Thailand Margin and Tax

Figures converted from Chinese renminbi at historical FX rates — see data/company.json.fx_rates. The run's rate table covers the Hong Kong dollar, the trading currency, so renminbi amounts here are converted at period-end CNY/USD market rates: 0.1569 (FY2021), 0.1450 (FY2022), 0.1409 (FY2023), 0.1370 (FY2024) and 0.1408 (FY2025). Year-on-year change amounts are converted at the FY2025 rate so that the profit bridge remains internally additive; converted levels for FY2024 therefore differ slightly from the converted levels net of the converted changes. Ratios, margins, multiples, percentage points, dates and names are unitless and unchanged, and figures a source stated in US dollars are carried through unchanged.

Where the gross profit went

Bottom line. Prinx Chengshan's FY2025 profit fell $31.6 million, and almost all of it is traceable to one plant. The Thai base accounts for 98.8% of the group's $27.0 million gross-profit decline, and a Pillar Two top-up tax on the same subsidiary takes another $10.0 million. Management names raw materials as a cause; the input evidence in peer filings does not support it. This was a trade-and-tax event in Chon Buri.

The group reported gross profit of $301.0 million in FY2025 against $319.2 million in FY2024, a margin of 18.1% against 21.2%, and attributes the decline to "fluctuations in raw material prices and the impact of U.S. tariff policies" without separating the two [1]. The segment note separates them for us. The Shandong base earned $161.8 million of gross profit on $1,025.0 million of revenue, against $157.8 million on $937.5 million a year earlier — a margin of 15.79% against 16.83% [2] [3]. The Thai base earned $139.2 million on $637.4 million against $161.4 million on $565.9 million — 21.83% against 28.52%, on revenue that grew 9.6% [4] [5].

Source: derived from segment revenue and segment results for FY2025 and FY2024 [6] [7]. Revenue-weighted decomposition of the 3.12-point fall from 21.23% to 18.11%.

Weighting each base by its share of revenue, the Thai margin contributed 2.56 points of the group's 3.12-point decline, the Shandong margin 0.64 points, and the shift of revenue mix toward the higher-margin base added back 0.08. In money rather than points: overseas gross profit fell $26.7 million and domestic gross profit fell $0.3 million, so 98.8% of the group's gross-profit decline sits in a segment that produced 38.3% of revenue.

Below the gross line, almost everything moved the other way. Net finance costs fell $4.0 million and other tax items were $5.2 million lighter; against those, the Pillar Two charge on Prinx Thailand cost $10.0 million, foreign-exchange-driven other gains fell $3.0 million and operating expenses rose $1.8 million [8] [9] [10].

Source: derived from the FY2025 financial review [11] [12] and the segment note [13] [14]. Components sum to the $31.6 million fall in profit for the year.

The two Thailand-specific lines — segment gross profit and the top-up tax — total $36.7 million against a group profit decline of $31.6 million. Everything the group did outside that plant in FY2025 was, in aggregate, a net positive.

The raw-material explanation, tested

Raw materials are the largest cost the business carries, so the first claim to check is management's own. The best available evidence says input prices eased in 2025. Linglong Tire, which discloses year-on-year purchase-price changes for each of its main inputs, bought natural rubber 7.36% dearer but synthetic rubber 7.16% cheaper, carbon black 17.42% cheaper, steel cord 5.40% cheaper and cord fabric 17.17% cheaper [15]. Its industry review states plainly that raw-material cost pressure in 2025 eased relative to 2024, as weather normalised in the natural-rubber growing regions and synthetic rubber and carbon black moved into oversupply [16].

Source: Linglong Tire FY2025 annual report, raw material procurement disclosure [17]. Prinx Chengshan publishes no equivalent table; Linglong buys the same inputs on long-term contract and spot.

Only natural rubber rose, and it is the largest of the five by purchase volume, so the basket did not fall as far as four of five lines suggest. But a rising input basket cannot explain what actually happened, because a global input shock would land on both of Prinx Chengshan's bases. The Shandong base lost 1.04 points of margin; the Thai base lost 6.69. Both bases buy in the same world markets, so a shared input shock would not produce a margin loss six times larger at one than at the other.

