SLP Resources set to increase output
GEORGE TOWN: SLP Resources Bhd will invest RM11mil initially to raise its production capacity to 32,000 tonnes next year from 27,000 tonnes now in a move to expand its presence in the healthcare packaging business.
Group managing director Kelvin Khaw said this is part of its strategy to increase share in the healthcare packaging market in SouthEast Asia.
“We have gone into the China market but because the business environment is quite slow there, we have decided to explore SouthEast Asia.
“The healthcare packaging materials will be about 10% of the annual output once we have expanded the capacity in the third quarter of 2019,” Khaw told StarBiz.
According to Khaw, there would be improvement in revenue and net profit this year because of lower resin prices.
“The polyethylene prices have dropped to US$1,100 from US$1,300 per tonne in the last three months.
“The drop has lowered our production cost, enabling us to achieve a better mar- gin,” he said.
Khaw said SLP had also adjusted its selling price downward and this should enhance its competitive edge in the mid to long term.
He said a drop in resin prices would usually impact orders, as customers would wait for selling prices to be adjusted correspondingly.
“However, this round of lower resin prices have yet to affect orders because the demand for packaging materials usually increase in the second half of the year.
“Consistent orders from Japan, New Zealand and Australia have also sustained the demand,” he added.
According to a Market Research Future report for the period 2017-2023, the flexible plastic packaging market is expected to reach US$129bil by the end of the forecast period, with a compounded annual growth rate of 5.2%.
“Asia-Pacific dominates the global flexible packaging market with the largest market share. Moreover, the increase in consumer income has led to a growth in demand for good-quality packaged food.”