Scientex to build new BOPP plant; investing RM300 mn in machinery/plant

Malaysian industrial packaging manufacturer Scientex expects to capture a major share of the consumer packaging market in Asia with its planned capital expenditure of RM300 million over the next three years, to expand its PE and BOPP film production, with lines from Windmöeller & Hölscher (W&H) and Japan Steel Works (JSW) respectively. Germany-based W&H will supply its latest nine-layer line Varex II (launched at the K2013), which will be a first for Southeast Asia. The Germany-based company will also supply the first flexographic printing press (Miraflex CM 10) to be deployed in Southeast Asia.

The public-listed Scientex will also enter the CPP film market, with Germany-based extrusion machinery group Reifenhäuser building two five-layer CPP lines ( for it.

Apart from the machinery, Scientex also recently signed an agreement with Japan's largest BOPP film producer Futamura Chemical to build a BOPP film manufacturing plant in Pulau Indah, Port Klang, at an expected cost of RM170 million. Following Scientex's early year acquisition of Seacera Polyfilms, one of Malaysia's leading producers of BOPP films, the new plant is expected to expand Scientex's capacity ten-fold from 6,000 tonnes/year to 60,000 tonnes/year.

In terms of its PE film production located in Rawang, Scientex is currently working to double its production output from 24,000 tonnes/year to 48,000 tonnes/year before the end of the year. It is installing seven lines from W&H: Optimex three-layer and Varex II nine-layer lines.

BOPP, PE and CPP films are utilised to produce flexible packaging of various food and beverage products. The protective outer and inner layers of packaging are made of BOPP and PE film, whereas CPP film serves as the sealing layer in laminated flexible packaging.

The multi-million dollar expenditure will be embarked on by Scientex's wholly-owned subsidiary Scientex Great Wall (SGW). SGW will issue 10 million new shares to increase its share capital from 90 million shares to 100 million shares. Scientex and Futamura will inject capital of RM40 million each to acquire 5 million shares representing 5% equity stake in SGW. Futamura is entitled to purchase up to 20% issued shares of SGW over the next five years.

Futamura will be involved in the construction of the new BOPP plant in Port Klang, incorporating the concept of Japanese quality management in order to minimise investment cost and simplify facility management. It says that in this way, SGW will manufacture BOPP films complying with Japanese quality at Southeast Asia’s production cost. With the 18,000-tonne BOPP films imported from SGW, Futamura would account for more than 35% of Japan’s annual import market of 48,000 tonnes.

At the signing ceremony, Lim Peng Jin, Managing Director of Scientex, emphasised the company's commitment to work with ‘global leaders’ in their respective sectors in line with its business growth.

"We believe this significant investment in increasing our current consumer packaging capacity and extending our range of films would grant us strategic opportunity to garner a larger slice of the consumer packaging market in the Asia Pacific region,"” remarked Lim. He also highlighted that Scientex’s main goal is to achieve cost efficient production in a variety of consumer films in order to provide lower prices for its customers in the food and beverage manufacturing sector. "“We regard this investment as not only advantageous to Scientex, but also as an industry game changer that will enable us to fulfil the constantly growing demand for consumer packaging."”

"Combining our strengths, I strongly believe that Scientex and Futamura can contribute to the development of flexible packaging film industry in Asia including Japan by channelling new energy into the market through realisation of Japanese quality within Southeast Asian costs,”" said Yasuo Nagae, President of Futamura.

Lim also said that upon completion of the new plant in 2016, Scientex will seek to expand its footprint in Japan and the Southeast Asia region for consumer packaging products, which is estimated to be a US$70 billion a year market.

In its July 2014 financial year end, Scientex's net profit soared 34.6% to RM148.5 million compared to RM110.3 million a year ago. The significant jump in net profit flowed from stronger revenue growth of 29.4% to RM1.6 billion, from RM1.2 billion previously. The commendable financial performance in FY14 was attributable to double-digit revenue growth in both the group’s manufacturing and property development businesses.

Scientex is not only involved in industrial packaging but is also the largest stretch film producer in Asia, ranked among the top three global companies with a production capacity of 194,000 tonnes/year. It has manufacturing facilities in Malaysia and Vietnam; as well as sales and marketing arms in Japan and Indonesia. Approximately 75% of its manufacturing products are exported to over 60 countries worldwide.


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