Monday, January 27, 2014

Thong Guan: Scientex in the making (without the property division)

Thong Guan Industries Bhd is spending about US$12mil (RM40mil) this year on its Sungai Petani plant to expand its range of industrial packaging products.

Group managing director Datuk Ang Poon Chuan told StarBiz that about US$4.5mil has been used to instal new production lines for its polyvinyl chloride (PVC) food cling wrap materials and masterbatch compound business.

“The remaining would be used for expanding into technology-breaking machineries for the production of value-added packaging materials and blown-film industrial bags.

“With the investment, we are targeting to raise the group’s annual output by 10% to 132,000 tonnes this year compared with about 120,000 tonnes in 2013,” he said.

The group’s stretch-film packaging materials is expected to generate about 65% of revenue this year.

“About half of the stretch-film products produced are in the high-value category, such as thin-gauge packaging materials of less than 12 microns and less than 17 microns used respectively for manually and machine-wrapped packaging products, which will contribute more to the group’s bottom line.

“The investment will also raise the contribution of the PVC packaging material and masterbatch compound business to 7% and 5%, respectively, this year from about 5% previously,” he added.

The demand for stretch-film and food and beverage packaging products come from Japan, New Zealand, Australia, the Middle East and Europe, while the orders for the masterbatch compound come from Asean countries and China.

Ang said the group expected to close the 2013 fiscal year with its best results in the last five years.

“We are confident because our 2013 third-quarter results were a record-breaking one in the group’s history,” he said.

For third-quarter 2013 ended Sept 30, the group posted RM13.4mil in pre-tax profit on the back of RM188mil in revenue, compared with RM6.4mil and RM155.4mil achieved respectively in the previous year’s corresponding period.

For the nine months of 2013, meanwhile, the group achieved RM27.4mil in pre-tax profit on the back of RM535.6mil in revenue, compared with RM20.7mil and RM452.9mil recorded respectively for the same period of 2012.

Moving ahead, the group would emphasise on the production of environment friendly products such as thin-gauge and biodegradable and compostable packaging materials, disclosed Ang.

“For example, we are working with a UK-based company to develop biodegradable and compostable compounds for the manufacture of plastic products.

“Part of the investment for the masterbatch compounding business is to mass produce solutions that can be used as a key ingredient to manufacture biodegradable packaging products.

“So far, the production of such masterbatch compound has been successful. Our products have been approved with the EN 13432 certification from the relevant European authorities, which endorses that our solutions have met with stringent standards,” he said.

According to a recent Smithers Pira research report, the global packaging market stood at US$799bil in 2012, increasing by 1% over 2011.

“Sales are projected to increase by 3% in real terms in 2013 to US$824bil,” the report said.

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