"The best thing that happens to us is when a great company gets into temporary trouble...We want to buy them when they're on the operating table."
Polyplex corporation is an India based multinational company manufacturing plastic films (PET, BOPP & CPP) used for packaging, electrical and other industrial applications .Company having manufacturing facilities in six countries viz - Netherlands. China. USA. Turkey. Thailand. and India . Company is the world's 4th largest producer of thin polyester film and one of the few fully integrated companies in the entire world. Products manufactured by Polyplex selling in more than 80 countries.Major portion of company’s products are used for manufacturing flexible packaging materials for food and FMCG items. Having said , Polyplex is a global company operating through various subsidiaries . One of its subsidiary in Thailand named ‘Polyplex Thailand’ is a listed company in Stock Exchange of Thailand (SET).Company is geographically well diversified . 28 % of total sales coming from India ,26% from Europe ,18 % from North America ,17 % from South East Asia and balance from Rest of the world.Till 2012 ,company’s performance was robust backed by good demand and better realisation.Citing the good demand scenario during 2009-10 , on a global level ,many companies started to add large capacities and started commercial production by 2012-13 .This resulted in oversupply of the products and at the same time the peak of global recession adversely affected the demand scenario.Due to this reason,Polyplex reported loss on a consolidated level in last Financial year.
The Road Ahead
Good consolidation happened in this industry in past few years .As per the management of Polyplex, major major players in this industry is only completing the already started projects ( if any ) and not thinking about any major expansion in near future. On the other side demand condition is improving worldwide . In India itself ,BOPP film production reported more than 25 % growth in June 2014 over the same month in the previous year.Worldwide the trend is almost similar . Price of company’s products also showing firm trend. For the past many years company was mainly concentrating in thin pet films(thickness below 50 micron) and now started the production of thick films which is used in many industrial segments other than packaging like photovoltaic and flat screen panel for TV’s and Computer monitors .In addition to thin and thick grade PET films ,company’s Bottle Grade PET Resins plant at Turkey at an advanced stage of completion.Bottle grade PET finding applications in packaging of Soft Drinks, Carbonated water,Mineral water ..etc and there is lot of growth potential in these sectors.
Valuation and Recommendation
Link to Company Website HERE
Link to Polyplex Thailand HERE
Disc: It is safe to assume that I have vested interest in Polyplex