SLP ups production capacity
New plant to enable firm to penetrate China healthcare sector
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.