Wed, May 21, 2014 - Page 14 News List

KMC Kuei Meng seeks to invest US$5m in Vietnam

UNAFFECTED CYCLE:The bicycle chain company’s Vietnam division did not suffer any losses during the anti-China riots and resumed operations on Thursday

By Camaron Kao  /  Staff reporter

Bicycle chain maker KMC Kuei Meng International Inc (桂盟國際) said yesterday that it will invest about US$5 million in Vietnam in the second half of the year as it enters the Southeast Asian market.

The company plans to build a new factory capable of making 15 million bicycle chains a year in AMATA industrial park in Vietnam, which is near its Vietnamese division, and the construction is expected to be completed in one year.

“Since we only have limited capacity for bicycle chains in Southeast Asia, a new factory in Vietnam can help us enter the market,” KMC president Daniel Wu (吳瑞章) told reporters.

The company has a plant in Vietnam capable of making 10 million chains a year. However, about 9 million chains a year are shipped to motorcycle manufacturers, the company said.

The company also has a division in Indonesia, but it is used to promote sales and marketing.

Gross margin for bicycle chains in Southeast Asia is lower than in other regions, but the company still cannot ignore the bicycle market and its aftersales market in the region, according to Wu.

The company made the announcement after its Vietnamese division shut down on Wednesday last week because of the eruption of anti-China protests in the country, following the Chinese government placing an oil rig near the coast of Vietnam earlier this month.

However, because it is situated in the AMATA park in Dong Nai Province, the division did not suffer any loss during the riots and resumed operations on Thursday last week.

“We think the anti-China protests have subsided, and we decided to implement our plan as scheduled,” Wu said.

KMC’s shares rose close to the daily limit of 7 percent to NT$133.5 in Tapei trading yesterday after the company said on Monday that it had finalized a share sale scheme with its key industry partners.

The company said it plans to sell 600,000 shares to Merida Industry Co (美利達), the nation’s No. 2 bicycle maker, and 1.5 million shares to Shimano (Taiwan) Co (台灣禧瑪諾) via private placements.

The announcement came after the company said on Wednesday last week that Taiwan’s top bicycle manufacturer, Giant Manufacturing Co (巨大機械), also agreed to purchase 1.5 million KMC shares.

At NT$105 per share, the company will raise fresh funds of NT$378 million (US$12.5 million) through the share offering.

Those deals will be subject to shareholders’ approval at the company’s annual general meeting on June 24 and are set to close in late July.

During the first quarter this year, KMC reported net income of NT$109.77 million, or NT$1.04 per share, up from NT$92.25 million, or NT$0.87 per share, for the same period of last year.

Revenue for the first four months of the year totaled NT$826.34 million, up 32.72 percent year-on-year.

Wu said the company will acquire two companies owned by his family based in southern and eastern China in the next two years.

In 2016, the company’s revenue would be twice as high as NT$2.09 billion it posted a year earlier after the acquisitions, it said.

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