Green Seal Holding Ltd (綠悅控股), China’s largest maker of biaxial oriented polyamide film for food product packaging, said yesterday it plans to invest 850 million yuan (US$137.2 million) on building three production lines in China’s Fujian Province in the next two years.
The company’s first new production line is expected to start operations in the fourth quarter this year, increasing its capacity by 10,000 tonnes a year, company general manager Yilin Yan (顏藝林) said at an investors’ conference in Taipei.
The two remaining new production lines, each with an annual capacity of 12,000 tonnes, would become operational in the second quarter and fourth quarter next year respectively, Yan said.
The three new production lines are expected to raise the company’s capacity to 75,600 tonnes from 41,600 tonnes, Yan said.
“Because of higher capacity, our market share in China is likely to reach 47 percent next year, up from 36 percent,” Yan said.
Green Seal will use its own cash to finance the capital expansion, Yan said.
The company’s capital expenditure is expected to be 630 million yuan this year and 250 million yuan next year, said Bonnie Tsai (蔡如雅), an assistant to Yan.
The company expects its shipments to grow 21.68 percent this year to 43,600 tonnes from 35,831 tonnes last year, Tsai said.
Green Seal’s gross margin would rise this year from 33 percent last year as the gap between demand and supply for biaxial oriented polyamide film widens in China and the price of caprolactam — which is used to make the raw materials for Green Seal’s products — declines, Tsai said.
China’s total demand for biaxial oriented polyamide film was 140,000 tonnes last year, while Chinese companies could only supply 110,000 tonnes, Tsai said, citing research conducted by China Plastics Film Web (中國塑膜網), a Chinese market intelligence company.
Based on the research, Tsai said demand for the product in China could rise to 180,000 tonnes this year, while local supply of the product could increase to 130,000 tonnes.
Green Seal shares surged 3.39 percent to NT$259.5 yesterday, the highest level after the company was listed, since the company on Tuesday posted a profit of NT$1.13 billion for last year, up 18.7 percent from NT$953.46 million a year earlier.
Green Seal’s gross margin rose to 33 percent last year from 27 percent in 2012 because of lower prices for caprolactam and rising sales of customized products, Tsai said.
Revenue declined 7.3 percent to NT$5.17 billion from NT$5.58 billion in 2012, which Yan attributed to lower shipments last year, after the company moved some of its production lines to Xiamen from two other locations in China.