SET-listed Srithai Superware Plc, a leading melamine maker, is ramping up investment this year in Vietnam, which has relatively high growth opportunities, while shelving its investment in Thailand, Indonesia and India.
Sanan Angubolkul, chairman and president, said the company will splash out 450 million baht this year to expand its business in Vietnam. Of the total, about 300 million baht is to install new machines to increase production capacity of its PET preform and closure products at its two factories in Ho Chi Minh City and Hanoi.
The remaining 150 million baht will be used to build a new melamine factory on a 16-rai plot in Ho Chi Minh City and install new machines at this factory.
The construction of the new melamine facility is scheduled to start in 1-2 months, with operations commencing in the first quarter of next year.
The new factory will serve demand from the domestic market in Vietnam.
Once the new factory is complete, the company will have four factories in Vietnam. One is a PET preform and closure factory in Hanoi, another in Ho Chi Minh City and two melamine factories in Ho Chi Minh City.
With the market facing a host of negative factors, particularly the coronavirus pandemic, Mr Sanan expects sales to be 8.62 billion baht this year, 2.6% lower than last year's 8.84 billion baht.
Despite the huge demand for food and beverage packaging for the delivery channel, the company foresees sales in the first quarter of about 10 million baht lower than its earlier expectation.
But the bottom line is likely to improve as the baht weakens from last year's rate, Mr Sanan said.
"We are satisfied with our performance in the first quarter this year, but are not quite confident about our sales in the second quarter because some clients in Europe and the US have already told us to delay their melamine shipment," he said.
Some 80% of its sales come from the domestic market, leaving 20% for export.
"We don't know when the pandemic will end," Mr Sanan said. "We have to be cautious managing our business and keep monitoring the situation on a daily basis."
He said the company will downplay boosting sales volume this year, emphasising instead liquidity management, better cash flow and effective supply chains.
Srithai is using caution in controlling its inventory, reducing the stock of raw materials to only 10 days from 45 days last year. Finished goods inventory is also reduced to two months from three months.
"If we are not confident in our clients, we will never sell our products," Mr Sanan said. "With these strategies, we won't have any bad debt afterwards."