Cheng Shin set to open new plants

Cheng Shin Rubber Industry Co’s (正新橡膠) two new tire plants in India and Indonesia are to start operations in the second and third quarter of next year respectively, a company spokesman said yesterday.

“Each plant can produce up to 20,000 motorcycle tires per day to meet demand from customers in the region,” Cheng Shin spokesman Richard Lo (羅永勵) said by telephone yesterday.

New motorcycle sales in India and Indonesia are expected to reach about 20 million and 7 million units per year respectively, Lo said, adding that the company hopes to grab an increasing share of the regional market.

Commenting on the sales outlook for next year, Lo said the company expects sales to grow on the back of robust demand in the global car market and an improving product mix.

Cheng Shin plans to manufacture more higher-margin products in hopes of boosting revenue, such as run-flat tires, which enable vehicles to continue working even when punctured, he said.

The company is also mulling raising its product prices in the first quarter to reflect rising rubber prices, Lo said, but declined to give detailed figures.

Synthetic rubber and natural rubber account for more than 40 percent of the company’s material costs, company data showed.

Cheng Shin’s main rival in the domestic market — Kenda Rubber Industrial Co (建大輪胎) — is expected to raise its tire prices by between 3 and 7 percent in the beginning of next year, local media reported.

From January through September, Cheng Shin saw its net profit rise 15 percent to NT$11.01 billion (US$346 million) from a year ago.

Aggregate sales in the first nine months of this year edged up 0.5 percent to NT$89.7 billion from a year ago, with gross margin improving from 30.2 percent to 31.73 percent, the company said in a filing with the Taiwan Stock Exchange.

Cheng Shin attributed the results to increasing sales contribution from higher-margin products, including all-season tires and run-flat tires.

The Changhua-based company, the world’s ninth-largest tire maker, operates 10 plants in Taiwan, China, Vietnam and Thailand.

It distributes a wide range of products under the CST brand, including tires and tubes for bicycles, motorcycles, all-terrain vehicles, automobiles and trucks.

Cheng Shin shares yesterday rose 0.49 percent in Taipei trading, outperforming the benchmark TAIEX, which slid 0.46 percent.