Leading industrial papermaker Cheng Loong Corp (正隆紙業) yesterday said that it would continue building new plants and expanding manufacturing facilities in Vietnam.
“We will continue to expand our Binh Duong plant and expect to complete the expansion in 2021,” Cheng Loong president Tsai Tong-ho (蔡東和) said at its annual shareholders’ meeting in Taipei.
“We also plan to invest US$10 million to establish another corrugated packaging plant in northern Vietnam,” he said.
Photo: Lee Chin-hui, Taipei Times
In December last year, the company completed construction of a paper and paperboard mill in Binh Duong Province with an annual output of 300,000 tonnes, and began operations at its third corrugated packaging plant in Long An Province in the first quarter of this year, Tsai said.
As a result, the sales contribution from Vietnam is expected to increase from 6 percent of the company’s total sales last year to about 10 percent this year, he said.
Over the next four years, Cheng Loong plans to invest NT$2.08 billion (US$66.01 million) in setting up new plants in Kaohsiung’s Yanchao District (燕巢), as the paper industry reported a 7.5 percent increase in domestic sales and a 2.2 percent growth in exports last year.
Taiwan remains the largest market for Cheng Loong, accounting for about 69.4 percent of its sales last year, company data showed.
In contrast, the company has over the past few years been lowering the output of its corrugated packaging plants in China, and would continue to do so this year amid the US-China trade dispute, Cheng Loong chairwoman Cheng Su-yun (鄭舒云) said.
Sales contributions from China dropped to 24.6 percent of the total last year, compared with 41.1 percent in 2015, company data showed.
Cheng Loong is the largest waste paper buyer in Taiwan and sources about two-thirds of the paper it needs domestically, although it costs NT$3.5 to NT$4 per kilogram, which is higher than the NT$3 it could pay for imported paper.
The company said it would still source most of its waste paper in Taiwan for the sake of quality.
Shareholders yesterday approved the company’s plan to distribute a cash dividend of NT$1.1, representing a payout ratio of 32.54 percent based on last year’s earnings per share of NT$3.38.
It also suggests a dividend yield of 5.66 percent based on the stock’s closing price of NT$19.45.
A harsher industry environment saw Cheng Loong’s net income plummet by 77.68 percent to NT$438.24 million in the first quarter, compared with NT$1.96 billion in the same period last year, while earnings per share dipped from NT$1.77 to NT$0.4. However, gross margin climbed 5.05 percentage points to 21 percent.
In the first five months, the company’s cumulative revenue dropped 8.45 percent to NT$15.69 billion, compared with NT$17.14 billion a year earlier.
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