Linglong's profit crushed by FX and rubber costs, buybacks and price hikes offset
H1 profit collapses on FX loss First-half 2026 net profit fell 87% to 110 million yuan, and non-GAAP profit plunged 99.3% to 5.55 million yuan. The main cause was a 342 million yuan exchange loss as the yuan strengthened, versus a 691 million yuan gain a year earlier. This weak result weighs on the stock.
The profit collapse is the core negative force driving the stock down.
Rubber costs surge, squeezing margins Natural rubber prices hit a nine-year high, up over 32% this year, while carbon black and synthetic rubber also jumped. Raw materials are over 70% of tire costs, and these increases have outpaced selling prices, pressuring Linglong's gross margin. This cost squeeze hurts earnings.
Rising raw material costs are a major ongoing headwind for profitability.
Tire price hikes help offset costs Linglong joined the fourth round of industry-wide tire price increases this year, raising all product categories by 2% to 5%. These hikes aim to pass rising raw material costs to customers, which could support revenue and margins if demand holds.
Price increases are a positive offset to cost inflation and support earnings.
Buybacks signal confidence Linglong repurchased 5.54 million shares for about 60 million yuan by September 30, up from 1.85 million shares in July. Buybacks reduce shares outstanding and show management's belief that the stock is undervalued, offering some price support.
Share repurchases are a positive capital action that can support the stock price.