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 ($202 million) tyre factory in southeastern Kratie province through a subsidiary – tentatively named Double Star (Cambodia) Tire Co Ltd – to tap into the potential of the industry.
The group’s Shenzhen-listed affiliate, Qingdao Doublestar Co Ltd, disclosed that the plant would be located in UBE Snuol Special Economic Zone – of Trapaing Sre village, Pi Thnou commune, Snuol district – with annual production capacity of 8.5 million “high-performance” radial tyres – seven million semi-steel and 1.5 million all-steel.
Construction is planned to be completed in 15 months, it said in a statement.
Once fully operational, the factory is expected to generate average annual sales of 2.8 billion yuan and net profit of about 550 million yuan, the statement said, adding that the facility constitutes part of its “localisation” strategy and is to “actively respond” to international trade barriers, given the “high tariffs” imposed on Chinese goods.
By shifting production to the Kingdom, Doublestar could avoid the risk of anti-dumping action in its major markets, it added.
Doublestar will have an 80 per cent stake in the project, with UBE Development holding the rest, it said, noting that factory equipment and the land use rights will be supplied by the former and latter, respectively.
The statement also mentioned that Doublestar Group owns South Korea’s second-largest tyre maker Kumho Tire Co Inc – second only after Hankook Tire & Technology Co Ltd, which is listed on the Korea Exchange as well.
Shaping up to be one of Doublestar’s more notable competitors in the Kingdom is General Tires Technology (Cambodia) Co Ltd, which has committed about $300 million to build another tyre factory that broke ground early last year on a 28ha plot in Preah Sihanouk province’s Sihanoukville Special Economic Zone (SSEZ).
Preah Sihanouk Provincial Administration spokesman Kheang Phearom revealed in January that construction of this project is expected to be completed by May.
Men Sopheak, director of rubber grower and exporter Sopheak Nika Investment Agro-Industrial Plants Co Ltd, told The Post that additional tyre factories sourcing rubber locally would boost the industry of Cambodia, which he pointed out has emerged as a top exporter.
“I’ve already been contacted by [representatives of] a few plants, and we’ll be keeping an eye on what their requirements and standards are, to supply them,” he said.
According to worldstopexports.com, Cambodia was the sixth largest exporter of natural rubber in 2021, accounting for $399.3 million or 2.37 per cent of the $16.86 billion global total, after Thailand ($5.5 billion; 32.7%), Indonesia ($4.0 billion; 23.8%), Ivory Coast ($1.8 billion; 10.6%), Vietnam ($1.2 billion; 7.1%) and Malaysia ($1.1 billion; 6.5%).
The next few on the list were: Belgium ($326.3 million; 1.9%), Myanmar ($293.8 million; 1.74%), Laos ($261 million; 1.5%), Guatemala ($223.6 million; 1.33%), Liberia ($193.7 million; 1.15%), the Philippines ($161.6 million; 0.96%), Ghana ($145 million; 0.86%), Singapore ($132.7 million; 0.79%) and France ($129.2 million; 0.77%).
And according to a report from the General Directorate of Rubber (GDR), Cambodia exported 372.9 kilotonnes of natural rubber worth $527.775 million in 2022. The average selling price of the Cambodian-made commodity last year was $1,415 per tonne, down $225 or 14 per cent compared to 2021, it said.
As of 2021, Cambodia had 404,044ha dedicated to rubber production, with 310,193ha or 76.77 per cent mature and tapped for latex, which yielded 368 kilotonnes that year, or an average of just below 1.2 tonnes per hectare, it noted.
On the Shenzhen Stock Exchange, Qingdao Doublestar Co Ltd’s shares inched down 0.07 yuan or 1.44 per cent to close at 4.80 yuan on March 8 for a market capitalisation of 3.92 billion yuan and 52-week range of 3.05-6.05 yuan, with 31.67 million shares traded or 132 per cent of the 65-day average of 24.08 million, according to MarketWatch.
For the quarter ended September 30, the firm reported sales/revenue of 1.09 billion yuan, up 7.78 per cent quarter-on-quarter; and net loss of 159.63 million yuan, growing 4.16 per cent on a quarterly basis, the financial news website indicated.
It also noted a negative EBITDA (earnings before interest, taxes, depreciation and amortisation) for the previous quarter of 50.98 million yuan, expanding 41.47 per cent from 36.04 million yuan in January-March 2022.
