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Thong Guan aims big

GEORGE TOWN: Thong Guan Industries plans to be an RM2bil group with a pre-tax profit of RM200mil by 2027.

Group managing director Datuk Ang Poon Chuan (pic below) told StarBiz that the group would invest RM300mil over the next six years to achieve its goal.“Over the next six years, we expect to see the group achieving a 10% to 15% compounded annual growth rate (CAGR).

“Our proposed Myanmar expansion project, courier bags, and packaging materials for the food and beverage, hygiene, food wrap, and stretch film sectors will spearhead the group’s growth over the next six years, ” he said.

On the group’s 2021 performance, Ang is confident that the group’s revenue would surpass the RM1bil mark, up from RM961mil in 2020. The group’s production capacity will be increased to 175,000 tonnes this year from 150,000 tonnes in 2020 to cater to the surge in demand for plastic packaging products.

However, Ang added that the no-dine-in restrictions imposed on food and beverage outlets and hotels had impacted the group’s food-wrap business.

“Once the pandemic is over, we expect to see the food-wrap business grow again, ” Ang added.

On its stretch film project in Myanmar, Ang said the stretch film project would start end of 2021. The main lure of Myanmar, he explained, is the country’s status as a developing country, which would allow it to enjoy zero-tariff privileges for its exports.

“Importers don’t need to pay any duty for the goods they buy from Myanmar; whereas if the goods are produced in Malaysia, and they are heading to the United States, the importers over there would need to pay a 4.9% tariff.

“European importers, on the other hand, would need to pay a 6.5% tariff for Malaysian-made plastic packaging products, ” Ang said.

According to Ang, the demand for food and beverage (F&B) products worldwide has increased.

“Because of the Covid-19 pandemic, more people are buying from supermarkets to eat at home. This has resulted in the rise in demand for stretch films used for wrapping food and beverage goods, hygiene products, and e-commerce mailer bags goods, ” he said.

“In the domestic market, we also see an increase in the use of laminated packaging materials for wrapping F&B products, ” he added.Ang said he expected the premium markets in the US, Europe, and Australia to contribute about 20% of the group’s 2021 revenue.

He noted Europe used to be a single-digit percentage contributor to the group’s income.

Ang revealed the market in Japan also showed no signs of slowing down.

“It will contribute about 20% to this year’s revenue, ” he added.

According to Ang, the group is optimistic about building on its market position and capturing new growth areas both locally and internationally for all of its products lines.

“The group has expansion plans that include the construction of three new factory buildings on a 16-acre site in Sungai Petani to produce high-quality stretch and blown film products, courier and speciality bags, ” he said.

For the first quarter ended March 31 2021, Thong Guan posted an RM21.7mil net profit on the back of an RM282mil revenue compared to RM17.4mil and RM244mil achieved in the previous year corresponding period.

A Reportlinker report has forecast that the global market stretch and shrink film market will reach US$20.8bil (RM85.86bil) by 2027 from US$14.5bil (RM59.86bil) in 2020, growing at a CAGR of 5.3% over the 2020 to 2027 period.

The report says China is forecast to reach a projected market size of US$4.5bil (RM18.58bil) by 2027, charting an 8.6% CAGR over the 2020-2027 period.

Japan and Canada are projected to grow at a 2.9% and 4.2% CAGR, respectively, over a similar time frame.

Within Europe, Germany is forecast to grow at approximately 3.7% CAGR.

https://www.thestar.com.my/business/business-news/2021/06/07/thong-guan-aims-big

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