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Taiwan Tire Maker Cheng Shin's Shares May Rise Anew On Mainland Growth

This article is more than 10 years old.

Shares in Cheng Shin Rubber of Taiwan, one of the largest suppliers of automotive tires in the mainland,  are  poised to rise even after a more than 20% increase in their price in the last year, according to a report out on Friday by President Capital Management of Taipei.

The addition of new production in Taiwan, along with Chongqing, Xiamen and Zhangzhou in the mainland, will likely help the company’s sales this year to climb 11% to NT$133 billion, or $4.5 billion, the report says.  Profit will also likely also improve on an easing of rubber prices, and climb 49% to NT$12.7 billion, or $430 million, this year, the report said.

President has a target price of  NT$78 on the company's Taipei-traded shares, which works out to a price-earnings ratio of 15 times, it said.  Cheng Shin is trading at NT$70.3 today.

Cheng Shin, whose tires are sold under the “Maxxis” trade name, competes with the likes of Goodyear and Michelin.  The company was orginally founded as a supplier of tires to the Taiwan bicycle industry.

Cheng Shin Chairman Luo Jye ranked No. 9 on the 2011 Taiwan Rich List with wealth of $2.9 billion.

The increase in the company's shares in the last 12 months contrasts with a 8% decline in the main index of the Taiwan Stock Exchange.

-Follow me on Twitter @rflannerychina