Sailing shares acquire peers to increase production capacity by 50%

As the first privately-owned tire company listed in China, the pace of expansion of the main business of Race Wheels Co., Ltd. is once again "accelerated," and the existing production capacity will rapidly increase by about 50%.

At present, the Race Wheels has passed two equity purchase plans and plans to invest no more than 200 million yuan and 120 million yuan to acquire the 49% equity of Shandong Jinyu Industrial Co., Ltd. (hereinafter referred to as “Jinyu Industry”) and Shenyang Peace Meridian Tire Manufacturing Co., Ltd. (down Called "Shenyang Peace") 100% equity. For this purpose, the company has signed the "Equity Transfer Framework Agreement" with the relevant shareholders of the target company.

According to statistics, Jinyu Industry currently has a registered capital of RMB 180 million. It is mainly engaged in the manufacture and sale of semi-steel radial tires. Currently, it has formed an annual production capacity of 10 million sets of semi-steel radial tires; after the acquisition, Jin Yu Tire Group still owns 51% of the company's shares and is in a controlling position. Shenyang Peace, which is also engaged in the production and sales of tires, has also formed an annual production capacity of 1.2 million sets of all-steel radial truck tires.

From 2008 to 2010, the company's radial tire production surged from the initial 2.8 million to 9.1 million. Since then, with the gradual production of the “10 million semi-steel radial tire project annually”, the company’s current tire production capacity has further increased to 11 million, including 2.5 million all-steel radial tires and approximately 8.5 million semi-steel radial tires. After the investment project is fully completed at the end of this year, the company’s production capacity of semi-steel radial tires will further increase to 10 million. If the acquisition is successful, the company will include the production capacity of 1.2 million sets of all-steel radial tires in Shenyang, and 4.9 million sets of semi-steel radial tire production capacity (calculated on an equity basis) of Jinyu Industry, which will expand production capacity by approximately 50%.

It is worth mentioning that while the production capacity is rapidly “plus code”, the production and sales ratio of the racing wheel tires has also been at a high level. Driven by this, the company's total operating revenue has increased from 4.05 billion yuan in 2010 to 6.39 billion yuan in 2011, of which the tire business has "contributed" nearly 5 billion yuan to become the second group in the domestic tire industry.

Although the growth rate of China’s automobile output slowed down for two consecutive years in 2010 and 2011, the number of car ownership continued to grow at a rate of around 17%. As the consumption of blowout cars in 2009 gradually entered the tire replacement period, replacement tire growth will increase. It has become the main driver of China's tire demand. In addition, the drop in rubber prices will also effectively boost the profitability of tire companies. In this context, semi-steel tire business, which is being developed in recent years by Saiwan, may become the main highlight of the company's future operations.