The same asymmetry appears across the listed Chinese makers. The levels of those peer margins are set out in Competition; what matters here is the direction each one moved in FY2025.

Sources: Prinx Chengshan segment note, FY2025 and FY2024 [18] [19]; Sailun FY2025 revenue and cost by region [20]; Linglong FY2025 revenue and cost by region [21]; Triangle FY2025 revenue and cost by region [22].

The comparison is imperfect and the table says so: Prinx Chengshan splits by where a tyre is made, the three A-share peers by where it is sold, and all three report under PRC GAAP. Even allowing for that, the pattern holds. At Sailun and Linglong the domestic line barely moved (down 0.09 and 0.25 points) while the overseas line fell 4.13 and 9.76 points. Triangle is the exception: its overseas margin rose 2.78 points, and Triangle holds $8.6 million of overseas assets, 0.32% of its balance sheet — it has no offshore plant and exports from China [23]. The makers whose margins broke in FY2025 are the makers who ship to the United States out of Southeast Asia.

The duty stack on the Thai base

The Thai plant exists to reach markets that China-origin tyres cannot reach economically. That is visible in the revenue-by-destination table: $549.4 million of FY2025 revenue was delivered to the Americas, against $637.4 million of revenue produced by the Thai base [24]. The company does not cross-tabulate base against destination, so the overlap cannot be pinned exactly; but Americas revenue equals 86% of Thai-base revenue, and the duty regime on Chinese-origin product makes it unlikely that much of the Americas figure came from Shandong. The chapter therefore proceeds on the assumption that most Thai-base output is sold into the Americas and most Americas revenue is made in Thailand.

That business carries a duty stack that has been rebuilt three times in five years.

Sources: the FY2025 annual report's anti-dumping and countervailing duty disclosure for every entry through the EU cases [25] [26]; the April 2025 US tariff action as dated by Linglong's industry review [27]. The February 2026 and July 2026 entries are from public sources outside the corpus and are discussed below.

Two of these landed inside FY2025 for the first time. The 12.33% duty on Thai truck and bus tyres became final on 10 October 2024, so FY2025 was its first full year [28]. The US baseline and reciprocal tariffs took effect in April 2025 and applied to every origin [29]. The Report of the Directors is unusually direct about which mattered: the fall in profitability, it says, "was mainly due to an increase in the cost of sales resulting from North American reciprocal tariffs" [30]. That sentence, in the directors' own report, names one cause and it is not raw materials.

The production data agrees. Of the four base-and-product lines the company discloses, Thai all-steel fell furthest and was the only one to end the year below 90%: capacity utilisation dropped to 80.6% from 87.1%, which on 2 million sets of capacity is roughly 130,000 fewer truck tyres. Shandong all-steel went the other way, from 82.6% to 93.8% on 7.4 million sets, while the two semi-steel lines each gave up around five points from near-full utilisation [31]. The line that fell furthest is the line that acquired a new 12.33% US duty eleven weeks before the year began, while the domestic line ran nearly flat out on an OE order book that grew 73.9% by revenue [32].

The tax layer

The Thai advantage was never only a duty advantage. Prinx Chengshan Tire (Thailand) has been entitled to a full corporate income tax exemption since 2020, and its weighted average effective tax rate on accounting profit for FY2025 was 0% against a Thai statutory rate of 20% [33]. The tax reconciliation puts a number on that exemption every year, and the number has been growing: $6.2 million in FY2021, $14.5 million in FY2022, $13.8 million in FY2023, $21.4 million in FY2024 and $21.2 million in FY2025 [34] [35] [36]. Cumulatively that is $77.1 million of tax not paid over five years.

OECD Pillar Two took effect on 1 January 2025 and the group recognised a $10.0 million top-up charge for Prinx Thailand in the same year [37] [38].

Sources: the tax exemption of a subsidiary line in the tax reconciliations of the FY2025 [39], FY2024 [40] and FY2022 [41] annual reports.

