SCGM set to commence construction of new factory
KUCHING: Leading thermoform food packaging manufacturer SCGM Bhd (SCGM) has awarded contracts totalling RM54 million to commence construction of its new manufacturing facility in Kulai, Johor.
The construction of the new manufacturing facility, located approximately five kilometres from the existing premises, is scheduled for completion in December 2018. The enlarged production floor space and new machinery would bump up the group’s extrusion capacity by 73 per cent to 62.6 million kilogrammes per year, from the current capacity of 36 million kilograms per year.
“As a major producer of thermoform packaging for food and beverages, SCGM has been among the key beneficiaries of higher demand for thermoform packaging in the past year with the regulatory ban on polystyrene products in Malaysia.
“In the near future, we foresee a second wave of uptrend in demand alongside public awareness of food safety and environmental sustainability, not only in the local market but also increasingly in the Asia Pacific region.
“Furthermore, the versatility of thermoform packaging and inhouse technical expertise enables us to develop new products to fit consumers’ preferences.
“Hence, we are optimistic that the larger production capacity accorded by the new factory would place SCGM on a steady growth path to meet current and future demand,” SCGM managing director Datuk Sri Lee Hock Chai said.
The new factory would be sited on a 7.8-hectare (or 19.2-acre) land in Kulai. Altogether, the group has earmarked RM125 million in total capital expenditure for the new factory, encompassing land acquisition, building construction and purchases of new machinery. The capital expenditure (capex) would be financed by internally generated funds, bank borrowings and proceeds from the ongoing private placement. SCGM has maintained a strong balance sheet, with net cash position as at October 31, 2016.
For the six months ended October 31, 2016 (1H17), SCGM recorded RM79.9 million in revenue, growing 25.3 per cent year-on-year. 1H17 net profit rose 13 per cent to RM10.9 million.
Sales to the domestic market made up 58 per cent of 1H17 group revenue with RM46.7 million, compared to RM33.2 million in exports. Notably, both segments showed year- on- year growth, due to higher sales orders from existing clientele and addition of new customers.
SCGM expects for the new factory to begin positively contributing to the Group in the financial year ending April 30, 2019 (FY19).