(Yicai) May 28 -- Shares of Songyuan Automotive Safety Systems advanced after the Chinese maker of auto safety gear said it plans to build a new plant in Malaysia to better meet the overseas demand from existing and potential new customers.

Songyuan [SHE: 300893] was trading up 2.5 percent at CNY29.02 (US4.01) as of lunch break in Shenzhen today.

Songyuan will establish a project company in Malaysia for the investment, construction, and operation of the new plant in the Automotive Hi-Tech Valley, the Zhejiang province-based company announced yesterday.

The new plant in Malaysia will help Songyuan minimize the impact of geopolitical factors, better meet the needs of international customers, and lower production costs, the firm noted.

With a total investment of CNY50 million (USD6.9 million), the first phase of the project will have an annual production capacity of 500,000 sets of automotive seat belt system assembly products for the overseas factories of two of Songyuan’s carmaker clients. It is expected to achieve mass production in the second half of next year.

Songyuan will increase its investment in the Malaysian plant depending on customers’ needs, the firm noted. 

Songyuan is one of China’s leading suppliers of automotive passive safety systems. While it only had Chinese carmakers as its clients, at the beginning of April, the company announced it had become the new seat belt supplier for a new car model of a well-known European automaker that is among the top five in the world, with batch deliveries expected to start in 2027. 

Last year, Songyuan’s sales of automotive seat belt assembly products reached 16.3 million sets, achieving a revenue of CNY904 million (USD124.8 million), accounting for 70 percent of the company’s total. However, Songyuan’s revenue from overseas sales accounted for only 8.6 percent of the total last year.

Editor: Futura Costaglione