Strong growth in the wood-plastic composite market is prompting Qinchuan Future Plastic Machinery Co. Ltd., a company that makes equipment for that market, to consider an initial public offering, a company executive said at NPE2009.
Baoji, China-based QC Future a joint venture of Futuresoft Technologies Inc. of Manalapan, N.J., and publicly traded Quinchan Machinery Development Co. Ltd. of Baoji wants to raise between $10 million and $30 million for an expansion to handle increasing demand in China's domestic wood-plastic composite market as well as exports, Futuresoft director Wayne Song said June 25 at the Chicago show.
The IPO would likely be in the new Growth Enterprise Board stock market, China's newly announced version of the U.S. small-cap Nasdaq market.
QC Future makes extrusion lines for wood-plastic composite applications, including twin-screw models and turnkey systems.
Song said China's wood-plastic composite industry will have about 440 million pounds of production this year and could grow to more than 660 million next year, fueled by the country's construction industry. Also bolstering the market is government stimulus spending intended to shore up China's domestic economy amid the global downturn.
QC Future had about $15 million in sales this year and is likely to hit $18 million next year, Song said. The venture is seeing 40 percent growth in domestic sales and 15 percent in exports, he said.
Exports to developed markets like the U.S. are down, he noted, but the company has compensated by boosting exports to developing economies such as India, South Africa and Iran. QC Future's booth at PlastIndia, held Feb. 4-9 in New Delhi, received very strong response, Song said.
Developing economies are using wood-plastic composites to get the appearance of wood products at a lower cost, and likewise, they buy Chinese equipment because it is inexpensive, he said.
Those markets are very price-sensitive, Song said.
China's domestic wood-plastic composite market is starting to develop sophisticated products including combination aluminum and composite window frames, he said. He claimed wood-plastic composite applications inside homes in China can be more sophisticated than in the U.S. market, because U.S. applications focus on exterior applications.
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