Stamford Tyres President Wee Kok Wah.
NextInsight file photoRECENT SHARE BUYING by Stamford Tyres president Wee Kok Wah shows his confidence in the company's prospects and the intrinsic value of its wide distribution network.
Between 20 and 26 June, Mr Wee snapped up 518,000 shares at 40.5 cents each on the open market.
Including his deemed interest, the purchase boosted his total interest in the company to 37.9%.
The leading Southeast Asian distributor of tyres and wheels recently posted a 3.5% year-on-year dip in FY2013 revenue to S$351.2 million due to weaker tyre sales in Europe of its proprietary Sumo Firenza brand.
This was mitigated by higher major brand sales in South East Asia and strong earthmover tyre sales in Indonesia.
Net profit attributable to shareholders was up 18.5% to $11.6 million, boosted by a one-off gain of S$11.9 million from the sale of its 20% stake in its China associate SRITP Limited.
Stamford Tyres booked two exceptional losses:
(1) Write-off of S$2.8 million from the remaining value of an existing warehouse structure demolished for redevelopment; and
(2) Allowance for doubtful receivables of S$2.5 million mainly due to one-off exit cost of S$1.3 million in a China subsidiary.
With the SRITP sales proceeds, it has injected US$4 million into expanding its 40%-owned joint venture in India, US$4 million into expanding its wholly-owned South African subsidiary and US$6.2 million in expanding warehousing facilities at Lok Yang Way, Singapore.
Indonesia is currently the world's largest coal producer.
Data from Index Mundi
Southeast Asian demand for major brand tyres
The increasing purchasing power of Southeast Asian populations is good news for Stamford Tyres as it is an exclusive distributor of the high performance Japanese tyre brand Falken in almost all the Southeast Asian countries - Singapore, Malaysia, Thailand, Indonesia, Brunei, Vietnam, Cambodia, Myanmar, India and East Timor.
It also has exclusive distributorships for Falken tyres in China, South Africa, Mauritius, Nepal and New Caledonia, and for upmarket European tyre brands, Continental and Dunlop, in several Asian countries.
Recently appointed Senior Vice President of Singapore operations, Peter Hofmann. Company photo
Indonesian Demand for Earthmover Tyres
Falling coal prices have led Indonesian coalminers to attempt to sustain cash flow by increasing coal output.
The ensuing higher mining activity level invariably have lead to higher replacement demand for ‘off-the-road’ tyres used in the mining industry.
This is expected to continue to benefit Stamford Tyres, which is a sole distributor of Japanese earthmover tyre brand Toyo in Indonesia (as well as in Singapore, Malaysia and Brunei).
A top European brand, Maxam, was added to the company's product range last year.
Stamford Tyres has two truck service centers, of which one is in Indonesia.
Former Continental Director to Boost Sales
The company also wants to boost sales of Continental tyres, judging from its recent hire of former Director of Sales & Marketing for Continental Asia Pacific (Malaysia), Peter Hofmann.
Earlier this year on 15 March, Stamford Tyres announced the appointment of the industry veteran as Senior Vice President of its Singapore operations, to oversee and manage retail, wholesale and export operations from headquarters.
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