Recently, the “7+5” global production capacity layout that Linglong Tire, a leading domestic tire company, has been vigorously promoting has encountered a major Waterloo. Two major domestic tire investment projects have been terminated, and the overseas plan to build a factory in Brazil has been halted simultaneously. Superimposed disclosure violations have received regulatory warning letters, and multiple negative effects have hit simultaneously.
Behind the expansion and contraction is Linglong Tire’s continued weakening operating fundamentals, continued pressure on the profit side, and debt repayment pressure caused by high interest-bearing liabilities. Multiple dilemmas need to be solved.
Many projects have failed one after another, and the globalization strategy has encountered setbacks
On May 11, 2026, Linglong Tire issued an announcement announcing the official termination of the Shaanxi Tongchuan project that had been planned for nearly four years.
The project was first launched in 2021. It was originally planned to build an annual production line of 15.2 million sets of high-performance radial tires and 500,000 sets of retread tires. The total investment budget is as high as 6.066 billion yuan. It was originally positioned as a core fulcrum to radiate the northwest market and expand overseas growth through Central Asia. It was eventually terminated due to “slow progress in early preparations and the failure of relevant supporting measures to be in place as scheduled.”
It is worth noting that the project has undergone major changes as early as October 2025, but the company did not disclose relevant information in a timely manner. When investors asked about the progress of the project in March 2026, the company still responded on the interactive platform that “the construction progress will be advanced in accordance with the company’s overall strategy and market conditions.”
Delayed disclosure eventually led to regulatory accountability. On May 22, the Shandong Securities Regulatory Bureau issued a warning letter to Linglong Tire, clarifying that its failure to disclose major changes in projects in a timely manner violated the relevant provisions of the “Information Disclosure Management Measures for Listed Companies”. The chairman and board secretary, as the main responsible persons, were also issued a warning letter and recorded in the securities and futures market integrity files. On the same day, the Shanghai Stock Exchange also issued a regulatory warning to the company and relevant responsible persons.
As of the termination of the project, the Tongchuan project has not yet entered the substantive construction stage, and the early planning and preparation alone has cost approximately 380 million yuan. There is currently a risk that this fund cannot be recovered in full.
In the same announcement disclosing the termination of the Tongchuan project, the progress of the Anhui Lu’an project and the Brazilian investment project was also confirmed to be less than expected.
The Anhui project was initially located in Lujiang, Hefei in 2021, but later moved to Lu’an High-tech Zone in 2023 due to insufficient energy consumption indicators. It plans to build a high-performance radial tire project with an annual output of 14 million sets and a 30,000-ton waste tire resource recycling project. As of the time of the announcement, a total investment of about 140 million yuan has been completed. Only the living area and some supporting facilities have been completed. The main workshop is still in the planning and design stage and cannot be advanced according to the original plan cycle.
The overseas Brazilian project originally planned to produce 14.7 million sets of high-performance radial tires and supporting 35MW photovoltaic power stations per year. As of the announcement, the two parties had not yet reached an agreement on core terms such as shareholding ratios, and had not yet entered the substantive construction stage. On May 27, the company officially announced the termination of the overseas investment project.
At this point, Linglong Tire’s high-profile “7+5” global layout strategy of “7 domestic production bases + 5 overseas production bases” has been obviously frustrated. At present, the company has only 5 domestic production bases and only 2 overseas bases in Thailand and Serbia. There is a big gap with the original plan.
Behind the strategic contraction is the pressure of overcapacity in the entire tire industry. Data shows that in 2025, the national production of pneumatic rubber tires will reach 1.207 billion units, and the total output of automobile tires will be 834 million units, a slight decrease of 1.59% year-on-year; the export volume of automobile tires will be 472 million units, a slight decrease of 0.64% year-on-year. Both internal and external demand are weak, and industry competition continues to intensify.
In this regard, Linglong Tire stated that the next step will be to focus on the intelligent upgrading and transformation of existing bases, improve production capacity utilization, and achieve flexible deployment of production capacity at each base.
Performance and debt are both under pressure, and it is difficult to reverse the stock price decline by buying back and increasing holdings
While the strategy is shrinking, Linglong Tire’s operating fundamentals have also continued to weaken.
Financial data shows that the company will achieve operating income of 24.642 billion yuan in 2025, a year-on-year increase of 11.72%, but the net profit attributable to the parent company is only 1.369 billion yuan, a year-on-year decrease of 21.88%. While the revenue side has grown steadily, the profit side has declined significantly. “Increasing revenue without increasing profits” has become the main line of operations throughout the year.
From the perspective of gross profit margin indicators, the company’s overall gross profit margin in 2025 will be 17.03%, 5.03 percentage points narrower than 22.06% in 2024. Domestic sales gross profit margins have basically remained stable, while overseas sales gross profit margins, which are the core profit source, have plummeted 9.76 percentage points year-on-year to 19.63%, almost halving, becoming a core factor dragging down overall performance.
Entering 2026, the company’s profitability has further deteriorated. The first quarter financial report shows that the company achieved operating income of 6.057 billion yuan, and the year-on-year growth rate has slowed to 6.33%; the attributable net profit only recorded 16.8935 million yuan, a year-on-year surge of
fell 95.04%; excluding non-net profit, it turned into a loss of 26.8959 million yuan, down 109.62% from the same period last year. The company mainly attributed the sudden drop in profits in the first quarter to exchange losses caused by exchange rate changes, while the company had exchange gains in the same period last year.
While profitability is declining, the company’s debt pressure cannot be ignored.
As of the end of the first quarter of 2026, the company’s interest-bearing liabilities totaled approximately 14.3 billion yuan, including 4.941 billion yuan in short-term borrowings, 2.625 billion yuan in non-current liabilities due within one year, and 6.727 billion yuan in long-term borrowings. During the same period, the company’s monetary funds were only 3.892 billion yuan. The short-term debt repayment gap was very obvious. The company’s annual profit of less than 1.4 billion yuan carried more than 14 billion yuan in interest-bearing liabilities, and the repayment pressure was high.
In order to stabilize market confidence, Linglong Tire has successively launched stabilization measures after the intensive release of negative news: on May 11, the company reviewed and approved the repurchase plan, and plans to invest 200 million to 300 million yuan to repurchase shares, part of which will be used for the employee stock ownership plan.
Or equity incentives, part of which will be used for cancellation and capital reduction; on May 20, it was announced that the controlling shareholder Linglong Group plans to increase its stake in the company within 6 months, with an amount of no less than 180 million yuan and no more than 230 million yuan. It has obtained special loan support from banks to increase its holdings.
However, the above measures have not reversed market confidence. Since May, the company’s stock price has been falling from around 13.2 yuan at the beginning of the month to closing at 10.4 yuan on June 25. The cumulative decline during the year reached 28.23%. Multiple difficulties such as setbacks in production capacity expansion, sharp shrinkage in profits, debt pressure, and lack of market confidence are still waiting for Linglong Tire to solve one by one.
