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Thailand cooks up a big fish
By Jim Kenny, Contributing Editor
Thailand’s pulp and paper sector is undoubtedly
more advanced than Vietnam’s, but it is enjoying similarly strong
growth and the country’s paper producers are working flat out to
keep up with demand. To get a flavor of what’s going on, you only
have to examine the country’s largest pulp and paper group - Siam
Pulp & Paper.
The most recent figures available show that Siam Pulp & Paper reported
first quarter 2003 export sales were down on the previous year by several
percentage points as the company did not have the capacity to keep up
overseas sales and still service the domestic market where prices proved
more attractive in any case. Sales in 2002 were up 8.4% on 2001 and that
trend looks to be continuing with Q1 sales this year up 10% on the same
period in 2002. Not only that, but despite rising wastepaper and pulp
costs, the groups saw net income climb by almost 25% in 2002.
Just in case you were thinking of snapping up some shares in the wake
of such performance, Siam Pulp & Paper is in process of being fully
incorporated into its Siam Cement parent group, so it will be delisted
shortly from the local stock exchange.
It is also worth noting that Siam Pulp & Paper took a majority stake
in another Thai paper company, Phoenix, early in 2002, indicating that
the group appreciates the need for scale if it is to stay competitive.
This is especially important as Thailand will be slashing its paper import
tariffs over the next few years as part of the ASEAN free trade agreement.
On top of that, SPP has just taken a 40% stake in one of the few other
Thai paper companies left - Thai Cane Paper.
The only other really significant player in the Thai paper industry is
Advance Agro. Despite the healthy markets seen recently however, the group
is somewhat restricted in terms of exploiting the potential benefits as
it carries a fairly hefty debt burden.
By contrast, Siam has plans to modernize its paper machines and add two
more packaging plants over the coming years.
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Thailand cooks up a big fish, Solutions!, Online Exclusives, July 2003
