SLP ups pro­duc­tion ca­pac­ity

New plant to en­able firm to pen­e­trate China health­care sec­tor

The Star Malaysia - StarBiz - - News - By DAVID TAN david­tan@thes­tar.com.my

KULIM: SLP Re­sources Bhd’s new RM30mil plant will start pro­duc­tion this month, rais­ing its max­i­mum pro­duc­tion ca­pac­ity to 27,000 tonnes this year, which will en­able the com­pany to pen­e­trate the China health­care sec­tor.

Group man­ag­ing di­rec­tor Kelvin Khaw told Star­Biz that the new pro­duc­tion fa­cil­ity would in­crease the monthly ca­pac­ity to 2,300 tonnes per month from 2,000 tonnes per month pre­vi­ously.

The group’s util­i­sa­tion of the pro­duc­tion floor would be about 78% this year, com­pared to 71% last year.

“We will also man­u­fac­ture thin­gauge plas­tic pack­ag­ing ma­te­ri­als for the health­care sec­tor in China at the new plant.

“The health­care pack­ag­ing mate- ri­als busi­ness is ex­pected to con­trib­ute about 20% to the rev­enue by 2020, of which 15% will be from China’s mar­ket,” Khaw said.

The out­put for the first half of 2018 is ex­pected to be more than 8,000 tonnes, com­pared to 7,050 tonnes in the same pe­riod of 2017.

“The out­put for 2018 first half will have a mar­ket value of RM95mil, com­pared to about RM89mil in the same pe­riod of 2017, based on to­day’s poly­eth­yl­ene price of about US$1,470 per tonne.

“The in­creased in value is around 6% be­cause the ring­git has strength­ened against the US since last year,” Khaw said.

Cus­tomers in Malaysia, Ja­pan, Aus­tralia, New Zealand, and Eu­rope are the top buy­ers of the group’s flex­i­ble thin-gauge plas­tic pack­ag­ing ma­te­ri­als for 2018.

The do­mes­tic mar­ket is pro­jected to ab­sorb about 40% of the group’s out­put this year.

“Ja­pan will con­sume about 38%, while Aus­tralia and New Zealand 9% and 6%, and the re­main­der goes to Eu­rope and the rest of the world,” he said.

“We will also ex­plore mar­kets when new fa­cil­ity is ready,” he added.

As of Dec 31, SLP has RM65mil in cash and zero bor­row­ing.

SLP pro­duces in three pro­duc­tion fa­cil­i­ties in Kulim on a 18-acre site.

Ac­cord­ing to a report from Mor­dor In­tel­li­gence, the flex­i­ble pack­ag­ing mar­ket, val­ued at US$230.97bil in 2017, is ex­pected to reach a value of US$291.96bil by 2023 at a com­pounded an­nual growth rate of 3.86%, over the fore­cast pe­riod (2018-2023).

The re­gions con­sid­ered in the scope of the report in­clude North Amer­ica, Eu­rope, Asia-Pa­cific, Latin Amer­ica, and Mid­dle East & Africa.

“The emer­gence of sus­tain­able and re­cy­clable al­ter­na­tive ma­te­ri­als based on poly­mers in the flex­i­ble pack­ag­ing in­dus­try, in line with the ex­ist­ing de­mand for en­vi­ron­ment-friendly pack­ag­ing, has ma­jorly ben­e­fited the phar­ma­ceu­ti­cal and food in­dus­tries.

“Fur­ther­more, with in­creas­ing sales through e-com­merce have given a strong mo­men­tum to the mar­ket growth.

“In 2016, an es­ti­mated 1.61 bil­lion peo­ple pur­chased goods on­line, glob­ally. In 2016, world­wide e-re­tail sales amounted to US$1.9 tril­lion and pro­jec­tions show a growth of up to US$4.06 tril­lion by 2020.

“How­ever, the strin­gent reg­u­la­tory en­vi­ron­ment in the pack­ag­ing in­dus­try has been a ma­jor lim­it­ing fac­tor for growth of the flex­i­ble pack­ag­ing mar­ket,” the report says.

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