Looking at the world, there are only a handful of industries that can still make a lot of money in 2023, and Chinese tires are one of them, and the momentum and explosiveness of this rise are even no less than that of new energy vehicles.
Drive foreign capital out of China
A-share tire listed companies will be in full swing in 2023.
According to the latest performance forecast, Sailun Tire is expected to achieve operating income of about 26 billion yuan in 2023, an increase of 18 percent year-on-yearabout 71%, and the net profit attributable to the parent company was about 3.1 billion yuan, an increase of about 132 percent year-on-year77%；
Linglong Tire is expected to achieve a net profit attributable to the parent company of 13 in 20235 billion to 161 billion yuan, an increase of 105.8 billion to 131.8 billion yuan, an increase of 362% to 451% year-on-year;
Triangle Tire is expected to achieve a net profit attributable to the parent company of 13 in 20234.7 billion yuan-144.7 billion yuan, an increase of 82 percent year-on-year61%-96.17%；
Sen Kirin expects to achieve a net profit attributable to the parent company of 13 in 20230 billion yuan-142 billion yuan, a year-on-year increase of 6233%-77.31%；Guizhou Tire is expected to achieve a net profit attributable to the parent company of 7900 million yuan-8500 million yuan, a year-on-year increase of 8424%-98.23%；GM expects its net profit attributable to the parent company to be 200 million yuan to 200 million yuan in 2023700 million yuan, an increase of 1079% to 1492% year-on-year.
Without contrast, there is no harm.
The Michelin Group's total sales in 2023 increased by only 2. year-on-year at constant exchange rates0%, and the operating profit of the business line increased by only 588%；Bridgestone's sales last year were 5% year-on-year, and the net profit attributable to the parent company was only 10% year-on-year; Goodyear is even more crotch-pulling, with annual sales of 200 in 2023$6.6 billion, down 35% and a net loss of 6$8.9 billion.
Since entering China in the 90s of the last century, foreign-funded tire companies have basically eaten up the entire domestic market, although they still occupy a dominant position, but their living space has become narrower and narrower.
On February 27, Bridgestone (China) Investment*** announced the termination of its commercial vehicle tire business in China and the closure of related production lines; Earlier, Japanese tire manufacturer Dunlop has stopped the sales and production of truck and bus tires in China from January 1, 2023, and Finland's Nokian Tyres decided to stop the sales and operation activities of Nokian Tyres Trading (Shanghai)** in the Chinese market in February 2023. Further back, South Korea's Kumho Tire and Japan's Yokohama have terminated the production of truck and bus tires in China.
In 2016, there were at least nine foreign-funded tire companies in China's large tire market, and by 2023, only five foreign-funded companies still have truck tire business in the Chinese market.
What makes foreign capital tremble even more is that Chinese tire companies are now collectively going out of the country to attack cities and seize land, with sparks and lightning all the way.
Spread the flames of war to the world
In 2013, the first phase of Sailun Tire's Vietnam project was put into operation, which was the first overseas tire manufacturing base in China, and the prelude to the foreign war of Chinese tires began. Two years later, the United States made a final decision on the anti-dumping investigation of passenger cars and light truck tires exported from China, and domestic tire companies were hit hard.
What is unfortunate is that the United States has forced domestic tire companies to speed up their going to sea, in order to avoid the impact of unreasonable double and anti-dumping tax rates, which actually opens up a new route for the further development of China's tire industry.
Building a factory in Southeast Asian countries has many advantages such as tax incentives, labor costs, proximity to terminals, and raw materials (rubber resources), all of which add up to the result that the profit margin of export sales is far greater than that of domestic sales, and there has been a trend of expansion in recent years.
Taking Linglong Tire as an example, its domestic sales gross profit margin in 2022 will be 582%, gross profit margin of export and overseas sales of 2087%。According to the data disclosed by major tire listed companies, the net profit contribution of overseas bases has basically been more than 50% since 2017.
The second round of overseas expansion cycle of China's tire industry has begun.
In 2023, Linglong Tire, Sailun Tire, Sen Kirin, Guizhou Tire, General Motors and other industry leading enterprises will collectively expand their production capacity overseas, of which Sailun Tire has been deployed in Vietnam, Cambodia and Mexico, and Sen Kirin is also working in Thailand, Spain and Morocco.
New projects will inevitably bring new growth poles.
According to the feasibility study report of Sailun tires, the total investment of Cambodia's annual output of 12 million semi-steel radial tires is 224.7 billion yuan, and the annual revenue of the project can be 323.2 billion yuan, and the average annual profit can be as high as 73 billion yuan; Sailun Singapore plans to establish a joint venture with TD Mexico in Mexico to invest in the construction of a project with an annual output of 6 million semi-steel radial tires, with a total investment of 2400 million US dollars, the construction time is 12 months, after the project reaches production, the normal operation can achieve an annual operating income of 219.42 million US dollars, a net profit of 40.59 million US dollars, and a net profit margin of 185%, far exceeding the profit level of the company's existing projects.
