No wonder today price up up UP all the way. - almost up 20 cents
GEORGE TOWN: Packaging firm Thong Guan Industries Bhd sees rising orders for food wraps from its Asian customers and the weaker ringgit lifting its earnings this year.
The company is projecting a “double-digit percentage” growth in its revenue and bottom line.
“Orders for stretch-film and polyvinyl chloride (PVC) food wraps have risen by about 20% so far this year,” group managing director Datuk Ang Poon Chuan told StarBiz.
He said the strongest growing markets were now in the Philippines, Vietnam and South Korea. The company, he said, is getting strong orders from Japan, Australia, New Zealand and South Africa.
On its new noodle business, Ang said that the recently completed RM4mil plant in Sungai Petani had the capacity to produce RM60mil worth of noodle products annually.
“There is space for the installation of an additional line that can enable us to produce RM150mil worth of noodle products a year. The line is expected to be installed over the next couple of years,” he said.
The noodle business is targeted to generate sales worth RM20mil next year.
The group makes noodle products under its own brandnames such as Golden Noodle, Vitame and Men No Sato.
The plant recently obtained the hazard analysis and critical control points, good manufacturing practices and halal certifications.
It has also received organic certifications from the authorities in Australia, Japan and China, as well as approval from Heinz, its customer.
“Our main markets are in China and the Asean countries,” Ang added.
On the outlook for the first quarter of 2017, Ang said the group had received enquiries and orders for the new value-added products such as the nano-layered stretch film materials, stretch hood materials, and films for automatic-packing machines.
Thong Guan has a target to produce about 120,000 tonnes of packaging products this year, about 15% more than a year ago.
Ang said the PVC food wrap output per annum is now about 8,000 tonnes.
“The output is expected to increase to 14,000 tonnes by 2018. It is expecting to take delivery of its seventh PVC food wrap line in December.
“The business, which generates about 9% of group revenue now, is expected to contribute about 18% by 2018,” he added.
The new RM1mil warehouse to store the raw materials and PVC packaging products will be operational before the end of 2016, according to Ang.
The group is investing soon for a garbage-bag production facility on a new five-acre site in Gurun.
“This RM4mil investment is to expand the garbage bag and kitchen bag business for the Japanese market, which generates 20% of our revenue.
“The plant should be ready for operations in the second half of 2017,” he added.
Thong Guan has also invested in a 16-acre site in Sungai Petani, which will be used to serve the group’s future expansion plans.
“We are allocating RM10mil for the project, which will serve our needs beyond 2020,” he said.
According to a Technavio report, the global stretch and shrink film market is expected to reach US$14.88bil by 2020, growing at a compounded annual growth rate (CAGR) of over 5%.
“In terms of revenue, the Asia Pacific holds the largest share of the global stretch and shrink film market.
“The region accounted for close to 37% of the market share in 2015, which is expected to increase to over 39% by 2020, growing at a CAGR of almost 7%,” the report said.
According to Sharan Raj, a lead analyst at Technavio, there would be an increase in demand for stretch and shrink films from the packaging and manufacturing industries in Asia Pacific during the forecast period, which is witnessing a transition from rigid packaging to flexible packaging.
The report also stated that China was the leading contributor to the market in Asia Pacific in 2015, followed by India.
In China, stretch films are more prevalent in packaging applications.