The "7+5" global strategy Linglong Tire (601966.SH) once highly anticipated is facing a complete stall. In May 2026, within a mere 5 days, Linglong Tire successively announced the termination of two new projects, Tongchuan, Shaanxi and Brazil. Coupled with the suspension of the Anhui project, the company's expansion faces heavy obstacles. Linglong Tire pledged: by 2030, achieve a production and sales volume of 160 million tires, with sales revenue exceeding 80 billion yuan, aiming for a production capacity scale among the top five in the world. It seems now that these goals for Linglong Tire are far off.
Striving for production and sales volume to reach 160 million tires
On April 28, in its released 2025 Annual Report, Linglong Tire stated, "We will continue to firmly promote the '7+5' global strategic layout, relying on international production bases, partner with global partners, commit to upgrading product quality, lean supply chain management, and breakthroughs in technical innovation, jointly promoting the coordinated development of the industrial chain, and actively building an open, diverse, and inclusive cooperation ecosystem."
For over 6 years, Linglong Tire's "7+5" global strategy has undergone "upgrades," but now it seems it might face "bankruptcy."
In March 2020, Linglong Tire released the Outline of Mid-to-Long-Term Development Strategic Plan (2020-2030). The outline clearly pointed out that with the continuous expansion of Linglong Tire's business and the company's scale, the company's previous "5+3" development strategy could no longer meet the company's development needs. To promote localization of manufacturing, sales, and services, get closer to users and the market, segment the market, and increase market share, implement "6+6" development strategy, that is: six domestic production bases, six overseas production bases, breaking through 160 million units of tire production capacity by 2030.
At that time, Linglong Tire already owned four production bases in Zhaoyuan, Dezhou, Liuzhou, and Jingmen domestically.
In June 2021, Linglong Tire changed the original "6+6" strategy to "7+5" strategy, with the Tongchuan, Shaanxi base project approval.
On December 14, 2021, Linglong Tire's fifth base in China and seventh globally—Jilin Linglong Tire Co., Ltd. Phase I all-steel first tire off-line ceremony was held in Changchun.
At the same time, Linglong Tire's two major planned domestic production bases are in Tongchuan and Hefei. Moreover, Linglong Tire already owns two overseas bases in Thailand and Serbia, and is planning and constructing a third overseas factory in Brazil.
The overall goal of the "7+5" strategy has not changed, that is, planning to reach a production and sales volume of 160 million tires by 2030, with sales revenue exceeding 80 billion yuan, and a production capacity scale aiming for the top five in the world.
Tongchuan Project Terminated
However, more than four years have passed, and Linglong Tire's "7+5" strategy not only did not advance further, but it is possible to "bankrupt."
In June 2021, an announcement by Linglong Tire showed that the Tongchuan project with an annual production capacity of 15.2 million sets of high-performance radial tires and 500,000 sets of retreaded tires had a total investment of 6.066 billion yuan.
Among them: construction investment 5.46 billion yuan, construction period interest 517 million yuan, working capital 88.6929 million yuan. Regarding funding raising, the company self-raised 2.466 billion yuan, bank loans 3.6 billion yuan.
However, in mid-2025, Linglong Tire introduced that the Shaanxi Tongchuan investment construction project had completed preliminary approval work, land tendering and auction, and factory design work. Currently, the project has not officially started due to the external "seven connections and one leveling" work not meeting engineering construction requirements.
On the night of May 22, 2026, Linglong Tire received a warning letter showing that in October 2025, the Tongchuan investment project underwent significant changes, and the company failed to disclose in time, violating relevant provisions of the Administrative Measures for Information Disclosure by Listed Companies.
The regulatory department stated that Wang Feng, as Chairman of Linglong Tire and General Manager at the time, and Sun Songtao, as Board Secretary, bore major responsibility for the company's above behavior.
According to relevant regulations, it was decided to take administrative regulatory measures of issuing warning letters against Wang Feng and Sun Songtao, and record them into the Securities and Futures Market Integrity Database.
Linglong Tire stated that for the above issues, the company has taken relevant measures to rectify, and held a Board meeting on May 11, 2026, to review and approve the "Proposal on Terminating the Investment Project in Tongchuan City, Shaanxi Province", which still needs to be submitted to the company's Shareholders' Meeting for deliberation.
Linglong Tire stated that due to the slow progress of preliminary project preparation work and supporting measures failing to land as scheduled, there exists significant uncertainty in the institutional guarantee and expected returns for project implementation.
To optimize resource allocation, after thorough demonstration and prudent analysis by the company, it was decided not to proceed with the above foreign investment project.