Mori Kirin plans to self-fund 19306470,000 US dollars in Morocco to invest in the construction of an annual output of 6 million high-performance cars, light truck radial tires project (phase II), after the production can achieve an annual operating income of 210 million US dollars, a total profit of 5790$900,000. The more critical connotation behind this move is that Morocco is a hub connecting the three major markets of the European Union, the Middle East and Africa, only 14 kilometers away from Europe, which has important commercial value and status, and Morocco is the only country in Africa that has signed a free ** agreement with the United States.
Some people enter, some people retreat.
According to the "2023 World Tire Top 75 List" by the American "Tire Business",The market share of the top three (Michelin, Bridgestone, and Goodyear) has dropped from 56% in 2003 to 39% in 2022, while the number of Chinese companies in the top 75 has increased from 11 in 2006 to 36 in 2022, corresponding to a market share of 50% expands to 148%。
In addition, according to incomplete statistics from the public disclosure information of international tire companies, since 2022, Michelin, Bridgestone, Goodyear and other overseas head tire companies have shut down or reduced production of more than 15 tire factories in Europe and the United States (including Russia), which are basically more than 50 years old, involving an annual production capacity of more than 50 million tires.
Looking ahead, the rise and fall of the world's tire industry has been unstoppable, which is determined by the objective reality and the process of the times, and is not subject to anyone's will.
Write the glory into history
The ambition of Chinese tires can be even bigger.
Historically, as an important part of the automotive industry chain, the development prospect of tires is highly positively correlated with the fate of the local automobile industry.
Since the 20th century, the world's automotive industry chain has undergone many migrations in pursuit of competitive advantages, first from the European continent to the United States, and from the United States to Japan during the oil crisis. Today's world's three tire giants Michelin (France), Goodyear (the United States) and Bridgestone (Japan) have gradually risen with the prosperity of vehicle production and related auto parts industry chains in Europe, the United States and Japan.
The shift from fuel vehicles to new energy vehicles is another change in the world's automobile industry, and the center of the dynasty is China.
In 2023, the production and sales of new energy vehicles in China will reach 95870,000 and 94950,000 units, with a CAGR of up to 50% from 2018 to 2023, and the current production and sales of new energy vehicles account for more than 60% of the world's total, ranking first in the world for 9 consecutive years.
Compared with fuel vehicles, new energy vehicles on the tire rolling resistance power, tire noise, wear resistance and other performance indicators have put forward different requirements, the international tire giant fuel era formed in the era of brand recognition in the new energy era is bound to weaken, all these latecomers to change lanes to overtake opened a mouth, and domestic tire companies in the new energy vehicle chain has an inherent geographical advantage. Linglong Tire has now become the No. 1 brand of new energy supporting in the local market, with an overall market share of nearly 24% in domestic new energy support, of which BYD's supply alone exceeded 4 million in the first three quarters of 2023.
Taking history as a mirror, domestic tire companies are fully expected to replicate the industrial path of the past, starting from cutting into the local automobile support, following the upward trend of domestic automobiles and surpassing the industry giants.
In fact,Even if there is no new energy revolution, China's tire industry will be brilliant.
Anatomy of the cost of a single tire at home and abroad, domestic tire companies have significant advantages over overseas friends in terms of labor, energy and power, depreciation and amortization, sales and management expenses, etc., among which the operating costs of overseas leaders such as Michelin and Pirelli are about 2-4 times that of domestic leaders, and the expenses are about 5-10 times. Therefore, the advantages of domestic tires are extremely obvious, according to the data of the American tire e-commerce platform tire, Chinese tires are generally only 50%-70% of overseas brands.
In the past, foreign capital could still rely on technological advantages to form a dimensionality reduction blow to domestic tires to support brand premiums, but as China's tire companies have gradually approached or even reached the world's advanced level in technology research and development, process equipment, organization and management, etc., this advantage is increasingly no longer existing.
Taking Sailun Tire as an example, its self-developed liquid tire adopts the world's first chemical rubber mixing technology, which solves the "Devil's Triangle" problem that has plagued the industry for a hundred years, and is known as the fourth milestone technological innovation in the world's rubber industry. On average, 1 liquid ** truck and bus tire and car tire can reduce energy consumption by more than % respectively, and the new energy car using liquid ** tire can increase the range by 5%-10%.
Engineer dividends bring technological development, China's manufacturing guarantees cost advantages, and the new energy revolution gives birth to market introduction opportunities.
The capital market should buy for the glory and dream of this trillion track, and the current rolling price-earnings ratio of the Shenwan tire industry is less than 20 times, which is obviously not enough to carry this ambition.