Kenda Rubber Industrial LTD

Transcription

1 Kenda Rubber Industrial LTD Investment Forum Proxy Spokesman Wei-ShuChen

2 Disclaimer The information in this document was acquired from sources available to the company and is subject to change. The information from TSE MOPS shall take precedence in case of discrepancies.

3 Outline Business Strategies (Production, R&D and Marketing) Operating Results Q & A

4 Production Strategy

5 Factory Production Plant PCR MC BC TUBE TBR Yuanlin plant ˇ ˇ ˇ Yunlin plant ˇ ˇ Kenda Tire (Shenzhen) ˇ ˇ ˇ In planning Kenda Rubber (China) ˇ ˇ ˇ ˇ ˇ Kenda Rubber (Vietnam) Kenda Tire (Tianjin) Kenda Rubber (Tianjin) ˇ ˇ ˇ ˇ ˇ ˇ ˇ In planning Kenda Rubber (Huizhou) Kenda Rubber (Indonesia) ˇ ˇ ˇ ˇ ˇ ˇ ˇ ˇ

6 Factory Production On August 12, 2014, the Board of Directors passed the proposal of opening an Indonesia factory. The Company will accelerate the set up of the factory to full-fill the Indonesia market and react to the US Antidumping/Anti-subsidy. The construction of the second plant of Kenda Rubber (China) and the plant of Kenda Rubber (Huizhou) is on schedule. From December 1, 2014, China cancelled the sales tax on tires of light motorcycle and auto under 250cc.

7 Factory Production To integrate sources effectively, to simplify the management procedures and to reduce the operating cost, Kenda passed the proposal to merge the two factories in Tianjin (KT&KJ). To simplify business structure and coordinate group strategy, Kenda Tire (ShenZhen) will be dissolved in Kenda signed the agreement with Kaisa Group (Shen- Zhen) for developing the land Kenda Shen-Zhen located.

8 Background Anti-dumping/Anti-subsidy United Steelworkers (USW) filed anti-dumping and anti-subsidy lawsuits against China s sedan and light-truck tire imports with the US Department of Commerce (DOC) and International Trade Commission (ITC) on June 3, On July 22, the ITC voted 6-0 that Chinese manufacturers were causing material injury to US tire manufacturers, prompting the todoc launch anti-dumping and anti-subsidy investigations. The result of Anti-subsidy investigation has been released on Nov 24, The result of Anti-dumping investigation is expected to be announced on Jan 21, 2015.

9 The result of Anti-subsidy investigation (released on Nov 24, 2014) Corporate Name Tax rate GITI Tire 17.69% Cooper Tire & Rubber 12.50% Shandong Yongsheng Rubber 81.29% Other Companies 15.69%

10 Impact on Chinese tire manufacturers The released tax rate of anti-subsidy is higher than market expectation, which indicates the tax rate of anti-dumping will also higher than estimation. The result could damage the US import market of tire from China even worse than predicted. Given the fact that the supply from China maybe drop 2/3, the price of US-produced tires will rise, which hurts US consumers. The measures will be imposed for five years and could be extended for another five years after the sunset review. The review could be repeated an unlimited times and indefinitely periods. This will pose a huge obstacle to Chinese tire manufacturers.

11 Surplus capacity in China could be relocated to regions other than the US, intensifying competition. Smaller Chinese tire manufacturers could exit the market, while stronger manufacturers will aggressively seek out opportunities to build plants in the US or other countries. This could trigger a global domino effect, prompting other countries to launch anti-dumping investigations against China s products involved in the US case.

12 Kenda s future plan Adding equipment in Taiwan plants; boosting capacity to take orders from subsidiaries in China. Tapping into emerging markets; increasing exposure of OEM business; increasing exposure in non-pcr tires such as bicycle and motorcycle tires. No expansion plans in China in the near term except for the scheduled construction of the second plant of Kenda Rubber (China) and the plant of Kenda Rubber (Huizhou) ; establishing a new plant in Indonesia. Continuing to relocate investment to Taiwan. The investigations will bring more pros than cons to Kenda. Outlook is positive.

13 R&D Strategy

14 Improving R&D capability & product quality Expanding the Taiwan R&D center, which is responsible for new product development, testing, and technology upgrades. Establishing the US R&D center by hiring many technology experts to develop products that cater to North American consumers and accelerate new product development. Expanding the Kunshan R&D center and seeking out more opportunities to team up with Chinese car companies.

15 Marketing Strategy

16 Promoting Kenda s own brand

17 Promoting sub-brands

18 Sports Marketing Sponsoring Cannondale professional bike team Sponsoring the Uni-President 7-Eleven Lions Sponsoring the NBA team Cleveland Cavaliers

19 Operational Results

20 Revenue Unit: NTD mn 35,000 30,000 25,000 20,000 15,000 11,567 14,564 18,675 21,281 19,899 24,245 28,203 29,821 32,451 30,601 10,000 5, 年 1-11 月 Note:Consolidated sales grew NT$31.9mn after ADI acquisition in 2013.

21 Sales breakdown by tire types Jan.-Nov % 35.07% Spare tires accounted for 13% of PCR 30% 27.63% 27.61% 20% 9.69% 10% 0% Bicycle Motocycle PCR Others

22 NT 元 /KG 150 Tire raw material price trend Natural Rubber (SIR20) Syntheic Rubber (SBR1500) 年 12 月

23 Consolidated gross margin 30% 28.04% 24.92% 26.24% 25% 21.95% 20% 15% 15.44% 13.53% 19.03% 15.92% 10% 5% 0% Q3

24 Consolidated gross margin(quarter)

25 NT$mn Net profit/loss 3,500 3,019 3,367 3,000 2,500 2,492 1,490 2, ,000 2,702 1,500 1,544 2,468 1, , Q3 Note: The 2013 data already eliminated the prior equity under common control when acquiring ADI.

26 NT$ 元 Earnings Per Share Note: The 2013 data already eliminated the prior equity under common control when acquiring ADI.

27 Earnings Per Share(Quarter) NT$ 元 Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 Note: The 2013 data already eliminated the prior equity under common control when acquiring ADI.

28 Thank you for supporting Kenda.