Tomypak to triple production capacity
http://www.theedgemarkets.com/my/article/tomypak-triple-production-capacity
- company is planning RM120 million to RM140 million in capital expenditure (capex) to triple production capacity over 10 years
- Phase 1 involves a capex of RM80 million for the construction of three factories. A new plant should be ready by October 2016 for the start of commercial production in 2017. This will double Tomypak’s production capacity to 35,000 tonnes per annum. Phase 2 is expected to start in 2018 and phase 3 in 2021.
- The company recently proposed a 1:2 rights issue at RM1 per share with free warrants for rights subscribed. The rights issue, if fully subscribed, should raise more than RM50 million, enough to partially fund phase 1 of the plan.
- We think the company’s growth plan is overly ambitious.
- In phase 1, Tomypak hopes to double its production capacity by end-2016. However, we believe it will take at least a few years to fully utilise the new capacity.
- Overseas multinational corporation (MNC) customers are very sticky and it could take a minimum of two to three years for them to switch suppliers, assuming Tomypak is successful in luring these MNCs away from their regular suppliers.
- The company could target non-MNC domestic food and beverage (F&B) customers, and start a price war strategy with its competitors to fill up its production capacity. However, profit margins could suffer as a result.
- Most non-MNC domestic F&B customers are price-sensitive and less concerned with quality and reliability. This is a market Tomypak’s peer, Daibochi Plastic and Packaging Industry Bhd , has moved away from over the past few years.
- Post the April 2015 goods and services tax implementation, domestic orders fell by around 10%
我差一点就被公司描绘的美好愿景所蒙蔽了。需求追不上产能，扩充生产线就没有意思了。