RAWANG: The factory of GW Plastics Holdings Bhd, one of Malaysia’s flexible plastic packaging manufacturers, could rival those from Europe. The company is equipped with high tech plastic film making machines, with brands ranging from Heliostar to Windmoller & Holscher.
However, the mastermind behind GW Plastics is a people-friendly leader without any plastic manufacturing experience.
“I remember when I took over the company in the early 2000s, a previous major shareholder came and told me that I would fail as I knew nothing about plastic manufacturing.
“Yes, I don’t have (the experience), but I didn’t give up. I embarked on a fast track learning curve, and the company had since grown from a profit before tax of RM2.5 million in 2001 to RM24 million last year,” a humble Lim Kok Boon, the company’s chief executive officer, told The Edge Financial Daily.
Founded in 1971, the company, previously known as Great Wall Plastics Industries Bhd, was first listed on the local bourse in 1995.
Following a takeover in 2003, the plastic operations were sold off and the listed entity morphed into property developer Encorp Bhd.
GW Plastics, which is involved in the plastic operations, was listed on the Main Market of Bursa Malaysia in October 2010, with its IPO priced at 76 sen per share.
Its shares closed at 65 sen last Friday, giving the company a market capitalisation of some RM153.4 million. The stock is trading below its net assets per share of 85 sen as at Sept 30, 2011.
GW Plastics specialises in manufacturing cast stretch, blown film and other value-added products. The films are used in both household and non-household industries for packaging.
While it has a modest market capitalisation, the company made a respectable net profit of RM20.9 million last year. Notably, it is the largest manufacturer of wicketed flexible plastic packaging for sandwich bread in Asia, according to independent research firm Dun & Bradstreet.
The company continues to grow with plans to expand its presence overseas, despite the current global economic uncertainties, said Lim. The focus is reflected in its growing export sales and larger factory size.
Export grew from some 20% of total sales in 2002, to more than 57% for the nine-month period ended Sept 30, 2011. The company has recently relocated all its machines to a new factory block measuring 83,000 sq ft as part of its aim to streamline its operations into dedicated production in the extrusion, blown, printing and converting processes.
All in all, GW Plastics’ whole factory complex located here spans a site area of 28.6 acres (11.44ha) with a total built-up area of 452,629 sq ft.
It now boasts a total production capacity of 46,200 tonnes of films annually with an average utilisation rate of more than 85%, said Lim.
“Previously we couldn’t penetrate more new markets because of limited capacity. But we can do it now as we have grown bigger. We are quite strong in Japan, we are looking at expanding our presence in Australia and Europe,” said Lim.
He said the company’s target is to continuously grow its export market.
“One reason is that the population in Malaysia is only some 28 million. The players in the industry keep on growing, but the growth of the market can’t keep up with the pace. So we have to export,” Lim says.
“On another note, overseas clients focus more on quality than price, that’s how our products fit into their demand. They are willing to pay for quality, whereas our local people just want everything to be cheap.
“Nonetheless, some of them are beginning to realise that if you pay a bit more, you will get good and consistent quality,” said Lim.
And it is the quality of its product that GW Plastics stands out among its peers, he adds.
Since Lim took over the helm of GW Plastics in the early 2000s, the company has acquired higher-end extruder machines, printing machines and converting machines to produce higher quality films and more value-added products.
The machines, together with the ISO food safety management system certification the company obtained in 2008, have contributed to the increase in export sales to Europe and other Asia-Pacific markets, he said.
But having new machines doesn’t mean the company does not need its workers anymore, said Lim.
“We still need skilled and disciplined operators to handle these machines. And in fact, our numbers showed that we did not replace workers with machines at all throughout the years. From 500 workers with a turnover of RM126 million in 2002, the number was 478 workers with a revenue of RM308 million last year.
They either retired or left the company on their own,” he said.
