Malaysian plastic film packaging company SLP Resources Bhd plans a March 12 initial public offering to fund capacity expansions and launch new products, including some targeted at the U.S., Europe and China.
Kulim-based SLP wants to spend 11 million ringgit ($3.5 million) during the next three years to expand capacity and develop new products for electronics and health-care markets, the firm said in a Feb. 20 IPO filing to Malaysia's stock exchange. SLP's investment will include more environmentally friendly materials, such as inflatable packaging bags made from polyolefins, to replace PE/nylon bags, which are more difficult to recycle; and expanded polystyrene foam block packaging - which is facing environmental pressures in some countries - for the electronics industry, particularly in China, the company said.
Of 22.1 million ringgit ($7 million) the firm expects to raise in the IPO, SLP said it will use 6 million ringgit ($2 million) for new equipment purchases in the next year, 5 million ringgit ($1.6 million) to repay debt and 9.1 million ringgit ($3 million) for working capital.
SLP said it sees opportunities in health-care packaging, as more medical-device makers are moving noncritical manufacturing operations like packaging to low-cost countries, including Malaysia, Thailand and Singapore. The company is testing health-care films with customers and the U.S. Food and Drug Administration, for applications such as medical-glove packaging or sterilization liners for bags used in making contact lenses.
Executive director of marketing Jasmine Khaw said the IPO money will help the firm expand, broaden its technology and differentiate itself from competitors in Malaysia's packaging-intensive industry. More than 60 percent of Malaysia's plastics companies are involved in the packaging sector, according to SLP.
The company also sees opportunities in Malaysia's domestic market for food packaging, and plans to invest in a five- or seven-layer extrusion machine.
SLP reported sales of 128.7 million ringgit ($40 million) and net profit of 8.3 million ringgit ($2.6 million) in the first nine months of 2007, up from sales of 99.5 million ringgit ($30.8 million) and profit of 5 million ringgit ($1.5 million) in the same period the year before.