Tire chairman invests another 1.56 billion

May 14,2024

Recently, Chairman Jin Yongsheng and CEO Omar Saeed of Service Long March Tire visited Pakistani Prime Minister Muhammad Shahbaz Sharif and thanked the government for its support to the tire industry.

Meanwhile, Service Industries Limited, the parent company of Service Long March, announced on the Pakistan Stock Exchange on Monday that the meeting between the two parties mentioned a number of development plans.

Invest 1.56 billion to expand production on a large scale

The notice stated that Service Long March Tire has committed to further invest 30 billion Pakistani rupees to double its production capacity and increase exports to US$100 million in 2025.

In addition, Service Long March Tire also stated that it plans to invest another 30 billion Pakistani rupees to launch a new project to export special tires from the country to the EU and the United States. The two investments total approximately 1.56 billion yuan.

As of 6 p.m. that day, Service Industries stock price rose 7.24%

During the meeting, Prime Minister Shahbaz promised continued support from all departments and directed relevant ministries to help drive growth in the country's tire exports.

The meeting was attended by the Minister of Finance, Secretary of Commerce, Minister of Privatisation and Investment, Minister of Information, Secretary to the Prime Minister, Secretary of Commerce and Secretary of BOI.

Pakistani authorities remain keen to attract foreign direct investment, which has declined significantly in recent years due to deteriorating law and order conditions and political instability.

It is reported that the country only received US$1.1 billion in foreign direct investment from July 2023 to March 2024, compared with US$1.216 billion in the same period of the previous fiscal year, a year-on-year decrease of US$118 million.

"The Belt and Road" Star tire project

In recent years, Pakistan's economy has grown rapidly, and the freight industry, mainly automobile transportation, has also flourished. The TBR market has grown at an average annual rate of 10%, with strong demand.

However, due to the lack of relevant technology and funds, Pakistan's tire production capacity is seriously insufficient. It costs US$300 million to US$400 million in foreign exchange to import TBR every year, which limits the development of the transportation industry and becomes a bottleneck for economic development.

It is understood that Service Long March Tire is a joint venture established by Service Group and Chaoyang Long March Tire, which mainly produces all-steel radial truck/bus tires.

In 2019, Long March established a joint venture with Pakistan Service Industries Limited to set up a factory in Pakistan, with a total investment of US$250 million.

2019 Joint venture signing ceremony

Among them, Service Group holds 51% of the shares, Chaoyang Long March Tire holds 44%, and Myco holds 5%. The Government of Pakistan has granted Service Long March the status of "The Only Enterprise Special Economic Zone".

The project is implemented in three phases, with the first phase achieving an annual production capacity of 720,000 sets of all-steel tires; the second phase will reach 1.2 million sets/year, and the final production capacity will reach 2.4 million sets/year.

According to reports, the main equipment of Long March Tire's Pakistan project is all made in China, and the first phase will drive the export of domestic equipment and ancillary tools to 210 million yuan; The complete set of production technology for the project is exclusively exported by Long March Tire; After the first phase of the project is completed, the monthly purchase of domestic raw and auxiliary materials for key products will reach US$1.5 million.

Chaoyang Long March, development momentum is strong

While foreign investment is increasing, Chaoyang Long March's operating indicators such as output, sales volume, sales revenue, and profits in the first quarter of this year have steadily exceeded the levels of the same period last year.

According to local media reports, Chaoyang Long March Tire produced 22,000 tons of tires and sold 349,600 sets in March, both hitting record highs.

Since the beginning of this year, the company's production lines have entered full capacity operation. In order to improve production and sales efficiency, the production department and each workshop continuously optimize all aspects of production.

At the same time, the company insists on R&D innovation and has achieved good results in areas such as tackling bottleneck technologies and transforming core technological achievements. In terms of sales, the company continues to pay attention to market changes. Distributors in various places held secondary distributor meetings to adjust production and marketing plans to meet product needs in different scenarios.

It is understood that on January 18 this year, the first tire of Chaoyang Long March Tire annual off-highway tire project of producing 200,000 sets rolled off the production line, with a total investment of 450 million yuan.

Among them, the first phase has an annual output of 100,000 sets of off-highway tires. The products are mainly targeted at off-highway vehicles such as wide-body vehicles, underground mining trucks, loaders, and cranes. It was originally planned that the first tire would roll off the production line on October 1 last year, and all production would be put into production in November.

After the project reaches full production, it is expected to bring 1 billion yuan in new sales revenue to the company and create 550 new jobs.

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