SINGAPORE—Singapore-based injection molder Showpla Asia Ltd. is boosting production of plastic components for the electronics and telecommunications industries in the emerging Latin American and Asia-Pacific markets.
The expansion is backed by a proposed public offering of 32 million new shares through a secondary listing on Japan's Osaka Securities Exchange later this month.
Faced with rising operation costs and hamstrung local demand, Showpla is eager to expand production in Brazil and Mexico, industry sources said.
Showpla Managing Director Teruyuki Nakagawa said the electronics industry slowdown in Malaysia and Singapore has resulted in a 20 percent fall in Malaysian orders, and a drop of about 10 percent in Singapore.
``I am not optimistic about Singapore and Malaysia,'' Nakagawa said. ``We are therefore beginning to appreciate our regional expansion projects.''
In Brazil the company's international investment arm, Showpla International Pte. Ltd., is doubling capacity at its $10 million plant in the Manaus Free Trade Zone. Showpla International is 60 percent owned by Showpla and 40 percent by the Government of Singapore Investment Corp.
The Brazilian plant started production in February to supply plastics components to Sony Corp., Toshiba Corp., Matsushita Electric Co. Ltd., Sharp Corp., Philips NV, Lucky Goldstar and Samsung Group Inc.
According to industry sources, the Manaus plant has six injection molding machines, and will have another five or six more by year-end. In addition, Showpla is conducting a feasibility study for a plant in Mexico, the company said.
In Ho Chi Minh City, Vietnam, Showpla International has invested an additional $3 million to double capacity at its $5 million television cabinet plant supplying Toshiba, Sanyo Electric Co. Ltd. and JVC Co. It also has started blow molding operations to supply polyethylene bottles to shampoo and motor oil companies.
In Thailand, the firm has started up its second plant in Bangpa-In, north of Bangkok, to produce air conditioner and television cabinets. The plant houses 13 injection molding machines, according to industry sources.
Over in India, Showpla (Delhi) Pte. Ltd. in July paid $7.9 million to take over the gas-assisted injection molding operations of Onida Savak Ltd. to produce plastic components for automobiles, computers and telecommunication equipment in New Delhi, the company said. It hopes to invest up to $30 million to set up three plants in Bombay and New Delhi.
In March, Showpla reported a 7.1 percent gain in 1996 profit over the previous calendar year to $3 million, on sales of $93 million. The firm is 34.4 percent owned by parent company Showa Plastics Co. Ltd. of Japan.
The offer price for the secondary listing will be fixed after the Osaka exchange approves the proposed listing, according to Showpla.
On top of the secondary listing, the company will raise an additional $15.2 million through a rights issue on the SES, both of which are subject to shareholders' approval.