QINGDAO, China — Sailun Group Co. Ltd. has embarked on a $124 million upgrade of an OTR tire plant in Qingdao to convert the plant's capacity to larger tires, those of 49-inch rim diameter and larger.
Sailun disclosed the project in a Jan. 17 filing with the Shanghai Stock Exchange, saying it is part of its strategy to transform the product structure of its OTR tire business.
The investment will result in the plant's capacity rising to 40,000 metric tons per year.
The plant's existing OTR tire production equipment will be relocated or disposed of, the group said.
Sailun said it expects the project to be completed within 10 months, with potential to realize an annual operating income of $194 million.
"With a dynamic payback period of 3.4 years, it has strong profitability and sustainable development capabilities," the group added.
Making the case for the investment, Sailun said after "years of technology accumulation and market development," its 49-inch-plus OTR technology had "reached the international advanced levels."
The upgrade project is also in line with the company's development strategy, themed "industry situation and market demand," the group added.
