Shanghai, China - On August 19, the 17th China International Tire Expo, with the theme of "Innovation, Professionalism, Efficiency, Leading the Future", opened at Shanghai World Expo Exhibition Hall. Prinx Chengshan brought products of its four brands: Prinx, Chengshan, Austone and Fortune.
Prinx Chengshan ranks No. 5 in All Steel Radial Tire market among domestic makers in China. With the production capacity enhancement in its China and Thailand factories, the company’s sales volume is expected to increase. Coupled with the higher premiums for its Thailand-made auto tires vs Chinese-made products and more revenue contribution from the deep cooperation business model, we estimate its GPM to widen in 2019E/20E. Even though we expect a surge in G&A expense in 2019 due to the new plant, the expense ratio is likely to reduce while the earnings go up once the new factory runs smoothly. We initiate BUY with a TP of HK$7.5, suggesting 20% upside potential.
On July 25, the "Leader of Energy Efficiency for Key Energy Consumption Products in the Petroleum and Chemical Industry in 2018" conference sponsored by the China Petroleum and Chemical Industry Federation was held in Yingkou