On June 17, Sailun Tire (SH601058, stock price 11.80 yuan, market value 38.80 billion yuan) held the sixth meeting of the seventh board of directors, and an overseas expansion plan with a total investment of US$1.141 billion officially surfaced.
Sailun Tire’s announcement shows that in accordance with global industry development trends and the company’s international development strategy, in order to better match and meet the needs of customers in the global market, and enhance the company’s comprehensive strength and global core competitiveness, the company plans to use its wholly-owned subsidiary Shams El Sherouk Tire Co., Ltd. (hereinafter referred to as “Shams El Sherouk”) and its newly established wholly-owned subsidiary Senro Tire
Co., Ltd. (the specific name shall be subject to the final registration document, hereinafter referred to as “Senro Tire”) invested in the construction of the “Egyptian Tire Production Capacity Improvement Project” with a total investment of US$1.141 billion.
The expansion plan targets an annual production capacity of 27 million semi-steel radial tires, 1.65 million all-steel radial tires and 20,000 tons of off-highway tires.
This expansion will not only rely on the “two-wheel drive” model of existing wholly-owned subsidiaries and proposed new entities, but also involves a multi-level continuous capital increase path of up to US$691 million.
With the significant expansion of Egypt’s production capacity again, Sailun Tire will build a global production capacity matrix covering China, Vietnam, Cambodia, Mexico, Indonesia and Egypt.
However, behind the eye-catching estimates that it will generate an average annual revenue of over US$1.16 billion after reaching production capacity, the challenges posed by geopolitics, foreign exchange fluctuations and ultra-long transnational management chains cannot be ignored.
The division of labor between the two major entities has led to a significant jump in production capacity
The investment of US$1.141 billion (equivalent to approximately RMB 7.807 billion) includes a construction investment of US$1.090 billion, a preparatory working capital of US$42.1 million, and interest during the construction period of US$9.19 million.
Of the total financing of up to US$1.141 billion, the company will raise US$625 million from self-raised funds (including its own funds) and borrow US$517 million from financial institutions.
In terms of implementation of specific projects, Sailun Tire has adopted a strategy of clear division of labor between the two major entities.
Among them, the previously established wholly-owned subsidiary Shams El Sherouk is responsible for building the semi-steel radial tire section with an annual output of 9 million units.
The total investment in this part is US$227 million, and the construction period is planned to be 15 months.
The “big part” of this capacity improvement project – the construction content of the annual output 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 constructed 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 meet the construction capital needs and daily operating needs of the two implementation entities, Sailun Tire has designed a thorough capital transportation channel: the company plans to increase the capital of its wholly-owned subsidiary Sailun Hong Kong by no more than 691 million US dollars; then from Sailun Hong Kong to Sailun Singapore; and from Sailun Singapore to Sailun Europe.
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.
It is worth noting that the design scale of this production capacity improvement project is huge. The project has a capacity of 3,805 people, including 3,326 production-related personnel and 479 technical and management personnel.
Staff wages are calculated according to local wage levels.
Such a large staffing also marks a real “big leap” for Sailun Tire’s manufacturing footprint on the African continent.
In terms of the impact of foreign investment on listed companies, 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 production capacity of the Egyptian project, the company will form a global production capacity matrix covering China, Vietnam, Cambodia, Mexico, Indonesia and Egypt, which can further enhance the company’s global operation capabilities and help the company effectively resist the operational risks caused by international trade barriers.
“The globally coordinated production capacity system can further expand the company’s scale advantages, continue to strengthen core competitiveness, continuously improve comprehensive risk resistance and long-term development potential, and provide strong support for the company’s sustainable development.” Sailun Tire said.
Anchor in the global core market, opportunities and challenges go hand in hand
Why does Sailun Tire show a strong willingness to invest in the Egyptian market?
The product sales target of this “heavy position” in Egypt is not only to digest the local demand in Egypt, but also to target the two global core markets of Europe and North America.
In the feasibility study report, Sailun Tire stated that Egypt, as the third largest automobile market in Africa, has strong and continuously growing tire market demand, and there is a production capacity gap, which provides space for the implementation of the project.
Relevant data show that from the supply side, Egypt’s domestic tire production capacity is limited and currently mainly relies on imports to fill the gap. The tire market consumption scale has formed a stable volume in 2025, and the average annual compound growth rate of market consumption from 2012 to 2025 has maintained positive growth. Although there are slight fluctuations during the period, the overall growth trend is clear.
With the deployment of Chinese and international tire giants, Egypt’s tire production capacity is gradually increasing. It is expected that Egypt’s tire production capacity will increase by more than 20% in 2026. However, the gap between supply and demand will still exist in the short term, especially in the fields of high-end commercial vehicle tires and high-quality passenger car tires.
Sailun Tire stated in the feasibility study report that Egypt relies on the Suez Canal, a global shipping and energy transportation hub, and has the advantages of trade transit between Africa, the Middle East and Europe.
Free trade agreements signed with multiple countries and international organizations have been superimposed to form a complete open trade system.
It is not only an important global trade hub, but also a core logistics and trade center in North Africa and the Middle East.
“This project makes full use of the network channels of the Suez Canal Economic Zone. It can coordinate product production plans with existing production plants according to market demands and tariff policies of different countries and regions, and can adapt to market changes and needs. It is competitive in the market and has good market prospects.” Sailun Tire said.
It is worth noting that the financial calculations of the project also paint a very attractive business prospect: after the project reaches production, it can achieve an average annual operating income of US$1.161 billion and an 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.
The first is the “hard target” for the project implementation procedure – this investment not only needs to be submitted to the Sailun Tire shareholders’ meeting for review, but also needs to be approved or filed by the relevant competent authorities in my country and the local competent authorities in Egypt. Failure to obtain approval may lead to the project being delayed or terminated.
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, it 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.
