Inoue Rubber Thailand PCL (IRC.BK) is a manufacturer of industrial elastomer parts for the automotive and other industries as well as a manufacturer of motorcycle tires and tubes under the brand name IRC. The company was established in 1969 as a joint-venture between Inoue Rubber Co. Ltd Japan, a subsidiary of INOAC Corporation, and the Leeissaranukul Family.[mepr-active membership=”1734″ ifallowed=”show” unauth=”message” unauth_message=”Please login or purchase a membership to view full text.”] The company is headquartered in Pathumthani, Thailand and listed on the SET since 1994. Public float of shares is around 28%.
The company has benefited from a recovering automobile market in Thailand and the neighbor countries. Thailand’s automotive industry is the largest in Southeast Asia and the 12th largest in the world. Total car production reached 1.96m units in 2016, an increase of almost 3% compared to the year before, and is expected to reach 2.08m units by the end of 2018. New campaigns, new models, and a recovering export will support the higher car production. The Thai auto industry also takes advantage of the ASEAN Free Trade Area (AFTA). ASEAN 5 countries are expected to produce 4.16m units by 2018 with an annual growth of 3.7% forecasted until 2020. Despite a weak motorcycle market, Inoue Rubber Thailand expanded the business due to increased exports to countries including Oceania, Asia, and Middle-East. Inoue Rubber Thailand is also continuously improving profitability and product quality by adopting automated processes in the production lines.
With a workforce of around 1,800 employees, Inoue Rubber reported revenues of 5bn THB (142m USD) and a profit before tax of 625m THB (18m USD) for the year 2016. A light decrease in revenues of 4% but a strong increase in profits of 19% compared to the year ago. The company had cash and equivalents of 228m THB (6.5m USD) at the end of last September. Inoue Rubber shows a healthy balance sheet with a strong equity ratio of 75% and a low gearing ratio. The operating margin is with more than 12% well above industry average.
Inoue Rubber’s shares are in a permanent uptrend since 2009 and gained nearly 28% since the beginning of 2016. The company is still reasonably priced at nine times earnings and comes with a dividend yield of more than 4%. Inoue Rubber is a financially healthy company and a sound investment. The company benefits from a growing car production and exports market as well as from a stable replacement market for tires and tubes.
AIS Rating: ★★★★☆
| 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
|---|---|---|---|---|---|---|
| EPS (THB) | 0.75 | 0.51 | 2.05 | 1.57 | 2.21 | 2.57 |
| Change | -51% | -32% | 302% | -23% | 41% | 16% |
| P/E | P/E SECTOR |
P/B | P/CF | Equity Ratio* |
ROE | Debt/ Equity** |
Div YLD |
|---|---|---|---|---|---|---|---|
| 10 | 26 | 1.5 | 6 | 75% | 17% | 34% | 4.3% |
* Equity / Total Assets, ** Total Liabilities / Equity
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