Auto & Parts - "Export Tax Rebate for Tires Lifted by 4ppt"
Events:
The MoF decided on November 17 to raise the export tax rebate for rubber products including tires by 4ppt (from 5% to 9%), effective December 1, 2008.
Our Comments:
Aeolus Tyre should be the biggest beneficiary based on static analysis, with ~25% EPS accretion in our view. However, impacts from the rebate hike will be limited based on a dynamic analysis. We believe that the EPS accretion from this hike will be eroded by export price cuts, as the industry competition is growing due to softening external demand and domestic overcapacity.
We will not likely see an upturn in industry fundamentals in the short run, given the industry’s reliance upon the elimination of outdated capacity and the recovery of external demand. China’s large-scale fiscal stimulus should be positive to OTR tire producers including Aeolus and Gui Zhou Tyre, but the effects will probably not be seen until mid-2009, in our view. Listcos may face heavy earnings pressure in 4Q due to their high-priced inventories. We leave our earnings forecasts for Aeolus Tyre, Qingdao Doublestar and Gui Zhou Tyre unchanged at HOLD.
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发表于 2008-11-20 10:34
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