Guangken to list Thai rub­ber pro­ducer

China Daily (USA) - - BUSINESS - By LIWENFANG in Guangzhou liwenfang@chi­nadaily.com.cn

Guang­dong Guangken Rub­ber Group Co ex­pects to list its oper­a­tion in Thai­land on stock ex­changes in Thai­land and Hong Kong in two years af­ter its ac­qui­si­tion of Thai Hua Rubbr Public Co, the world’s third largest nat­u­ral rub­ber group.

One of the largest nat­u­ral rub­ber com­pa­nies in China, with a full busi­ness chain, in­clud­ing seedlings, farm­ing, pro­cess­ing and sales, Guangken com­pleted its ac­qui­si­tion of a 60 per­cent stake of Thai Huaat­aprice of 1.2 bil­lionyuan ($174 mil­lion) in Au­gust. It plans to in­vest an ad­di­tional 600 mil­lion yuan. In­clud­ing the ac­qui­si­tion, Guangken has an­nual nat­u­ral rub­ber pro­cess­ing ca­pac­ity of 1.5 mil­lion met­ric tons and rub­ber farms of 2 mil­lionmu(133,330 hectares).

Be­fore the ac­qui­si­tion, it was al­ready run­ning rub­ber pro­cess­ing plants in Thai­land and In­done­sia, farms in Malaysia and Cam­bo­dia, and a trad­ing com­pany in Sin­ga­pore, said Xiong Yinzhong, a board di­rec­tor of the group.

Thai Hua has an an­nual pro­cess­ing ca­pac­ity of about 1 mil­lion tons, with Thai­land hous­ing about 40 per­cent of the world’s out­put. The Chi­napro­cess­ing ca­pac­ity of Guangken stands at 200,000 tons a year.

China is the largest rub­ber con­sum­ing coun­try, with an­nual out­put of 800,000 tons, com­pared with de­mand for 4.8 mil­lion tons.

The ac­qui­si­tion of ThaiHua is in line with the industrial pol­icy un­der the coun­try’s Belt and Road Ini­tia­tive and also givesGuangken a com­par­a­tive ad­van­tage, be­cause South­east Asian re­gions are bet­ter lo­cated for rub­ber farm­ing, Xiong said.

Guangken’s cap­i­tal and man­age­rial ad­van­tages will be com­bined with Thai Hua’s strength as an in­ter­na­tional brand, in co­op­er­a­tion with tire com­pa­nies in China, he said. “In many busi­ness sec­tors, in­clud­ing re­source sec­tors, the trend is there to cen­tral­ize.”

Apart from over­seas list­ings, Guangke­nis al­soeye­ing­do­mes­tic list­ing of the whole group in three years, Xiong said.

Guangken is set to gain sig­nif­i­cant cost ad­van­tages thanks to the lower land and la­bor costs in Thai­land, fa­cil­i­tated by the ASEAN-China Free Trade Area, said Cao Xi­ap­ing, as­so­ciate pro­fes­sor and PhD pro­gram di­rec­tor with the fi­nance de­part­ment, Ling­nan Col­lege, Sun Yat-sen Univer­sity in Guangzhou.

The stable po­lit­i­cal sit­u­a­tion in ASEAN mem­bers makes the re­gion a good choice for Chi­nese com­pa­nies in their “go­ing global” pur­suit, he said, adding com­pa­nies like Guangken can raise funds in the lo­cal mar­kets in ASEAN, given the wide ac­cep­tance of ren­minbi there.

The ac­qui­si­tion of ThaiHua came at a good time, given the low global rub­ber price, said Xu Weny­ing, sec­re­tary-gen­eral of the China Rub­ber In­dus­try As­so­ci­a­tion.

Guangken was the first Chi­nese rub­ber com­pany en­gaged in over­seas rub­ber farm­ing and this lat­est ac­qui­si­tion will help it in over­seas re­source al­lo­ca­tion and pric­ing, she said, not­ing that Guangken has the op­por­tu­nity to­sup­plyrub­berto four tire plants in­vested byChi­nese com­pa­nies in Thai­land.

A sub­sidiary of Guang­dong Agribusi­ness Group, Guangken re­ceived a cap­i­tal in­jec­tion of 500 mil­lion yuan from China Agri­cul­tural In­dus­try De­vel­op­ment Fund and China Cinda As­setMan­age­ment Co.

BLOOMBERG

A worker re­moves smoked rub­ber sheets from a rack to be trimmed at the Thai Hua Rub­ber Pcl fac­tory in Sam­nuk­tong, Ray­ong prov­ince, Thai­land.

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