On the big stage of global trade, Chinese tire company Linglong Tire is facing a situation where opportunities and challenges coexist.
On the evening of August 28, Linglong Tire (601966.SH) announced that its operating income for the first half of 2025 reached 11.812 billion yuan, a year-on-year increase of 13.80%. However, the net profit attributable to shareholders of the listed company was 854 million yuan, a year-on-year decrease of 7.66%. Sales volume increased but profits shrank.
When it comes to cost pressure, Linglong Tire said that in the first half of 2025, the natural rubber futures market fluctuated violently, with high fluctuations in the first quarter and rapid price declines in the second quarter.
Although the price curve of tire core raw materials shows a downward trend, compared with the same period last year, the cost has increased significantly, directly squeezing the company’s gross profit.
Taking natural rubber STR20 as an example, the average price in the first half of 2024 is US$1,662 per ton, while the average price in the first half of 2025 is US$1,905 per ton, which is still 14.63% higher than the same period last year.
Shandong Linglong Tire Co., Ltd. was listed on the main board of the Shanghai Stock Exchange on July 6, 2016. Its main products are passenger and light truck radial tires, truck and bus radial tires and off-highway tires, which are widely used in passenger cars, commercial vehicles, engineering machinery and other fields.
Judging from the financial report, Linglong Tire’s revenue in 2019 and 2020 was 17.164 billion yuan and 18.383 billion yuan respectively, and non-net profits after deducting non-net profits were 1.556 billion yuan and 2.086 billion yuan respectively.
But by 2024, its revenue will only increase by 28.51% to 22.058 billion yuan compared with 2019, and non-net profit will shrink by 32.69% compared with 2020 to 1.404 billion yuan.
The operating conditions in the fourth quarter of 2024 better reflect the difficulties of the tire industry. The company’s operating income was 6.11 billion yuan, a year-on-year increase of 8.4%, while the net profit attributable to the parent company was 40.56 million yuan, a year-on-year decrease of 90.6%, and the net profit after non-attribution to the parent company was 7.4 million yuan, a year-on-year decrease of 98.2%.
In order to speed up the company’s overseas layout, expand the brand’s international influence, and comprehensively enhance its core competitiveness in the global market, Linglong Tire announced at the 2024 performance briefing held in April this year that it decided to establish a third overseas base in Brazil.
The project has a total investment of US$1.19 billion (approximately 8.71 billion yuan) and is located in Punta Grossa, Parana State, Brazil. After the project is fully completed and put into operation, it will have an annual production capacity of 14.7 million sets of various high-performance radial tires.
The planned construction period of the project is expected to be seven years, and will be constructed in three phases. Construction is planned to start in the third quarter of 2025 and will be put into use by the end of December 2032.
The Brazilian base is the company’s third overseas factory after Thailand and Serbia, marking the first time that a Chinese tire manufacturing base has successfully deployed in the South American market.
However, judging from the company’s previous overseas operations, overseas business is not ideal.
The Thai factory will have revenue of 4.45 billion yuan and a net profit of 910 million yuan in 2023; in 2024, the revenue will be 4.16 billion yuan and the net profit will be 820 million yuan.
In 2023, the Serbian factory will have revenue of 220 million yuan and a net profit loss of 80 million yuan; in 2024, the revenue will be 1.44 billion yuan and the net profit loss will be 120 million yuan.
In addition, Linglong Tire recently submitted a prospectus to the Hong Kong Stock Exchange, officially seeking an “A+H” listing, with CITIC Securities and China Merchants International serving as joint sponsors.
The funds raised from this Hong Kong IPO are intended to be used to expand the company’s overall production capacity, establish and improve production bases around the world; enhance independent research and development and innovation capabilities; enhance global marketing strategies to strengthen and enhance existing brand influence; and be used for working capital and general corporate purposes.
As of the close of trading on August 28, Linglong Tire was trading at 15.55 yuan per share, and the company’s total market value was 22.76 billion yuan.
Whether Linglong Tire can achieve better results in domestic and foreign markets in the future deserves our continued attention.
