Scanwolf’s earnings to be driven by plastic film business

by ANIS HAZIM / pic credit: scanwolf.development FB

SCANWOLF Corp Bhd (SCB) is eyeing a turnaround in its fourth quarter of financial year 2021 ending June 30, 2021 (4QFY21), driven by its newly-commenced plastic film manufacturing business and the capacity-maximised plastic edging division.

SCB ED Ng Chee Wai, in a statement yesterday, noted that demand for furniture products such as bedroom sets, panel-based office suites and dinette sets sees healthy growth as more people are opting to work from home.

He added that order diversion from China to Malaysia due to the US-China trade war further enhances growth for the company.

“As of 2QFY21, our plastic edging division is operating at a maximum capacity of 300 metric tonnes (MT) per month, with a total backlog of 400MT as of Dec 31, 2020. It is imperative for us to add new production lines to produce plastic edging for the furniture industry, which would then increase the maximum capacity to 440MT per month,” Ng added.

SCB is in the middle of completing its proposed rights issue of irredeemable convertible unsecured loan stocks with warrants, targeting to raise RM10.5 million under the maximum scenario.

He added that its newly-commenced plastic film manufacturing business in March 2021 has gained traction by receiving overwhelming inquiries from its potential customers.

The company will focus on providing packaging solutions to higher-margin industries such as pharmaceutical and food and beverage (F&B).

“We plan to instal a total of three production lines with an initial production capacity of approximately 3,576MT of plastic firms per annum, while one line has commenced operations and we expect the other two lines to start operation by September 2021 and December 2021 respectively,” Ng said.

Ng stated that the delay is mainly due to the disruption of works by contractors as a result of ongoing Covid-19 pandemic.

The total capacity of all three production lines is expected to generate a revenue of RM2.4 million per month.

“We plan to utilise RM800,000 of the proceeds raised to add one unit of PVC calendar six-roller with the latest automation features. This would then increase the maximum production capacity to 4,896MT per annum, from the current 3,576MT per annum,” Ng added.

SCB also intends to diversify its business into the pharmaceutical sector by supplying blister packs for medicines and capsules packaging.

Other areas of interest are F&B packaging for the clamshells and vacuum forming converters supplies, said Ng.

The group targets to be the one-stop supplies for the packaging industries.

“We expect a sustained demand for F&B packaging, riding on increasing demand for apportioned F&B servings to maintain higher hygiene standards, F&B deliveries and takeaways,” Ng said.

The group is confident to turn around in 4QFY21 compared to the RM1.1 million loss in the corresponding quarter of the previous year.

Looking ahead, SCB is confident of a bullish earnings outlook, driven by both the expansion of its capacity in the furniture industry under its plastic division, as well as the scaling of its packaging industry.

SCB has also set an internal target of double-digit growth for both its top- and bottom-line in FY22 amid the expected “revenge spending” in developed markets.