Year one of Pillar Two therefore reclaimed 47% of the exemption's benefit, leaving $11.2 million. The top-up is smaller than a straight 15% floor on Thai accounting profit would imply, because the global rules exclude a slice of income tied to payroll and tangible assets, and the Thai plant is asset-heavy. At a 20% statutory rate, the FY2025 exemption line implies a Thai pre-tax profit of roughly $106 million — the only handle the filings give on that subsidiary's bottom line, and a derivation rather than a disclosure. The group's effective tax rate has moved from a credit in FY2021 and FY2022 to 8.6% in FY2023, 5.2% in FY2024 and 8.9% in FY2025 [42].

Pillar Two is a permanent floor, with no administrative review of the kind that has cut the anti-dumping rate three times, and the group states that it has been implemented in Thailand, Malaysia and Europe, which means the Malaysian base now under construction inherits it from the start [43].

What changed after the balance-sheet date

Three things have moved since 31 December 2025, and two of them run the group's way.

The reciprocal tariffs the directors named as the main cause of the FY2025 decline no longer exist. The US Supreme Court held them unlawful on 20 February 2026 and customs stopped collecting them from 24 February; those dates come from public reporting outside this corpus, but the fact is confirmed inside it — at Sailun's results meeting on 8 May 2026 an investor asked about refunds following the ruling, and Sailun answered that it had received none so far and that its Vietnamese and Cambodian plants' semi-steel and all-steel exports to the United States remain subject to a 25% rate under Section 232 [44]. The reciprocal layer is gone; the Section 232 layer, which is larger, is not. Sailun had earlier put the reciprocal rates at 19% for Cambodia and Indonesia and 20% for Vietnam, against Section 232 at 25% [45].

The Thai anti-dumping rate has fallen again. Commerce published the final results of the third administrative review on 20 July 2026, with Prinx Chengshan Tire (Thailand) among the respondents at 2.90%, against the 5.08% set in May 2025. The existence, date and respondent list of that notice are recorded in the corpus [46]; the rate itself is from the Federal Register text and is flagged as an outside source.

Running the other way, the European anti-dumping and countervailing cases are open against China-origin product, with import registration running since 22 January 2026 so that duty can be applied retroactively [47], which places that exposure on the Shandong base rather than the Thai one; the docket, the bound on the exposure and the Malaysian relief timetable are in Trade Docket 2026.

Sources: segment note [48] [49] and the tax exemption of a subsidiary line in the tax reconciliations [50] [51] [52]; the margin cost is the 6.69-point fall applied to FY2025 overseas revenue.

What would change the read

The evidence points to a FY2025 that was damaged by trade cost and a permanent tax change at one plant, not by an input cycle — and to a FY2026 in which the largest single component of that damage has already been removed by a court. On the arithmetic, restoring the Thai base to its FY2024 margin would be worth $42.6 million of gross profit at FY2025 overseas revenue, roughly 28% of last year's profit. The second half of FY2025 was already moving that way: with first-half attributable profit of $71.5 million reported by the trade press, the implied second half was about $81.7 million against about $68.5 million a year earlier [53], a point set out in more detail in Business.

The strongest fact against that read is the one the group put in its own risk section: Pillar Two does not reverse, the EU case is open against the Shandong base with retroactive registration already running, and the Thai plant's largest remaining US cost — the 25% Section 232 rate a peer describes as still in force — survived the Supreme Court ruling untouched [54] [55]. The duty on Thai passenger tyres has been 17.06%, 4.52%, 5.08% and now 2.90% across five years, so the Thai margin moves with review outcomes the company does not set and is better held as a range than as a level.

Two disclosures would settle the argument, and the company makes neither. A split of the FY2025 cost of sales showing duty separately from raw materials would end the attribution question in one table. A base-by-destination revenue cut would convert the 86% overlap between Americas revenue and Thai-base revenue from an inference into a fact. Until then, the segment note plus the peer purchase-price tables are the best available substitute, and they say the same thing. The next event to watch is the EU determination, and it lands on the Shandong side of the group — where the capital commitment stands at $104.9 million against $10.7 million a year earlier, mostly for Malaysia and the off-the-road project [56].

One note on timing worth carrying forward: the Report of the Directors is dated 30 March 2026 [57], five weeks after the reciprocal tariffs it identifies as the main cause of the profit decline had been struck down and collection had stopped. The report covers FY2025 and is not obliged to update FY2026; on its 30 March 2026 signing date, the cost it names as the main cause of the decline was no longer being collected.