Shift to innovative bags

At present, the company produces plastic bags for packing industrial products like electronic components and consumer products, but these bags yield low profit margins and face much competition.

Managing director Prapoth Pholpipattanapong recently said its new products were anti-static bags used in several industries, including electronics, automobiles and furnishings; and biodegradable products in the form of bags that degrade naturally within six months and leave no harmful waste.

The biodegradable products are made from corn and tapioca. They are suitable for shopping malls and hotels, which must eliminate large volumes of waste each day, Prapoth said.

"So far, we've only sold biodegradable products abroad, because their prices are three times higher than general plastic bags. Local shopping malls and hotels have not wanted to spend large amounts of money on them, but I believe Thai industries are more concerned about the environment nowadays, so they may be interested in our products in the near future," he said.

He said ordinary plastic bags contributed 70 per cent of company revenue and the new products the rest. However, the new products generate gross profit margins at a higher rate of 30 per cent, compared with less than 10 per cent for ordinary plastic bags.

Prapoth said Advance Packaging recently won a Bualuang SME Award

from Bangkok Bank for being an innovative firm whose performance showed potential.

"We expect revenue of Bt320 million this year, up about 39 per cent from Bt230 million in last year. Our revenue grows 25-30 per cent a year on average, thanks to our attempts to create innovative products that differentiate us from competitors," he said.

Advance Packaging has a total production capacity of 350 tonnes per month, which is 90 per cent of full production capacity.

Specialty Tech, the company's parent, will issue 200 million shares in its initial public offering next year. The funds raised will be used to increase Advance Packaging's production capacity.