KUALA LUMPUR (Mar 18): China Automobile Parts Holdings Ltd (CAP) and SRI Elastomers Sdn Bhd will jointly invest US$3 million (RM11.11m) in a rubber-scrap recycling plant in China.

CAP (fundamental: 1.95; valuation: 1.8) managing director Li Guo Qing said the plant, which would be set up in Fujian would recycle used tyres and processed rubber scraps.

"We are not sure yet on the percentage of investment that each party has to cough up. We have to take into account the composition of debt and equity," Li told reporters today after signing the JV Memorandum of Understanding (MOU).

Li, who signed the MOU on behalf of CAP, said the MOU would allow CAP to broaden its revenue base by capitalising on its existing relationship with China-based automobile companies.

SRI CEO Gopinath B. signed the MOU on behalf of the company. "We will make the appropriate announcement when that (JV agreement) is done," said Gopinath.

According to Gopinath, the plant will have an installed capacity of 10,000 tonnes a year and is scheduled to start operations within nine months after the JV agreement is finalised.

"We will need nine months to construct the plant and set up equipment," he said.

At 12:30pm, CAP shares rose 0.5 sen or 2% to settle at 25.5 sen for a market capitalisation of RM153 million. The stock has fallen 6% this year, underperforming the FBM KLCI's 2% rise.

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