Kenda Rubber increasing tire production capacity

Tire manufacturer Kenda Rubber Industrial Co  is increasing its production capacity for car tires to meet rising market demand, the company said yesterday.

The Yunlin County-based company told its annual shareholders’ meeting that it would increase its tire capacity by 50 percent to 38,000 units a day by the end of this year.

Kenda plans to raise its capacity in Taiwan by 4,000 car tires a day, a company official, who declined to be named, said by telephone.

The company’s new plant in Tianjin, China, is expected to increase its capacity by 5,000 car tires a day by the end of this year, while its new factory in Shanghai will increase its production by 2,500 car tires a day, the official said.

Currently, Kenda produces 22,500 car tires a day in Kunshan, China, and 4,000 car tires a day in Yunlin, Taiwan, the company official said.

“Kenda’s new plant in Tianjin is operating on a trial basis and likely to become fully operational next month, instead of by the end of next quarter as we previously expected,” chairman Yang Ying-ming told shareholders yesterday.

In addition, the company launched a subsidiary in Europe last month to promote its brand and conduct marketing, in a bid to enter the European market in the near future, the chairman said.

In the January-to-March quarter, Kenda reported net profit of NT$769.09 million, or earnings per share (EPS) of NT$1.05.

The company yesterday said profit this year would increase from last year’s NT$2.64 billion (US$88 million), or NT$3.6 per share, without elaborating.

Waterland Securities Investment Consulting Co  forecast Kenda could post net profit of NT$3.45 billion, or NT$4.7 per share, this year, on the back of its continued capacity expansion across the Taiwan Strait, declining rubber prices and strong car tire demand in China.

“Kenda’s EPS this quarter is expected to reach NT$1.36, the highest quarterly EPS this year, because rubber prices declined and Kenda launched new bicycle tires,” analyst Shane Wu said in a report on Tuesday last week.

“However, EPS for next quarter and the fourth quarter could decline to NT$1.27 and NT$1.01 respectively, as the company might lower prices amid market competition,” Wu added.

Shareholders yesterday approved the company’s plan to distribute a cash dividend of NT$1.7 per share — which represents a dividend yield of 2.53 percent based on the company’s closing share price of NT$67.3 — and a stock dividend of 4 percent.