Melamine maker Srithai scales back plans
SET-Listed Srithai Superware Plc, Thailand's biggest melamine producer, will reduce its investment budget for expansion at home and abroad next year by 40% to 900 million baht.
The cut reflects the company's concerns over negative factors, especially currency exchange volatility brought about by the recent hike by the US Federal Reserve.
"We have taken a wait-and-see approach on new investment because we expect a second rate increase in the near future."said chairman and president Sanan Ungubolkul."The rising interest rate means we will have more currency risk when investing in other countries."
When the US doliar is stronger, Srithai faces exchange losses if the country it invests in other currency.
With that in mind, the company will temporarily delay some investment plans in Vietnam, Indonesia and china.
Of the total 2016 budget, 550 million baht will be invested in Thailand, expanding the food and beverage container line while the remaining 330 million baht will be used to expand mostly in the US, Cambodia, Laos, Myanmar and Vietnam.
Another concern, Mr. Sanan said, is falling oil prices. A crude price hovering around $30 a barrel could hurt income for Middle East countries, which are for Srithai's main customers.
Moreover, the company wants to see if political stability in Myanmar can hold after Aung San Suu Kyi's victory in the November election. If so, Srithai is ready to set up a factory in the Yangon area.
" We will postpone building a fourth melamine factory on a 20-rai plot in Hochi Minh City, Vietnam next year, and we will export melamine products from our plant in Nakhon Ratchasima instead." Mr. Sanan said.
Demand for melamine products from hotels, restaurants and caterers will continue to increase in Vietnam. Srithai will export about 100 million baht worth of products a month to the country.
Apart from it's Superware brand. Srithai recently launched a sister brand. The Potters, in response to design-oriented customers.
The company is set to generate 60 million baht in sales from The Potters in the first year of operation,rising to 120 million by 2018.
Total sales are forecast to grow by 8% to 10 billion baht in 2016.
STTHAI shares closed yesterday on the SET at 2.08 baht, up two satang, in trade worth 745,150 baht.