Brazil Project Terminated
Only 5 days later, problems arose with Linglong Tire's newly built overseas project.
On the night of May 27, an announcement by Linglong Tire showed that due to the failure to reach an agreement on core terms such as shareholding ratio and cooperation terms with the proposed partner, the Brazil investment construction project no longer has the conditions to advance on schedule.
After comprehensive evaluation, the company decided to terminate the above foreign investment project. Currently, both parties have reached a consensus on termination of cooperation matters, and will proceed with termination work according to their respective internal procedures after completion of relevant deliberations.
Linglong Tire stated that the termination of this investment matter was a prudent decision made by the company based on changes in the market environment, company strategic adjustment, and actual operating situation. The project has not entered into substantial construction investment and will not adversely affect the company's business development and daily operations.
On May 15, 2025, Linglong Tire held the 2024 Annual Shareholders' Meeting, passing the "Proposal on Carrying Out Overseas (Brazil) Investment Construction Project and Cumulative Foreign Investment". The company planned to jointly invest and construct an overseas (Brazil) investment construction project with SUNSET S.A. COMERCIAL INDUSTRIAL Y DE SERVICIOS ("14.7 million sets of various high-performance radial tires per year" and "35MW photovoltaic power station"). The total project investment was 1.193 billion USD (equivalent to 8.71 billion yuan).
A detail worth noting is that at that time, Linglong Tire introduced that according to the construction content, scale, and actual situation of the construction subject of this project, the planned construction period was expected to be 7 years, carried out in three phases, planned to start in the third quarter of 2025, and end for use by the end of December 2032.
Obviously, the Brazil construction project did not start in the third quarter of 2025, but Linglong Tire did not disclose the progress of this project.
The company only stated in the 2025 Annual Report that the Brazil investment construction project is currently in the planning and design phase, while carrying out business negotiations with partners on matters such as shareholding ratio, and has not entered the substantial construction investment phase.
Did Linglong Tire also violate regulations when disclosing the Brazil construction project? A relevant person in a listed company's Board Secretary's Office stated that Linglong Tire didn't tell lies, but told too little and too vaguely, letting investors look at a full year's annual report without knowing the project had "actually failed."
"This is not sustainable at the information disclosure compliance level." Overall, Linglong Tire's two domestic and foreign major projects totaling a proposed investment of 14.776 billion yuan have both ended in failure, and the company's "7+5" strategy is effectively defunct.
Revenue Growth Slowing
Not only were the above two projects, Linglong Tire's project in Anhui also did not go smoothly.
In May 2026, Linglong Tire also announced that the company's project with an annual production capacity of 14.6 million sets of ultra-high-performance self-healing and smart radial tires in Anhui Province was terminated due to insufficient energy consumption indicators, and transferred to build two new projects in Lu'an High-tech Industrial Development Zone, Anhui. Currently, about 140 million yuan has been invested, but only the living area and part of production supporting facilities have been completed, the main workshop is still in the planning and design phase, and the project construction cycle cannot be executed as originally planned.
When new construction projects do not meet expectations, Linglong Tire's 2030 visionary goals seem unlikely to be realized.
In 2023, Linglong Tire's operating revenue increased by 18.58% year-on-year, breaking through 20 billion yuan for the first time to reach 20.162 billion yuan. In 2024 and 2025, the company's operating revenue was 22.058 billion yuan and 24.642 billion yuan respectively, increasing 9.39% and 11.72% year-on-year respectively.
From 24.642 billion yuan growing to 80 billion yuan, Linglong Tire's operating revenue needs to grow by an average of 11.1 billion yuan per year in the next 5 years. Without new capacity release, the company cannot reach this goal.
In Q1 2026, Linglong Tire's operating revenue reached 6.057 billion yuan, increasing 6.33% year-on-year, entering a slow revenue growth period.
In 2025, Linglong Tire's tire product production volume reached 94.2981 million units, sales volume reached 91.3468 million units, inventory volume reached 16.4931 million units.
As of the end of 2025, Linglong Tire's design capacity reached 126 million units, achieved production capacity reached 114 million units, capacity utilization rate was 82.43%.
Obviously, Linglong Tire's production and sales volume reaching 160 million units still has a considerable distance. Under the continuous "blows," Linglong Tire's stock price has continued to probe downward, currently oscillating around 12 yuan per share.
For this reason, on May 21, Linglong Tire announced that the company's controlling shareholder intends to increase holdings in the company's shares, with the increase amount not less than 180 million yuan (inclusive), and not more than 230 million yuan (inclusive).
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