*NEWS*CHINA’s 18,000 TONNES OF INK A YEAR

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*NEWS*CHINA’s 18,000 TONNES OF INK A YEAR

 user 2007-01-23 at 10:18:00 am Views: 49
  • #16895


    Jadi banks on China demand

    PETALING
    JAYA: Malaysia’s sole toner maker Jadi Imaging Holdings Bhd has set its
    sights on China, which currently supplies half of the world’s recycled
    printer cartridges. “We believe the toner consumption in China will
    grow rapidly. The demand is going to be huge because many Americans and
    Japanese have outsourced their remanufacturing jobs to China,”
    executive chairman and group chief executive officer Liew Kim Siong
    told StarBiz.  Given the outsourcing trend, China is expected to supply
    80% of the global remanufactured cartridges in the near future. Thus
    the country’s potential demand for toner, a key component of the
    cartridge, is great. A few years ago, the black toner demand was
    expected to surge to 10,000 tonnes in China by 2010. But by 2005, the
    country’s demand had already soared to 18,000 tonnes and it is still
    growing.  “China is our biggest market,” said Liew. He expects the
    contribution from China to balloon to 25% of Jadi’s net profit from 5%
    currently.  Jadi makes black toner that it supplies to recycled printer
    cartridge manufacturers.  The group’s rationale for setting up a
    factory in Suzhou city, central east China, is to be near to the
    prospective customers.  Its subsidiary Jadi Imaging Technologies
    (Suzhou) Co Ltd started production in China last June. Less than a year
    later, it is already planning for capacity expansion amid the rising
    demand. “We intend to acquire a piece of land to add one production
    line,” said Liew.  Jadi (Suzhou)’s current production line is on rented
    premises. Without much teething problem, it saw income flowing in from
    Suzhou after the second month in operation.  “We expect to have a
    decent profit from our China operation in the fourth quarter last
    year,” said Liew, adding that the group’s annual earnings would exceed
    the forecast target.  He added that Jadi was targeting a revenue growth
    of at least 30% this year. Jadi, which made its debut on Bursa Malaysia
    second board last April, has forecast a pre-tax profit of RM10.9mil and
    revenue of RM63.5mil for the financial year ended Dec 31, 2006.
    Earnings per share is anticipated at 2.42 sen.  The China unit
    generated RM3.68mil or 9% of the group’s revenue of RM41.3mil for the
    nine months ended Sept 30 last year. It posted a net profit of
    RM468,000, accounting for 5% of the group’s net earnings of RM9.1mil.
    Given the solid earnings track record, with annual compounded growth of
    40% between 2001 and 2005, Liew is confident that Jadi would graduate
    to the main board by year-end. On its domestic operation in Shah Alam,
    Jadi has added a production line dedicated for colour toner. This sixth
    production line, requiring an investment of RM1.8mil, will commence
    operations this quarter. Liew noted that colour toner was unlikely to
    generate significant contribution soon as colour printers had yet to
    gain popularity. However, he believes that the venture would bear fruit
    in the long run. “We will be ready to capture this new market when
    demand picks up,” he explained. The Malaysian production mainly caters
    for exports. Jadi’s toner reaches a large part of the globe. Asia,
    particularly the Middle East, South America and Eastern Europe, are the
    major export markets.  In the past year, Jadi has utilised the fund
    raised from its listing exercise to double its combined annual capacity
    to 5,000 tonnes in Malaysia and China. “The added capacity allows us to
    enter new markets and that would help to boost earnings.  “We want to
    adopt more aggressive marketing strategies, particularly in markets
    where we are not strong yet such as central and western Europe and the
    US,” said Liew. Besides enabling it to penetrate fresh territories,
    Jadi’s enlarged capacity also strengthens its bargaining power in
    purchasing raw materials.  “We could bargain for a better price with
    our raw material suppliers since our volume is bigger now. This will
    bring down our (unit) costs,” said Liew.  That’s also one reason that
    Jadi management is not too concerned about the fluctuations in crude
    oil price that affect the cost of plastic resin and silica. “We have
    actually got a lower price for our plastic resin supply for this year,”
    he said.