Car tire: growing competition in the industry as a whole doing well on the (four)

Business ownership in the form of diversification

Enterprise-system has been diversified, the state-owned and state-controlled, private, private, Sino-foreign joint ventures, cooperation, sole proprietorship, and so on, the basic form of state-owned and state-controlled, private and foreign investment pattern of the three.

China's foreign investment has become an important part of the tire industry, but in recent years, the international tire top 10 multinational companies invariably rely on its China growth factor in the consolidation of their international status, is typical of the South Korean tire expansion in China To go beyond South Korea's Kumho in the international ranking. They follow up or internationally well-known Chinese enterprises to enter the car, or a very important growth potential value of the Chinese consumer market, or has its global competitiveness strategy, however, they are in China, with the growth of local enterprises out of the clear-cut Different models. Foreign-funded enterprises more attention to the layout, and production of a single species; more local enterprises on their own, to expand the scale, all-round development. It was reported that in addition to rubber tires in Shanghai and Chongqing, Yunnan, all-steel radial tire, Qingdao Double Star entered the success of the Hubei Dongfeng tires, other companies have only one production area, and bias, so the whole radial tire, car, truck , Agriculture, the project has fetal; and foreign investment is the production of a number of areas and semi-steel and steel is not more than one production, which is of course concerned with the development of history, that the provisions of the new industrial policy on foreign-funded enterprises are not allowed on the bias tire, But at the same time to see China's tire business and foreign-funded enterprises operating on a different philosophy.

Tire exports large area and focus

Data show that in 2006 Chinese tire production for more than 40% of exports, increase in the number of National Tire exports more than 20%, driving China's tire industry has become an important force for development. Exports account for child car tires in the tire of the total exports of 60.5 percent, up to 72,200,000, exports accounted for 36.1 percent of total exports, 16.7 billion U.S. dollars, truck tire export volume of total exports of 32.6 percent, to 38,900,000 , But its exports accounted for 57.9 percent of the total export volume reached 2,680,000,000 U.S. dollars, is still China's first re-export of tires, truck tires in bias tire exports continued to dominate. In 2006 the total exports for the first time exceeded 100,000,000 mark, reaching 119,000,000, or when domestic production of 1 / 3 strong than the 20.2 percent growth in 2005, exports also increased to 4,689,000,000 U.S. dollars, growth in 2005 than the 36.75 % Of the global tire was about 16.7 percent of the volume of trade. Exporting countries to nearly 180 across five continents, especially in the United States, the European Union represented by the developed countries is not only our traditional markets, but also to focus on output, in 2006 China's total tire exports 56.5 percent, exports 50.2 % Occurred in the area.

Exports a wide area, a high degree of concentration. In addition to all previously known European and American markets, to the United Arab Emirates, Saudi Arabia, represented the country in the Middle East to Pakistan, Iran, the Philippines-based Asian countries, Australia, the Oceania For us, both familiar and unfamiliar. China's exports in the U.S. tire market share is the status (see Figure 14, 15). Car exports to the United States of child car tire exports accounting for 35.4 percent of the total, exports accounted for 39.4 percent, truck tire exports accounted for 40.2 percent, exports accounted for 36.3 percent, agriculture and forestry-type vehicles with tires accounted for 55.9 percent, exports accounted for 37.7% , Tire engineering accounted for 28.3 percent, exports accounted for 29.4 percent, the EU-15 (referring to the founding members of the European Union) together it is difficult to shake its hegemony. In the 15 European Union countries, Britain is China's tire exports of the main battlefield, and its imports of Chinese tires in the number and amount of the EU accounts for 1 / 4 of the strong. By industries, Taiwan has gradually become China's major exporter of tires, Taiwan is a new building, South Thailand has abundance of Kunshan in China, Xiamen, Zhangjiagang, Nanchang, such as setting up more factories to form large production capacity can not be ruled out Their products are likely to return. Consolidation in the markets of developed countries at the same time, nurturing and developing countries to open up markets in China's tire exports is another feature, such as South America, Brazil, Mexico, Argentina, Asia, India, Iran, Pakistan, the Philippines, Africa, Algeria, South Africa, Egypt And so on, the Chinese tires in several local efforts to have a certain basis, with the development of the world economy, the emerging market of great potential for development.

Export enterprises constitute a form of ownership there has been a fundamental change. Statistics show that exports of foreign enterprises in China, not only in quantity, but also to establish a value of more than funded enterprises, foreign-funded enterprises in the car radial tire exports regardless of the number or from the volume of trade has played an overwhelming advantage in exports of 72,200,000 cars in the fetal , Joint ventures and wholly foreign-owned accounts 62,000,000. Have always been optimistic about the industry's truck tire exports can be a hard position, currently funded enterprises in order to 1,558,000,000 U.S. dollars ahead of 430,000,000 U.S. dollars of foreign-funded enterprises. In the all-steel radial truck exports, domestic-funded enterprises desperately crowded out, and some of the very few transnational corporations export, and bus tires firmly occupy the high-end consumer market, which is of course with their production capacity, but more importantly, Is the first high-technology products, reflects the strong safety.

