Domestic tires continue to break through, technology as the base, expansion of production for the wing

(1) Racing wheel tires: technology is close to the head enterprise, OTR production capacity continues to increase

Technology continues to innovate, and the level of wheel technology is gradually approaching the head of international tire enterprises. The engineering giant tire market of 3 meters or even 4 meters high is dominated by foreign manufacturers with early start, mature technology and large reputation influence, and the head enterprises Michelin and Bridgestone have absolute advantages in the field of giant engineering tires. In 2016, Cylon Tire independently developed the world's largest 53/80R63 giant radial tire, successfully breaking the foreign technology monopoly on giant tires. At present, the technical level of the company's giant engineering radial tire products has reached the international advanced level, and has been widely recognized by domestic and foreign customers. In 2021, Cyrun liquid Gold Tire made an amazing debut at the Qingdao Innovation Festival. The company independently developed a low-carbon green tire product - Liquid Gold Tire using the new material prepared by the world's first "chemical rubber refining" technology, successfully solved the "devil's triangle" problem that has plagued the industry for many years, including tire rolling resistance, wet skid resistance and wear resistance. Make driving more safe, energy saving and comfortable. The excellent performance of liquid gold tires has been tested and certified by several authorities. We believe that liquid gold tires are expected to help the company continue to break through in the field of off-road tires.

Off-highway tire and giant tire production capacity continues to increase. Racing Tire has off-highway tire production capacity in both domestic and overseas Vietnam factories. From 2018 to 2022, the company's off-highway tire production capacity increased from 6400 tons to 124,600 tons, achieving nearly double growth. In addition, the company has planned the Qingdao off-highway tire transformation project, Dongjiakou 150,000 tons off-highway tire construction project, etc. If these projects are all landed, the company's off-highway production capacity is expected to double again on the basis of 2022, while the production capacity of 49 inches and above giant tires is expected to increase.

(2) Haian Rubber: Focus on the research and development of all-steel giant tires, improve the ability of independent innovation

Haian Rubber focuses on the field of all-steel giant tires, constantly improves the ability of independent innovation, and has achieved a number of key technological breakthroughs in the formulation of rubber material, carcass structure, production process and other aspects. Long-term technology accumulation and continuous R&D investment make Haian Rubber have certain advantages in the field of all-steel giant tires. In 2015, the company cooperated with the Beijing Rubber Industry Research and Design Institute to develop the 59/80R63 specification all-steel giant tire product, which is the largest specification model all-steel giant tire applied in the world at present. The technology and products filled the domestic gap, making China the third country in the world to produce 59/80R63 giant tires. In terms of products, the company's independent research and development and production of all steel giant tire products with excellent product quality, stability and reliability advantages, gradually obtained the wide recognition of downstream customers, broke the domestic all steel giant tire market by the international three major brands monopoly situation, to achieve import substitution, promote the whole steel giant tire localization process. At present, the company has a complete series of specifications of all steel giant tire products, covering 49 inches, 51 inches, 57 inches and 63 inches of full series specifications of products, which can meet the supporting needs of 90-400 tons of mining trucks and adapt to various types of mining environment. The quality of all steel giant tire products has reached the leading domestic and international advanced level.

In recent years, the growth of production and sales is obvious, and the future production capacity is expected to grow. The annual production capacity of Haian Rubber in 2022 increased significantly, from 0.88 million in 2021 to 10,500 in 2022, an increase of 19.32%. The capacity utilization rate has increased rapidly in the past three years, rising from 36.36% in 2020 to 99.05% in 2022, and the production and sales rate has always maintained a high level. In 2023, the company issued the "Main Board Initial Public Offering stock Prospectus (declaration draft)", intending to raise 2.952 billion yuan for all-steel giant radial tire expansion and automatic production line technical upgrading projects, research and development center construction projects, etc., and the future production capacity may continue to grow.

With the expansion of the company's scale and future development needs, the cost of management and marketing research has increased. From 2020 to 2022, with the expansion of the company's business scale, the compensation of sales personnel, travel expenses and after-sales service expenses will increase correspondingly, and the amount of sales expenses will increase correspondingly, while the proportion of operating income will decrease year by year due to the scale effect. At the same time, administrative staff compensation, office expenses, business hospitality expenses and other expenses increased, the amount of management expenses increased accordingly; The company's steel giant tire product development and production technology is difficult, and due to the use of large differences in the environment, the degree of customization of related products is also high, the company combined with customer needs to add more research and development items, the corresponding research and development investment is also growing rapidly.