Tire manufacturer Kenda Rubber Industrial Co (建大輪胎) said yesterday that it plans to invest NT$10 billion (US$333.6 million) on building a factory in Indonesia over the next few years, eyeing the growing demand for cars, motorcycles and bicycles in the most populous Southeast Asian nation.
The company is looking for a plot of 35 hectares in western Java, where Japan’s Bridgestone Corp and South Korea’s Hankook Tire Co built tire-manufacturing bases, and Kenda is to start the construction plan after acquiring the property, assistant vice president Huang Shi-chin (黃錫欽) said yesterday.
Kenda is to first spend part of the investment budget on installing equipment for making tires for bicycles and motorcycles, which is expected to take a year, before it expands the factory to make tires for cars, Huang said.
Huang said the company aims to use the factory to generate sales of NT$10 billion a year and it will try to boost its sales to between NT$15 billion and NT$18 billion a year after the factory starts making tires for cars.
Huang said there are 8 million to 10 million bicycles and motorcycles sold each year in Indonesia, alongside about 1 million cars yearly.
Shareholders yesterday approved the company’s proposal to distribute a cash dividend of NT$1.8 and stock dividends of 7 percent per common share, based on its earnings per share of NT$4.41 last year. That represented a 2.79 percent dividend yield, compared with the stock’s closing price of NT$64.6 yesterday.
Commenting on the second half of this year, Yang said the ongoing antidumping investigations in the US on tires shipped from China posed uncertainties for Kenda’s growth.
On July 18, the US government is to decide whether to impose a tariff upon tires imported from China, including tires manufactured by factories in China owned by foreign companies, Yang said.
Although tires manufactured in Kenda’s factories in China might be subject to the tariff, the company can still ship tires to the US from its factory in Taiwan, making it less affected by the policy, Yang said.
However, Chinese tire makers might increase their shipments to the US before the tariff is implemented, causing the tire supply in the US to surge temporarily, Yang said.
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