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MALAYSIA
Falling Rubber Price Good News for Goodway
“The softening in rubber price will help to boost our cash flow and margin. When price was rallying between RM10 and RM13 per kg previously, we could not pass on the increase to the customers,” said Goodway managing director Tai Boon Wee
between RM10 and RM13 per kg previously, we could not pass on the increase to the customers,” Goodway managing director Tai Boon Wee said. Tai is the single largest shareholder in Goodway with a direct stake of 16.52%, followed by Lembaga Tabung Angkatan Tentera (LTAT) with 11.31% shareholding.
LTAT has been one of the main shareholders of the company since it was listed in 2004. “LTAT has been with us since day one. It is supporting our environmental protection business,” Tai said.
Goodway’s main businesses are rubber compound and tyre retreading. The company has presence in over 60 countries globally.
Goodway also has a maiden property development project on 15.9 acres in Sabah with an estimated gross development value of RM180mil spanning over three years.
Tai said the project, called Bigwheel Industrial Park, was divided into two phases.
He said the first phase, comprised 36 units of semi-detached and six units of detached three-stores buildings that have flexible designs for showroom, office, factory and warehouse space. Tai said the property development
project was expected to boost the company profit margin by between 25 per cent and 30 per cent in its financial year ending Dec 31, 2015 (FY15) to FY17.
In the first half of FY14, Goodway’s net profit plunged 73.9 per cent to RM984,000 from RM3.77mil in the same period last year due to lower sales in both of its rubber compound and tyre retreading businesses.
Tai said the idea to develop the land came after a number of property developers approached the company to purchase the land.
“The land used to house our manufacturing plant in Sabah, but we decided to develop it on our own to unlock its value,” he said, adding that the company has relocated its plant to another location in Sabah that is closer to the port.
Its Sabah plant has a capacity to produce 20,000 retreading tyres per month. Presently, the company has a market share of 70 per cent in Sabah for tyre retreading and 15 per cent to 20 per cent in Peninsular Malaysia, which is marketed under the Supercool brand.
Source:StarBiz
Fluctuating rubber prices have a different impact in different markets. In Malaysia Goodway’s Tai Boon Wee told local newspaper StarBiz that the drop in rubber prices was good for Goodway’s finances.
With Latex prices falling to their lowest level in five years this had helped the group’s cash flow. The
price drop has been down to a lack of demand from the huge Chinese market, which has been impacted by a slowing of its economy and a need to use stockpiles built up in anticipation of uninterrupted growth.
“The softening in rubber price will help to boost our cash flow and margin. When price was rallying