among the top three in the tire industry for a long time. The three market share totals.

6%.

At present, there is a structural surplus in the domestic tire industry. Through the advancement of supply-side reforms, small and medium-sized production capacity is gradually cleared out. The domestic market is in the process of concentrating on the right tire companies.

Focus on building the four core driving forces of strategic power, product power, innovation power and brand power: the company is a global supplier of world-class car factories such as Audi, Volkswagen, GM, Ford, Renault Nissan, and its products are sold to more than 180 countries and regionsIt ranks among the top 20 tires in the world, steadily ranks among the top 3 tires in China, and ranks among the top 500 Asian brands. It has replaced the foundation for achieving the strategic goal of becoming a world-class tire company.

Earnings forecast and investment grade: We estimate that the company’s net profit attributable to its parent in 2019-2021 will be 15 respectively.

9.9 billion, 19.

08 thousand yuan, 22.

55 ppm and EPS are 1.

33 yuan, 1.

59 yuan, 1.

88 yuan, the current sustainable corresponding PE is 16X, 13X and 11X.

Maintain “Buy” rating.

Risk reminder: the new production capacity is less than expected; the price of raw materials fluctuates greatly; the load rate of production facilities affected by the epidemic declines