KUALA LUMPUR (Sept 1): Oceancash Pacific Bhd is embarking on an expansion to double its production capacity for non-woven materials used in the production of personal protective equipment (PPE).
The group manufactures and trades air-through bonded non-woven and thermal bonded non-woven fabric, which is widely used in disposable hygiene products.
The estimated capital expenditure for the project will be RM40 million (for land and machinery) which will be funded through internal funds, placements and bank borrowings, Oceancash said in a statement today.
The new expansion is estimated to increase Oceancash's capacity by 100% to 16,000 tonnes per annum, from the existing capacity of 8,000 tonnes, with an estimated completion time of less than 18 months.
"We observed that the demand for non-woven materials has accelerated during this Covid-19 pandemic as non-woven is the key raw material used in the production of PPE. We believe that this pandemic is an opportune time for such an expansion," said Oceancash general manager Lor Seng Thee.
"We are confident that this plan will mark a new major milestone for the group with very strong potential to raise the growth trajectory of our earnings," he added.
Lor said the new expansion involves a major upgrade in production technology, in which its applications include producing the complete three-ply material for three-ply masks, in contrast with most machines in the industry which are only capable of producing one to two out of the three-ply material needed.
"In addition, the non-woven material from the new plant can be supplied to the disposable hygienic products industry, ie diapers, sanitary pads and surgical apparel, in which Oceancash already has a steady customer base," said Lor, adding that the company believes the demand for hygiene products will continue to grow, given the improvement of standard of living as well as the higher hygiene awareness arising from this pandemic.
Separately, in a filing with Bursa Malaysia, Oceancash proposed a share placement, entailing the issuance of up to 24.5 million new shares, representing 10% of the total number of its issued shares, to investors.
This is expected to raise up to RM21.2 million, which will be used to purchase one set of spunmelt non-woven machinery to produce non-woven fabric (RM17.9 million) and for working capital (RM3 million).
As at Aug 26, Oceancash's issued share capital was RM26.25 million, comprising 245.3 million shares. Following the proposed exercise, Oceancash will have an enlarged issued share capital of 269.8 million shares worth RM47.47 million.
Subject to the relevant approvals being obtained, the proposed placement is expected to be completed by the third quarter of 2021.
Shares in Oceancash closed unchanged at 75.5 sen today, valuing the group at RM185.2 million. Year-to-date, the counter has risen 73.6% from 43.5 sen. It touched an all-time high of RM1.46 last month.
Edited by S Kanagaraju