Replacement tires: tire companies compete for new space

As the technology, scale, brand, and other factors, China's tire products focused on the replacement tire market (see table 2), with the smooth development of the automotive market, cars keep growing, the original tire market is no longer able to meet The development of the tire business, and the replacement of fetal growth in demand in 2006 will usher in a peak market share of the tire market as a whole will account for nearly 70% of the market is the child of the original 2-fold. Supporting relatively similar to the tire sales Procurement, in the replacement market, the channel plays a key role. With the major tire giant in the domestic distribution to the gradual completion of construction and after-sales service network to provide value-added services will become the core of the competition, the replacement tire market, foreign-funded enterprises have gradually become part of the enclosure, Happy Valley, Michelin "as you like "Service plan, as well as Goodyear's" nanny car "are directed at the replacement market and the introduction of the child. According to a survey, Chinese consumers to buy a car, concerned about the performance of the tire brands and only 18.5 percent, while concerned about the replacement of tires when the tire brands and performance of the consumer is close to 88.6 percent; in the choice of tires, 90.3 percent of the Consumer choice and quality of the performance better tire, and only 4.2 percent of consumers will choose the original tires.

The survey also showed that the tire manufacturers to strengthen marketing and after-sales service building in the market driving forces.

Tire industry overall economic situation

2006 sales for the tire industry 132,260,000,000 yuan, up 28.38 percent, the total profit of 3.95 billion yuan, 21.24 percent year-on-year decline. 2007 January-August sales of 108,400,000,000 yuan, up 31.37 percent, 47.7 percent of the total profit, up 38.59 percent. As can be seen from the chart, profit growth rate of sales growth and often inconsistent, sales and marketing costs to maintain a growth rate higher, the industry as a whole healthy and stable development of the situation. Figure 2 by the gross margin map can be seen from 1999 to date gross margin remained at 12% -24%, the lowest margin in 2006 was 12.69 percent, in 2007 January-August has gone up to 14.00 %, Mainly in 2006 caused by rising rubber prices, in 2007 rubber prices remain high, and the United States and the European Union, a new "FMVSS139 tire testing standards" and "Chemical Registration, Evaluation and Authorization system and limit the" REACH the impact of laws and regulations , Has greatly enhanced China's enterprises to enter the threshold of Europe and the United States market, and since July 1, 2007 tires from the export tax rebate rate from 13% to 5%, to a certain extent, the tire manufacturer squeeze profits and slow down our country Tire export growth, driven industry consolidation. But in 2007, the major tire companies have been through price increases to absorb the impact of these negative factors.

China's tire market demand forecast

Tire industry and the automotive and mechanical engineering development are inseparable, the two decided to yield the tire market, matching the capacity of both to maintain the level should be determined in the replacement tire market, the capacity of the child.

China's car output in 2000 from 2,000,000 in 2006 to reach 5,760,000 in 2007, 1-10 month sales have surpassed 7,000,000, China's auto industry is expected to remain around 15 percent growth rate. With the growth in car production, the 2006 cars in China has reached 35,000,000, was 3.5 times that of 1996. For the tire industry has brought a huge space.

Domestic demand growth in recent years, and overseas markets continue to make breakthrough in the Chinese construction machinery industry developed rapidly, sales in 1992 from 20.8 billion in 2006 to 970 billion yuan, a compound growth rate of 11%. Urbanization construction, real estate investment, Tielun medium and long-term construction plan, the highway network, as well as the revitalization of old industrial Northeast and smuggling, the development of the western region, the Three Gorges Project, West-East Gas Transmission project, such as stimulating domestic consumption growth of the machinery, as well as OTR tire relatively high rate of replacement tires for the project to provide a larger enterprise market space.

China's tire market forecasts: the original application of local brands in overseas markets advanced tire design, production and application of technology in domestic sales of tires, and by strengthening the brand-building, develop marketing channels and upgrade services such as additional measures to improve the cost-effective products Will be showing a strong competitive advantage.

Is expected in the next few years the overall development of China's tire industry is still to maintain a certain level of growth and the growth rate is estimated that about 15%, an increase of radial tire in about 20%, all-steel radial tire in about 35%, still a slight decline in bias tire.

Analysis of related listed companies

Aeolus shares (600,469): truck tires and tire industry leading engineering

In heavy-duty tires and tire production project in a leading position through the transfer of shares, the company has been transformed into enterprises under the central enterprises (China Chemical Industry Group, a wholly-owned subsidiary of China Hao Hua Chemical (Group) Holdings), the transfer of shares after the Chinese-ho China Chemical Industry Group Company holds 39.22 percent stake in the company's largest shareholder.

The company has more than 400 million sets of all kinds of tire production capacity in 2007 in the third quarter of meridian tires the company has reached the rate of 60%, well above the industry standard of 45%, radial tire company in the future the proportion will rise over time. At present, by way of debt for the acquisition of Henan Tire Group of 500,000 sets of radial tire production line and supporting facilities, the company settled with the group competition, the company has become another profit growth. Po-shek for the company to provide the loan guarantees because of 70,000,000 yuan Baoshuo bankruptcy jointly and severally liable, the deduction for 2006 is expected to set aside the balance of 14,000,000 yuan, there will be 56,000,000 yuan of assets for impairment losses. Production capacity expansion, product mix and a slight decline in natural rubber prices will enable the company has improved gross margin.

Taking into account the tire industry increasingly fierce competition in the industry overall gross margin will decline, it's a smaller rise in gross margin, maintained at about 14%, we expect earnings per share the company for 2007-2009 were 0.41 yuan, 0.65 yuan And 0.85 yuan.

Risk Analysis

Exchange rate risk: China's major exports tires, the RMB appreciation on China's tire business have a certain influence.

Natural rubber price risk: China is the world's major rubber importer, about two-thirds of the natural rubber imports, the international natural rubber price changes, China's rubber products have a greater impact.