Guizhou Tyre’s 670 million yuan rights issue
Guizhou Tyre reportedly planed to raise 670 million yuan (£62.924 million; 74.624 million euros; US$102 million) through a rights issue of three shares for every 10 shares held at 6.86 yuan per share. According to Shanghai Securities News, which cited a company filing, the subscription period was 11 – 17 January 2011. The company has not yet released any details of the results of the issue.
According to reports, all the funds raised will be used for upgrades to the company’s production line which has a reported annual production capacity of 1.1 million all steel radial tyres. After the upgrade is completed, the company’s production capacity of all steel radial tyres is expected to total 4 million units a year.
In January the company forecasted that its net profit over the past year (2010) would fall 50 to 70 per cent to 111-180 million yuan (between $16.84 million and $27.30 million) due to inflated raw material costs.
Conversely in 2010 the company posted a 604 per cent profit surge for the 2009 financial year, driven by a lower material costs and a strong domestic demand. Then net profits jumped to 360 million yuan (US$52.7 million). Annual business revenue rose 8.3 per cent year on year to 4.7 billion yuan, according to reports. Guizhou Tyre Co. is said to have earned $120 million through exports in 2009, down 1.64 per cent compared with the previous year.
Prior to the most recent profits warning, the company had previously forecast a mixed outlook in 2010, saying the government’s continued investment in infrastructure would offer new opportunities, but the tyre industry would face pressures from rising material costs and the US tyre import tariffs.