Cheng Loong Corp (正隆紙業), the nation’s biggest industrial papermaker, yesterday outlined plans to build a production base in Southeast Asia over the next decade.
“We plan to allocate more than US$1 billon to build a paper mill in Vietnam’s Binh Duong Province,” Cheng Loong president Tsai Tong-ho (蔡東和) told an investors’ conference in Taipei.
The first phase of construction is to be completed in the first half of next year, with an installed annual capacity of 300,000 tonnes of industrial paper products, Cheng Loong said.
Construction of the new facility is to take place in five phases, the company said, adding that the facility is expected to be running at full annual capacity of 1.05 million tonnes in 2030.
The mill would eventually also manufacture household paper products for Southeast Asian clients, Cheng Loong said.
The expansion project comes as the company aims to develop an integrated supply chain in Southeast Asia and grab more market share there, Tsai said.
The mill is to serve as the company’s core production hub in the region, he said, citing the potential zero-tariff benefits brought by Vietnam’s free-trade agreement with other ASEAN members.
Cheng Loong, which entered the Vietnamese market in 2005, operates two paper box plants and one paper processing plant there.
The 57-year-old firm is more cautious about its business in China, primarily due to a dramatic fluctuation in paper prices there and Beijing’s tightening environmental regulations.
Given the circumstances, Cheng Loong said it plans to shut down one of its major units in Shanghai’s Pudong New Area by the end of this year, as potential compliance costs might be much higher in the future.
The dissolution of Shanghai Chung Loong Paper Co Ltd (上海中隆紙業) is expected to have limited effect on Chen Loong’s operations this year, it said.
The company’s 11 other plants in China would continue running as usual, it said.
With the closure, Cheng Loong is planning to sell 8.9 hectares of land in Shanghai, which have a book value of 38 million yuan (US$5.8 million), the company said, without providing a timetable.
Cheng Loong reported that net profit for the first half of the year rose 6.7 percent to NT$698.43 million (US$23.2 million), compared with NT$654.33 million in the same period last year, with earnings per share increasing from NT$0.59 to NT$0.63 in the same period, thanks to rising paper prices and better cost controls.
Revenue in the first six months grew 9 percent annually from NT$19.16 billion to NT$20.8 billion, company data showed.
The company’s stock rose 0.97 percent to close at NT$20.8 on the main board yesterday, outperforming the broader market, which gained 0.25 percent.
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