This article first appeared in The Edge Financial Daily on March 28, 2019

KUALA LUMPUR: SCGM Bhd’s wholly-owned subsidiary Lee Soon Seng Plastic Industries Sdn Bhd (LSSPI) has inked a memorandum of agreement (MoA) with Indonesian distributor PT Harapan Infiniti Mulia to exclusively manufacture degradable packaging for the Indonesian market.

In a bourse filing yesterday, SCGM said it will manufacture the products for PT Harapan’s in-house Ecorasa brand, with expected sales of US$2.1 million (RM8.57 million) over a two-year period.

SCGM managing director Datuk Seri Lee Hock Chai said the MoA showcases SCGM’s experience in thermoform packaging and commitment to innovating new products in line with increasing customer demand for “socially conscious” products.

“We want to be in the forefront of spearheading this change to bring about greater awareness in Malaysia and the region.

“Both SCGM and PT Harapan have collaborated well in the past year to bring the Ecorasa degradable packaging into Indonesia. This MoA brings us a step further to cement our relationship and make eco-friendly products more accessible into the large market,” he said.

PT Harapan is the exclusive distributor of Ecorasa degradable packaging in Indonesia, which includes thermoform lunch boxes, bowls, plates, trays and other products. PT Harapan will distribute products to food and beverage traders, resellers, and retailers across Indonesia.

SCGM shares settled seven sen or 6.14% lower at RM1.07 yesterday, with a market value of RM204.33 million.

On Tuesday, it announced it had fallen into the red in the third quarter ended Jan 31, 2019, despite slightly higher revenue. It incurred a net loss of RM694,000, versus a net profit of RM5.4 million a year ago, due to pricier raw material and increased finance costs.

Revenue was up 4% to RM55.64 million from RM53.42 million, on higher local demand for food and beverage packaging.