PETALING JAYA: The slumping rubber price bodes well for Goodway Integrated Industries Bhd that relies on the commodity to undertake its business of producing rubber compound and tyre retreading.
Local latex prices sank to its lowest level in more than five years, trading at RM4.90 per kg last Friday due to lack of buying support from China.
“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,” Goodway managing director Tai Boon Wee (pic) told StarBiz.
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.
Rubber compound is made from natural and various polymer mixed with chemicals to increase durability for a wide range of applications. The material is sold to various industrial players including tyre and hydraulic hose manufacturers.
Among Goodway customers are Petroliam Nasional Bhd, Continental, Toyota, Emirates Transport and Fenner Dunlop.
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.
The semi-detached units have a built-up area of 5,766 sq ft, while the detached units are available in 5,903 sq ft and 6,239 sq ft.
Tai marketed the units for RM600 per sq ft, which is equivalent to RM3.5mil per unit.
“We planned to launch the project last month, but all units are already booked even before we launch the project,” he said.
He added that selling price for office spaces in Kota Kinabalu, Sabah was between RM400 and RM500 per sq ft.
The project is located 12km from the heart of Kota Kinabalu and construction works are expected to start this month.
Tai said the property development project was expected to boost the company profit margin by between 25% and 30% in its financial year ending Dec 31, 2015 (FY15) to FY17.
In the first half of FY14, Goodway’s net profit plunged 73.9% 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% in Sabah for tyre retreading and 15% to 20% in Peninsular Malaysia, which is marketed under the Supercool brand.