Lu Hai Holding Corp (六暉), the world’s largest tire valve manufacturer, yesterday said that Indonesian demand for valve stems used in scooter and motorcycle tires has grown significantly this year, potentially helping to offset softening demand in China.
“We plan to raise the capacity of our Indonesian plant from 15 million valve stems to more than 20 million units per month in the first quarter of next year to meet growing demand,” chairman and president Simon Hsu (許廉凱) told an investors’ meeting in Taipei.
The plant, which mainly makes scooter and motorcycle valve stems, has run at capacity the entire year so far, he said.
Sales generated from the Indonesian market rose about 23.25 percent year-on-year in the first half, accounting for 27.56 percent of the company’s total sales of NT$1.34 billion (US$42.65 million) in the period, company data showed.
Sales also grew in other markets such as Vietnam and Brazil, while sales in China fell about 4.07 percent year-on-year.
In China, the company is investing between NT$1.2 billion and NT$1.5 billion in a new plant in Xiamen, which is expected to be completed in the second quarter of next year, Hsu said.
Lu Hai plans to relocate production lines for vehicles, heavy-duty truck valve stems and metalworking bases from its Kunshan plant to the Xiamen plant as requested by the Chinese authorities, he said.
In the first half of the year, the company’s net income soared 35.78 percent annually to NT$104.44 million, thanks to lower raw material prices and a better product portfolio, Lu Hai said.
Earnings per share climbed from NT$0.94 in the period last year to NT$1.27, and gross margin improved 2.13 percentage points to 21.79 percent due to a higher utilization rate, the company said.
Shipments of scooter and motorcycle valves, the company’s main products, grew 9.1 percent year-on-year in the first half, while other products, such as valve stems for bikes, heavy-duty trucks and tire pressure monitoring systems (TPMS), also grew 0.26 to 4.91 percent, company data showed.
TPMS valve stem sales would see robust growth next year, as Lu Hai received orders from the world’s top two TPMS suppliers, Hsu said.
New orders would contribute to sales in the first half of next year after the company gains certification for the new products later this year, he said, citing the average selling prices for TPMS valves, which are at least three times higher than those of traditional valves.
Lu Hai shares closed flat from the previous day at NT$38.5 in Taipei trading yesterday.
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