Hwa Fong Rubber to set up 2nd subsidiary in mainland China

Taipei, March 24, 2003 (CENS)--Hwa Fong Rubber Ind. Co., Ltd., a local manufacturer of rubber tires listed on the Taiwan Stock Exchange, will establish a subsidiary manufacturer in Changshu of Jiangsu Province, mainland China, with the production to begin at the end of 2004.

Hwa Fong's shareholders, at this year's first provisional meeting on March 20, consented to the establishment of the new subsidiary with investment of US$12 million and decided to boost the company's registered capital from NT$2.45 billion to NT$3.50 million.

Hwa Fong already has a subsidiary manufacturer of rubber tires used in bicycles, motorcycles, and small automobiles in mainland China. To be the second one there, the new subsidiary will produce rubber tires used in motorcycles, light trucks, and industrial/agricultural vehicles.

On the other hand, Hwa Fong's board of directors passed the distribution of a dividend per share of NT$0.75, all in stock, for the company's 2002 operation as well as the issuance of five-year unsecured convertible bonds of NT$700 million, the first time for the company, at a meeting on March 21. The company's shareholder meeting for this year is slated for June 12.

Hwa Fong reaped pretax profit of NT$201 million and after-tax profit of NT$180 million last year, soaring by 127% and 114% respectively from 2001. The corresponding earnings per share (EPS) and net (after-tax) EPS for last year stood at NT$0.83 and NT$0.75, respectively.

The fundraising is to repay bank loans, add production equipment of rubber tires used in industrial/agricultural vehicles, and invest more in its subsidiary manufacturer in the U.S. The company's U.S. subsidiary will raise additional capital of US$6 million by issuing new shares.

Hwa Fong rang up revenue of N$148 million last month, up 22.34% from February 2002. The company brought in two-month revenue of NT$331 million, a year-on-year rise of 19.62%.