[Borneo Post Online] Daibochi eyes new ways to enhance efficiency

KUCHING: Local player Daibochi Plastic & Packaging Industries Bhd (Daibochi) is set to increase its scope in driving revenue growth with the Asean and Australian regions being key areas of focus.

“In fact, Daibochi has already made inroads on this front, having recently secured a major contract from a regional food and beverage (F&B) player,” outlined Kenanga Investment Bank Bhd’s research team (Kenanga Research) in a report on the group.

“The group’s business ventures into medical glove, electrical and electronics (E&E) as well as tobacco packaging segments have also shown progress and Daibochi commercial supply orders have also already begun to trickle in,” it said.

Even though management did not indicate the size of the respective contracts, Kenanga Research understood that the group was eyeing its overall local and export sales to grow by circa RM50 million within a year.

To recap, Daibochi was established in 1972 and is a leading one-stop flexible plastic packaging (FPP) solution provider for world-renowned customers in the F&B, fast moving consumer goods (FMCG) and specialty industries.

Most of Daibochi’s clients were multinational corporation (MNC) eccentric companies like Nestle Bhd, British American Tobacco Bhd and Tesco Bhd with more than 85 per cent of its revenue being generated from the F&B segment, it noted.

“However, the group’s business segments are segregated into packaging unit and property development. In contrast to the other local players, more than 60 per cent of Daibochi’s revenue is domestically driven.”

In addition, Daibochi is also in the midst of exploring avenues to enhance its efficiency, which can further support its margin improvement.

Kenanga Research believed that the group had thus far received positive feedback from three major multi-national corporation customers for the down-gauging of its films from the current four layers to the thinner and more cost effective two-layer films.

“Commercial production could start as soon as the latter half of 2013, and this could be a mitigating factor to its near-term cost pressure arising from the minimum wage policy as well as the new anti-dumping duties being imposed on biaxially oriented film (BOPP film) imports.”

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