Kenda to Set Up New Tire Factory in Indonesia

Optimistic about growth potential of the tire market in Indonesia, the Taiwan-based Kenda Rubber Ind. Co., a globally known tire supplier, has decided to set up a new factory there, reports the company's chairman, Y.M. Yang.

Yang emphasized that with incomes in Indonesia rising steadily, the domestic market demand for vehicle tires, particularly motorbike tires, is sure to take off soon. This is the reason for Kenda's decision to establish a production base there.

West Java Province has been chosen as the location for the planned factory, which will occupy about 35 hectares and cost roughly NT$10 billion (US$333.33 million). The factory will produce bicycle and motorbike tires initially and then expand its product mix to sedan tires, mostly for the domestic market.

The Indonesian plant will be Kenda's second manufacturing base in Southeast Asia, following the first one in Vietnam. The company will be the second Taiwanese tire maker with a foothold in Indonesia, after Cheng Shin Rubber Industry Co., Ltd.

In addition, Kenda will kick off construction of a new factory each in Huizhou and Kunshan, China, in the second half of this year. These plants will turn out motorbike and bicycle tires and steel radial truck tires, respectively, helping to fuel the firm's growth momentum.

Kenda chalked up consolidated revenues of NT$32.05 billion (US$1.08 billion) and net profits of NT$3.36 billion (US$112 million) last year, yielding an all-time high EPS (earnings per share) of NT$4.41. The firm announced a dividend distribution of NT$2.5 per share, NT$1.8 in cash and the remainder in stock, at an investor conference in late June.

Kenda's outlooks this year seems increasingly bright, as its latest financial report shows that consolidated revenues increased 16.68% in the first five months, to NT$14.15 billion (US$471 million). With market demand in the U.S. and Europe remaining strong, along with the seasonal boom hitting the industry, institutional investors estimate that the company's revenue approached NT$10 billion in the second quarter.

With the United Steelworkers union filing an anti-dumping lawsuit with the U.S. International Trade Commission against sedan and light truck tires imported from China, Yang said, his company will switch its shipments to the U.S. from China to Taiwan. (SC)

New Factories Planned by Kenda
Place	Huizhou, China	Kunshan, China	West Java Province, Indonesia
Investment	NT$5 Bn.	NT$10 Bn.	NT$10 Bn.
Products	Motorbike and bicycle tires	All steel radial truck tires	Motorbike and bicycle tires
Scheduled Start of Construction	2nd half of 2014	Q4, 2014	Undecided

Source: Kenda Rubber Ind. Co., Ltd.