GW Plastics’ earnings remained relatively strong despite the volatility of plastic resin prices — a main component of its raw materials — during the past few years. Its net profit grew at a compounded annual growth rate of 40% between 2007 and 2010.
Net profit for the nine-month period ended Sept 30 was RM14.08 million, which was slightly higher than RM14.03 million a year ago. Revenue rose 6.3% to RM249.69 million from RM234.79 million a year earlier.
According to Lim, plastic resin prices are expected to trend downwards over the medium-term due to the additional capacity that will come onstream from 2012 onwards and huge new capacities from the Middle East.
“We have already proven ourselves that we can make money even when resin prices are exceptionally high, just like before and during the global financial crisis of late. Going forward, with our expanded capacity and size, plus the expected downward trend of resin prices ... I think we can perform even better,” he says.
Although the 54-year-old does not possess any first hand knowledge in plastic manufacturing, his passion towards lifelong learning and helping companies to turn around has helped him in his journey in GW Plastics.
“I was with Multi-Purpose Holdings Bhd (MPHB) before joining GW Plastics. I was involved in corporate banking and corporate finance work, and the experience gained during my tenure with them has helped me a lot,” he said.
Lim played an instrumental role in the rescue and restructuring of Eksons Corp Bhd, previously known as Chongai Corp Bhd, during the late 1990s when the company was financially insolvent. Chongai was then a company under the MPHB’s stable.
After the rescue of Chongai, Lim was given the task to improve GW Plastics’ business. “GW Plastics was an indirect associate company of MPHB back then. MPHB was providing management service to the company and I was eventually being assigned to head the CEO’s department and oversee their (GW Plastics) business,” he said.
His fascination towards machines has also helped him.
“To be frank, I am quite fascinated with machines. All of the high-tech features that can help improve operational efficiencies and most importantly, safety, intrigue me,” he said.
Having grown GW Plastics to where it is now, it is interesting to see how Lim can put the company’s expanded capacity and size to use and grow GW Plastics’ presence bigger in the international front in the future.
This article appeared in The Edge Financial Daily, February 8, 2012.
However, the mastermind behind GW Plastics is a people-friendly leader without any plastic manufacturing experience.
“I remember when I took over the company in the early 2000s, a previous major shareholder came and told me that I would fail as I knew nothing about plastic manufacturing.
“Yes, I don’t have (the experience), but I didn’t give up. I embarked on a fast track learning curve, and the company had since grown from a profit before tax of RM2.5 million in 2001 to RM24 million last year,” a humble Lim Kok Boon, the company’s chief executive officer, told The Edge Financial Daily.
Founded in 1971, the company, previously known as Great Wall Plastics Industries Bhd, was first listed on the local bourse in 1995.
Following a takeover in 2003, the plastic operations were sold off and the listed entity morphed into property developer Encorp Bhd.
GW Plastics, which is involved in the plastic operations, was listed on the Main Market of Bursa Malaysia in October 2010, with its IPO priced at 76 sen per share.
Part of GW Plastics' production line in Rawang.
Lim says the company boasts a total production capacity of 46,200 tonnes of films annually with an average utilisation rate of more than 85%.
Its shares closed at 65 sen last Friday, giving the company a market capitalisation of some RM153.4 million. The stock is trading below its net assets per share of 85 sen as at Sept 30, 2011.
GW Plastics specialises in manufacturing cast stretch, blown film and other value-added products. The films are used in both household and non-household industries for packaging.
While it has a modest market capitalisation, the company made a respectable net profit of RM20.9 million last year. Notably, it is the largest manufacturer of wicketed flexible plastic packaging for sandwich bread in Asia, according to independent research firm Dun & Bradstreet.
The company continues to grow with plans to expand its presence overseas, despite the current global economic uncertainties, said Lim. The focus is reflected in its growing export sales and larger factory size.
Export grew from some 20% of total sales in 2002, to more than 57% for the nine-month period ended Sept 30, 2011. The company has recently relocated all its machines to a new factory block measuring 83,000 sq ft as part of its aim to streamline its operations into dedicated production in the extrusion, blown, printing and converting processes.
