Daibochi allocates RM60m for capacity expansion

PETALING JAYA: Flexible packaging manufacturer Daibochi Bhd is investing RM60 million for capacity expansion in line with long-term growth strategies, on the back of resilient business performance and outlook.

The capital expenditure would enhance Daibochi’s capabilities and services to its customers and involve the purchase of 13 new lines for its printing, lamination, and bagging processes, which are expected to come on stream over the next six months.

Separately, the group is considering plans to purchase eight more lines, while maintaining group net gearing below 0.5 times. As at April 30, the group’s net gearing stood at 0.23 times.

Being part of the essential services category in supporting the food and beverage (F&B) sector, the group continued its manufacturing operations and supply to customers, with standard operation procedures in place to ensure employee safety.

This supported the results in the third quarter ended April 30 (Q3’20), with Daibochi posting a net profit of RM10.84 million, while revenue stood at RM151.98 million.

For the nine-month period (9M’20), Daibochi saw a net profit of RM36.45 million, while revenue was RM463.5 million. There is no comparison to the previous corresponding period due to the change in financial year end from Dec 31 to July 31.

The group declared an interim dividend of 2 sen in respect of FY20, with ex-date on July 6, 2020 and payable on July 17, 2020. The dividend payout of RM6.5 million represents 18% of net profit for 9M’20.

Daibochi executive director Low Jin Wei said Daibochi’s resilient performance is buoyed largely by sustained orders for flexible packaging from the F&B and fast-moving consumer goods sectors despite the various lockdown measures implemented across the region.

“With the positive outlook, we are continuing to expand our capacity and capabilities. We believe that this strengthened position will enable us capture more growth opportunities in Southeast Asia and Oceania.

“Alongside the capacity expansions, we also anticipate the need for a larger workforce to support our operations. We are cognisant of the challenging economic scenario in Malaysia and rising unemployment rate, and are working with the relevant authorities to prioritise the hiring of Malaysians while growing our talent pool,” he said in a statement.

Commenting on prospects, Low said it is seeing continual interest from its multinational clients for sustainable flexible packaging solutions, as they progressively implement sustainability targets across their global operations.

“By jointly working with Scientex in research and development efforts, we would strive to expand our role in supporting our customers’ targets. Furthermore, through collaboration with our clients, we have rolled out new sustainable solutions such as mono-material laminates, and are expecting more product commercialisation in the near term.”

source https://www.thesundaily.my/business/daibochi-allocates-rm60m-for-capacity-expansion-YY2616463