PETALING JAYA: The long-term prospects of the plastics and packaging sector is looking up as Malaysian stretch film producers are gaining momentum, thanks to advanced technology, skilled labour and efficient raw material sourcing.
In a note, Kenanga Research said the rising demand for food and beverage (F&B) packaging will be a key accelerator for the industry as local companies were among the first to invest in the production of stretch films which then consistently expanded their operations, drove product innovations and embraced technological advancements.
”The estimated annual production of stretch film in Malaysia is about 450,000 tonnes or 9% of global production or 32% within the Asia-Pacific region.
“We expect Malaysia to sustain its edge in the global stretch film market, staying ahead of its competitors in the Asean region,” it said.
Kenanga Research said the demand for stretch films is also set to rise due to the increased need for high-performance flexible packaging across various industries such as F&B, shipping and logistics.
Notably, the demand is expected to shadow the growth in population, income and international trade which involves additional packaging materials such as bubble wraps, palletising films or simple covers to protect against the elements.
“Companies like Thong Guan Industries Bhd
, BP Plastics Holding Bhd and Scientex Bhd are poised to benefit from such demand trends,” it said.
On top of that, sustainable packaging has been gaining traction globally as more companies are adopting eco-friendly solutions.
Kenanga Research believes that Europe is set to be the most attractive marketplace for innovative packaging solutions because of its proactive approach to regulations and standards.
“This growing emphasis on sustainability and increased consumer demand is spurring companies to adopt innovative, eco-friendly packaging solutions in the European market.
“In this context, we believe companies like Thong Guan can expand its revenue within Europe by leveraging its nano stretch film technology, which aligns with the demand for sustainable packaging.
“In 2022, Europe accounted for 14% of Thong Guan’s total sales,” Kenanga Research said.
Local exports are expected to rise, evident after more than 70% of the RM63bil from total turnover for the plastics industry in 2022 was attributed to exports.
Kenanga Research said the major export markets for the local industry included Europe, the United States, Singapore, Australia and Japan.
“Often, such exports are indirect, for example as electrical and electronics exports including appliances, electrical components, or even medical devices, but also as automotive parts or household products and furniture,” it said.