All in all, GW Plastics’ whole factory complex located here spans a site area of 28.6 acres (11.44ha) with a total built-up area of 452,629 sq ft.
It now boasts a total production capacity of 46,200 tonnes of films annually with an average utilisation rate of more than 85%, said Lim.
“Previously we couldn’t penetrate more new markets because of limited capacity. But we can do it now as we have grown bigger. We are quite strong in Japan, we are looking at expanding our presence in Australia and Europe,” said Lim.
He said the company’s target is to continuously grow its export market.
“One reason is that the population in Malaysia is only some 28 million. The players in the industry keep on growing, but the growth of the market can’t keep up with the pace. So we have to export,” Lim says.
“On another note, overseas clients focus more on quality than price, that’s how our products fit into their demand. They are willing to pay for quality, whereas our local people just want everything to be cheap.
“Nonetheless, some of them are beginning to realise that if you pay a bit more, you will get good and consistent quality,” said Lim.
And it is the quality of its product that GW Plastics stands out among its peers, he adds.
Since Lim took over the helm of GW Plastics in the early 2000s, the company has acquired higher-end extruder machines, printing machines and converting machines to produce higher quality films and more value-added products.
The machines, together with the ISO food safety management system certification the company obtained in 2008, have contributed to the increase in export sales to Europe and other Asia-Pacific markets, he said.
But having new machines doesn’t mean the company does not need its workers anymore, said Lim.
“We still need skilled and disciplined operators to handle these machines. And in fact, our numbers showed that we did not replace workers with machines at all throughout the years. From 500 workers with a turnover of RM126 million in 2002, the number was 478 workers with a revenue of RM308 million last year.
They either retired or left the company on their own,” he said.
GW Plastics’ earnings remained relatively strong despite the volatility of plastic resin prices — a main component of its raw materials — during the past few years. Its net profit grew at a compounded annual growth rate of 40% between 2007 and 2010.
Net profit for the nine-month period ended Sept 30 was RM14.08 million, which was slightly higher than RM14.03 million a year ago. Revenue rose 6.3% to RM249.69 million from RM234.79 million a year earlier.
According to Lim, plastic resin prices are expected to trend downwards over the medium-term due to the additional capacity that will come onstream from 2012 onwards and huge new capacities from the Middle East.
“We have already proven ourselves that we can make money even when resin prices are exceptionally high, just like before and during the global financial crisis of late. Going forward, with our expanded capacity and size, plus the expected downward trend of resin prices ... I think we can perform even better,” he says.
Although the 54-year-old does not possess any first hand knowledge in plastic manufacturing, his passion towards lifelong learning and helping companies to turn around has helped him in his journey in GW Plastics.
“I was with Multi-Purpose Holdings Bhd (MPHB) before joining GW Plastics. I was involved in corporate banking and corporate finance work, and the experience gained during my tenure with them has helped me a lot,” he said.
Lim played an instrumental role in the rescue and restructuring of Eksons Corp Bhd, previously known as Chongai Corp Bhd, during the late 1990s when the company was financially insolvent. Chongai was then a company under the MPHB’s stable.
After the rescue of Chongai, Lim was given the task to improve GW Plastics’ business. “GW Plastics was an indirect associate company of MPHB back then. MPHB was providing management service to the company and I was eventually being assigned to head the CEO’s department and oversee their (GW Plastics) business,” he said.
His fascination towards machines has also helped him.
“To be frank, I am quite fascinated with machines. All of the high-tech features that can help improve operational efficiencies and most importantly, safety, intrigue me,” he said.
Having grown GW Plastics to where it is now, it is interesting to see how Lim can put the company’s expanded capacity and size to use and grow GW Plastics’ presence bigger in the international front in the future.
This article appeared in The Edge Financial Daily, February 8, 2012.
