Mesdaq-listed Oceancash Pacific Bhd (OPB) sees sustainable revenue growth despite the intense competition that will come with liberalisation of the local market under the Asean Free Trade Area (Afta).
Managing director Tan Siew Chin said: “The local resinated felt and non-woven cloth markets will be over-saturated if new players were to come in, because OPB has already captured 70% of the local felt market and 60% to 70% of the non-woven cloth market.”
Speaking to reporters after the listing of OPB on the Mesdaq market in Kuala Lumpur yesterday, Tan said the company's primary position in the thermal bonded non-woven cloth and resinated felt markets in Malaysia, Thailand and Indonesia would remain intact upon the full implementation of Afta and trade liberalisation under the World Trade Organisation in the next few years.
“The probability of manufacturers from Afta and WTO countries setting up a production plant here is slim,” he said. The reduction in import tariffs on resinated felt by Thailand, and non-woven cloth by Indonesia, would make their products relatively more price-competitive, he said.
Tan said the company's manufacturing plant in Bangi was preparing to raise production of non-woven cloth to 340 tonnes per month by September, from the current 250 tonnes. As for resinated felt, the plant is currently operating at 70% capacity or an equivalent of 150 tonnes per month, he said.
Resinated felt is used for thermal and acoustic insulation in motor vehicles while thermal bonded non-woven cloth is used as the top and bottom layers of disposable diapers, wet wipes and surgical apparels.
“The increased output will be channelled to existing customers. Demand has escalated from the components industry (in Thailand) as well as from the disposable hygienic products industry in the aftermath of the Severe Acute Respiratory Syndrome attacks.”
The company doubled its exports of felt to Thailand this year to 30% of its output, from 15% last year, due to a “tremendous rise” in motor vehicle production there.
OPB made an initial public offer (IPO) of 50.778 million 10-sen shares at a reference price of 20 sen each. The counter opened at 21.5 sen for a premium of 7.5% over its IPO price and traded between a high of 26 sen and a low of 21.5 sen before closing at 24.5 sen on volume of 21.947 million shares.
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