On the evening of June 17, Sailun Tire (601058) announced that the company plans to invest in the construction of the “Egyptian Tire Capacity Improvement Project” with a total investment of US$1.141 billion.
This move demonstrates Sailun Tire’s determination to actively expand overseas markets.
The construction content of this tire production capacity improvement project is rich, with an annual production of 27 million semi-steel radial tires, 1.65 million all-steel radial tires and 20,000 tons of off-highway tires.
Among them, Shams El Sherouk, a wholly-owned company established by the company through its overseas wholly-owned subsidiary in Egypt, is responsible for the construction of the semi-steel radial tire part with an annual output of 9 million units. The other parts are constructed by Senro Tire, a new wholly-owned subsidiary of the company’s overseas subsidiary to be established in Egypt.
The announcement shows that Sailun Tire’s total investment in the project of US$1.141 billion (equivalent to approximately RMB 7.807 billion) includes US$1.090 billion in construction investment, US$42.1 million in initial working capital and US$9.19 million in interest during the construction period.
In terms of financing, Sailun Tire will raise US$625 million from self-raised funds (including its own funds) and borrow US$517 million from financial institutions.
According to the project plan, Shams El Sherouk, a wholly-owned subsidiary of Sailun Tire, is responsible for the construction of the semi-steel radial tire section with an annual output of 9 million units. The total investment is US$227 million and the construction period is planned to be 15 months.
The annual production capacity of 18 million semi-steel radial tires, 1.65 million all-steel radial tires and 20,000 tons of off-highway tires is planned to be built by the newly established wholly-owned subsidiary Senro Tire on a new plot of land about 4 kilometers away from the original industrial park. The total investment is up to US$914 million, and the construction period is planned to be 24 months.
In order to ensure the funding needs for project construction and daily operating needs, the company has also carried out a series of capital increase plans.
The company plans to increase the capital of its wholly-owned subsidiary Sailun Hong Kong by no more than US$691 million; from Sailun Hong Kong to Sailun Singapore by no more than US$691 million; and from Sailun Singapore to Sailun Europe by no more than US$684 million.
In the end, Sailun Europe and Sailun Singapore invested no more than US$141 million and US$1.43 million in Shams El Sherouk respectively, and invested no more than US$543 million and US$5.49 million in Senro Tire respectively.
In fact, Sailun Tire has invested in Egypt many times in the past year.
In April this year, Sailun Tire invested US$285 million in Egypt’s radial tire expansion project with an annual output of 7.05 million units. In August 2025, the company invested US$291 million in Egypt’s annual radial tire output of 3.6 million units.
Sailun Tire stated that after the completion of this project, the company will have an annual production capacity of 36 million semi-steel radial tires, 3.3 million all-steel radial tires and 20,000 tons of off-highway tires in Egypt.
With the implementation of the Egyptian project’s production capacity, the company will form a global production capacity matrix covering China, Vietnam, Cambodia, Mexico, Indonesia and Egypt.
It is worth noting that the financial calculations of this Egyptian production capacity improvement project also paint a very attractive business prospect: after the project is completed and reaches capacity, it is expected to increase the company’s average annual operating income of US$1.161 billion and average annual net profit of US$170 million.
The project’s investment payback period (after income tax) is expected to be 5.67 years, and the investment return rate is expected to reach 14.91%.
However, benefits often come with risks.
This investment ambition of over US$1.1 billion is also facing multiple tests.
This investment still needs to go through a number of approval procedures, including review and approval by the company’s shareholders’ meeting, as well as approval or filing by the relevant competent authorities in China and Egypt.
Sailun Tire reminded that the project has risk factors such as changes in the market environment, delays or failures in the approval process, and lower than expected economic benefits.
In addition, Sailun Tire also mentioned that the expected income and expected investment return rate of this investment are only estimates. During the implementation and operation process, they may be affected by risk factors such as the global political and economic environment, intensified competition in the international market, changes in supply chain and logistics costs, and there is uncertainty about whether the predicted economic benefits can be achieved.
Moreover, Sailun Tire has been on a weak trend this year, falling more than 28% so far.
