P Sihanouk tyre plant lifts hopes for rubber
P Sihanouk tyre plant lifts hopes for rubber
A massive, freshly-launched tyre factory, backed by a $300 million investment from Chinese-owned General Tires Technology (Cambodia) Co Ltd, could be the breakthrough that the local rubber and automotive sectors have been waiting for, and potentially act as a type of price stabiliser for domestic natural latex that blunts the adverse effects of fluctuations from international markets.
An official ceremony was held on March 18, marking the launch of the plant, located on an 18ha site in Preah Sihanouk province’s Sihanoukville Special Economic Zone (SSEZ).
At the event, General Tires Technology chairman Gu Cui disclosed that the facility will have an annual production capacity of five million “small” tyres and 900,000 “large” ones – possibly referring to semi-steel and all-steel radial tyres, respectively, as suggested by media reports – which he said are mainly to be exported.
Target markets include the US, Europe and Brazil, he revealed.
“The tyre factory broke ground on February 27, 2022, with the aim of creating a smart, data-driven enterprise in Cambodia that embraces automation and uses world-class equipment and leading technology,” he said, noting that the project comes three years after an affiliate tyre plant in Thailand.
The Ministry of Commerce’s business directory notes that General Tires Technology was previously named General Intelligence (Cambodia) Co Ltd, which Shanghai-listed Jiangsu General Science Technology Co Ltd identifies on its website as an “overseas subsidiary”.
Jiangsu General is behind the TBB brand, and commissioned production at its $300 million tyre factory in Thailand’s Rayong Industrial Zone – with annual capacity of six million passenger car tyres and one million for trucks and buses – back in December 2019, around 12 months after it broke ground, according to Tire Business.
Presiding over the event, Preah Sihanouk provincial governor Kuoch Chamroeun commented that the company has added the tyre as a new entry in the province’s product portfolio.
The factory “will truly contribute significantly to provincial economic growth, through job creation, an increase in exports, the development of physical infrastructure, and an uptick in tax and non-tax revenues, all of which will promote and maintain macroeconomic stability as well as opportunities for national and international investment”, he said.
Preah Sihanouk authorities will continue to work with the Council for the Development of Cambodia to keep things straightforward for investors who may be interested in entering the provincial market, ensuring duty-free imports of construction materials, protecting their interests, and giving them peace of mind, Chamroeun affirmed.
Ministry of Agriculture, Forestry and Fisheries director-general for rubber Him Aun told The Post on March 19 that the factory could be a turning point for Cambodian tyre production, and that its products could supply both domestic and foreign markets.
The project could also provide a leg-up for the Kingdom’s rubber sector, encourage players to plant more Hevea brasiliensis trees – which are native to Brazil – and buoy yields of the milky-white fluid that runs along cuts made on its bark, as well as “help stabilise the price of rubber and expand the domestic market”, he said.
He confirmed that the Kingdom currently has two tyre factories, with the other in Svay Rieng province – alluding to Chinese tyre manufacturer Sailun Group Co Ltd’s $350 million venture managed by wholly-owned subsidiary Cart Tire Co Ltd, in Bavet town’s QiLu (Cambodia) Special Economic Zone near the Vietnamese border.
Also gunning to tap the potential of the industry, Chinese car tyre manufacturer Qingdao Doublestar Group is partnering with local industrial park developer UBE Development Co Ltd to build a 1.4 billion yuan ($200 million) tyre factory in southeastern Kratie province through a subsidiary – tentatively named Double Star (Cambodia) Tire Co Ltd.
Men Sopheak, director of prominent rubber grower-cum-exporter Sopheak Nika Investment Agro-Industrial Plants Co Ltd, previously told The Post that he has been negotiating with the companies behind both active factories to supply natural latex for tyre production.
Sopheak said that his team was looking into demand conditions as well as potential rubber quality and similar requirements before a deal can be reached.
On the Shanghai Stock Exchange, Jiangsu General’s share price rose 0.02 yuan or 0.51 per cent to close at 3.94 yuan on Friday, March 17 for a market capitalisation of 5.06 billion and 52-week range of 2.90-4.62 yuan, with 3.22 million shares traded or 62.71 per cent of the 65-day average of 5.14 million, according to the Wall Street Journal.
For the quarter ended September 30, the firm reported sales/revenue of 1.147 billion yuan, up 16.53 per cent quarter-on-quarter; net income of five million yuan, down 56.88 per cent; and total assets of 9.017 billion, down 1.54 per cent, the news outlet indicated.
It also noted an EBITDA (earnings before interest, taxes, depreciation and amortisation) for the previous quarter of 120 million yuan, down 7.09 per cent from 129 million yuan in January-March 2022.
