(Yicai) May 15 -- Aeolus Tyre, a leading Chinese supplier of commercial vehicle tires, plans to invest CNY2.7 billion (USD394.1 million) to build a plant in Egypt, aiming to expand its overseas high-end market presence, lift profitability, and raise its global brand profile.

To be sited in Alexandria, the new plant will have an annual production capacity of 1.5 million truck or bus tires along with 30,000 tires each for engineering and agricultural vehicles each year, Jiaozuo-based Aeolus Tyre announced yesterday.

Construction is expected to take about 20 months. Some of the project land will come from idle plots at an existing factory owned by partner Prometeon Tyre Egypt, with the rest to be acquired from surrounding land, per the announcement.

A subsidiary Aeolus Tyre will set up in China’s Hainan province will have a 98.9 percent stake in a new Egyptian joint venture that will oversee the factory’s investment, construction, and running. Prometeon Tyre Egypt and China National Rubber International, the Chinese firm’s partners, will own the rest.

Aeolus Tyre also plans to bring in outside investors for the Hainan subsidiary, although details on this have not yet been finalized. As such, Aeolus Tyre’s final stake in the new Egyptian factory is not yet known.

Prometeon Tyre Egypt is a subsidiary of Prometeon Tyre Group, which emerged from Pirelli’s industrial tire spin-off in 2018. Prometeon Tyre is now controlled by China National Tire and Rubber, which is also the controlling shareholder of Aeolus Tyre.

Aeolus Tyre said a production base in Egypt will enable the company to leverage its strengths in the industrial tire business, optimize its global capacity layout, deepen business synergies with Prometeon Tyre, and enhance its overall competitiveness in the global market.

Aeolus Tyre’s export revenue reached CNY3.4 billion last year, accounting for 47 percent of its total, according to the firm’s earnings report. Its products are exported to more than 100 countries and regions in North America, Latin America, Europe, the Middle East, Africa, Asia-Pacific, and the Commonwealth of Independent States.

Shares of Aeolus Tyre [SHA: 600469] closed 0.3 percent lower at CNY6.47 (95 US cents) each today, after earlier gaining by as much as 3.4 percent. The benchmark Shanghai Composite Index gave up 1.02 percent amid a broader correction in China’s equity markets.

Editor: Futura Costaglione