Overseas enterprises have a significant position, and domestic leading enterprises have developed rapidly

Goodyear: Goodyear Tire & Rubber Company is one of the largest tire manufacturing companies in the world, headquartered in Ohio, USA, mainly producing tires, engineered rubber products and chemical products. The company introduced the first dozer tire in 1934. In 1939, Goodyear tires were selected for use on Admiral Byrd's snow cruiser expedition to Antarctica. In 1944, Goodyear broke ground on an off-highway tire plant in Topeka, Kansas, one of eight Goodyear off-highway tire manufacturing facilities worldwide. In 1971, the world's largest tire was produced (11.5 feet high / 7,000 pounds). In 1984, the company expanded its off-road tire manufacturing facility in Europe, the Luxembourg off-road Radial Tire Plant. In 2010, Goodyear's 63-inch oversized trailer tire went into production as part of the Goodyear RockMining (RM) line. In 2014, it completed the expansion of 57-inch off-highway tire production capacity to better serve global customers. In 2016, the 63-inch RM-4B+ off-highway tire was introduced, utilizing Goodyear's latest technologies in materials, design, construction and manufacturing.

At present, domestic tire companies are trying to overcome problems such as the difficulty of off-highway tire production technology, and off-highway tire production capacity is gradually catching up with overseas head enterprises, including enterprises such as racing tires. As of the 2022 annual report, the company has a production capacity of 124,600 tons of off-highway tires, the company plans to add 40,000 tons of off-highway tire technology transformation, add 40,000 tons of off-highway tires in the Vietnam factory, and add 150,000 tons of off-highway tires in Qingdao Dongjiakou. In addition, Haian Rubber, Guizhou Tire, Zhongce Rubber, etc. have off-highway tire expansion plans. In the context of better off-highway tire market demand, the income of companies expanding off-highway tires is expected to increase.

Technically speaking, we believe that 63-inch off-highway tires, as the largest size products in off-highway tires, can represent the technical level of enterprises in the off-highway field to a certain extent. According to the Haian rubber prospectus and Triangle Tire official website news, Michelin is a leading enterprise of all-steel giant tires, and Michelin first launched 63-inch construction machinery tires in 2001. From 2015 to 2016, Haian Rubber, Cylon Tire, Triangle Tire have produced the first 63-inch off-highway tire, and currently master the production technology of 63-inch products.

(3) Off-highway tire entry barriers and competitive advantages

Off-highway tires, especially giant tires, have complex application scenarios, and have higher requirements for material properties, tire profiles and tire sizes in the production process, among which the size of giant tires is more than 49 inches, and the maximum size can reach 63 inches, so the production is more difficult and the entry barrier is higher. According to Haian Rubber prospectus, off-highway tires have high barriers in terms of technology, capital, customers and so on. (1) From the level of technical barriers, off-highway tires carry large loads, harsh use environment, long continuous working time, because of the requirements of tires with large rigidity, cutting resistance, puncture resistance, wear resistance, good elasticity, low heat generation, fast heat dissipation and other characteristics, so the product development difficulty is high, long development cycle, the need for long-term technology accumulation. (2) From the level of financial barriers, the off-highway tire industry is a capital-intensive industry. Due to the large size of the product, high production technical difficulty, the need for a large area of land and plant investment, and the machinery and equipment for the production of off-highway tires are customized non-standard equipment, and the unit value is high, so the production enterprises have a large investment scale in fixed assets in the early stage. (3) From the customer level, the unit value of off-highway tire products is high, and the customers are mainly large mining companies, or mining card Oems, which have higher requirements for the timeliness of suppliers and production scale. Therefore, new entrants in the industry need to have strong financial strength and be able to afford higher working capital needs.

Due to size and other reasons, the unit price of off-highway tires is significantly higher than that of other tires, and the larger the size, the more obvious the price increase. According to the disclosure of Zhongce Rubber prospectus, in the first half of 2022, the unit price of semi-steel and all-steel tires of Zhongce rubber is 191.98 yuan/piece and 829.01 yuan/piece, respectively. According to the prospectus of Hai 'an Rubber, the unit price of 49 inch giant tire of Hai 'an rubber in 2022 is 49,300 yuan/piece. On top of this, between 49 and 51 inches, each additional 1 inch of the price increase of $1,600, between 51 and 57 inches, each additional 1 inch of the price increase of $11,500, between 57 and 63 inches, each additional 1 inch of the price increase of $26,800. Due to its larger size, the price of off-highway tires is higher, and the price increase is more obvious when the size is larger.