This article first appeared in The Edge Financial Daily, on February 29, 2016.

KUALA LUMPUR: Oceancash Pacific Bhd, a felt and non-woven product manufacturer, which saw its net profit and revenue rise by 81.6% and 9.1% respectively last year, expects to sustain its positive momentum in 2016, albeit at a slower pace, driven by growth in its non-woven division that will help cushion a slowdown in its felt division.

Its group general manager Lor Seng Thee said the outlook for the felt segment is challenging in 2016, as the regional automotive market, a key contributor to its revenue, is expected to slow down. Still, he hopes to maintain the division’s performance in 2016 at last year's level. The Bursa Malaysia’s ACE Market-listed company produces felt for heat and sound insulation in vehicles.

Lor said the felt segment in Malaysia derives a third of its revenue from the local auto industry, while the air-conditioning and export markets contribute the remaining two-thirds. The group is bullish about its non-woven division’s prospects, with revenue projected to grow 10% this year, compared with 14.8% in 2015, according to its co-founder and chief executive officer Tan Siew Chin.

Tan said growth in the non-woven segment will be underpinned by prospective new customers and increased orders. Oceancash aims to capture some big names in 2016.

He added that the group is currently in talks with a multinational corporation, which would make a “significant” contribution to the division if a deal is clinched.

Its felt division produces resonated and thermoplastic felt for application in the auto and air-conditioning industries, while the non-woven division manufactures fabrics used in the hygiene industry, which Tan said is fairly recession-proof.

“Worldwide, the usage of disposable hygienic products is continuously increasing,” he said.

Oceancash exports over 80% of its non-woven products, with Japan being its largest market, followed by Thailand, Indonesia and China.

Tan said Oceancash will spend about RM4 million on capital expenditure this year, mainly to buy a new spooling machine for the non-woven division to upgrade its production capability to cater for a wider range of products. He said the group has five production lines at its non-woven plant in Malaysia, running at 75% to 88% of capacity.

The four production lines at its felt plants in Malaysia and Indonesia are running at a lower 50% capacity utilisation rate, owing to a slowdown in the auto markets of Indonesia and Thailand.

Lor said the Indonesian operation is running with one production line, as Oceancash is in the midst of commissioning the second line after moving into its new factory in Cikarang from Bekasi and expects it to commence production in a month.

Previously, Oceancash planned to expand its business operations to Thailand, and relocate one of its two production lines from Malaysia to the country. But the expansion did not materialise, and Lor said the group is now re-evaluating the option.

Founded in 1997, Oceancash’s net profit has been increasing steadily from RM1.81 million in the financial year ended Dec 31, 2010 (FY10) to RM8.92 million in FY15.

Net profit nearly doubled from RM4.91 million in FY14, thanks to higher sales, foreign-exchange gain and the group incurring a one-off loss of RM1.69 million on the disposal of a PE modular machine in the third quarter of 2014. Revenue for FY15 grew 9.1% to RM79.43 million from RM72.81 million in FY14, on higher non-woven sales to Thailand and Japan.