Kenda Rubber Industrial LTD

Transcription

1 Kenda Rubber Industrial LTD Investment Forum Hong-Der Chang

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 The construction of the second plant of Kenda Rubber (China) and the plant of Kenda Rubber (Huizhou) are expected to be started at the end of On August 12, 2014, the Board of Directors passed the proposal of opening an Indonesia factory. The first phase products are bicycle tires, mortorcycle tires and tubes. The second phase will start producing auto tires.

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). 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 antisubsidy 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 DOC to launch anti-dumping and anti-subsidy investigations. Preliminary results from the investigations are expected to be announced on Nov 2014 and Jan 2015, respectively.

9 Impact on Chinese tire manufacturers Based on the previous safeguard actions case, once the measures are implemented in the first half of 2015, China s US exports will decline by 20 to 30 million units. According to conservative estimates, market share of China tire will decrease from 24% to 12 % in US market. Given the supply from China decreases, 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.

10 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.

11 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; 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.

12 R&D Strategy

13 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 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.

14 Marketing Strategy

15 Promoting Kenda s own brand

16 Promoting sub-brands

17 Sports Marketing Sponsoring Cannondale professional bike team Sponsoring the Uni-President 7-Eleven Lions Sponsoring the Houston Rockets Hosting the Kenda Tire TLPGA Open

18 Operational Results

19 Revenue Unit: NTD mn Note:Consolidated sales grew NT$31.9mn after ADI acquisition in 2013.

20 Sales breakdown by tire types Jan.-Sep % 35.10% Spare tires accounted for 13% of PCR 30% 27.82% 27.26% 20% 9.82% 10% 0% Bicycle Motocycle PCR Others

21 NT 元 /KG 150 Tire raw material price trend Natural Rubber (SIR20) Syntheic Rubber (SBR1500) 年 1-10 月

22 Consolidated gross margin 30% 28.04% 24.92% 25.95% 25% 21.95% 20% 15% 15.44% 13.53% 19.03% 15.92% 10% 5% 0% H1

23 NT$mn 3,500 3,000 2,500 Net profit/loss 3,019 2,644 2,492 1,490 3,367 1,619 2,000 1,767 1,500 1,544 1, ,529 1, H1

24 NT$ 元 5.00 Earnings Per Share H1

25 Thank you for supporting Kenda.