Nine Dragons Paper (Holdings) Ltd. (02689.HK) plans to start production in Vietnam by June 2015, one year ahead of the original schedule, chairwoman Cheung Yan said on Tuesday.
Vietnam has a favorable business environment but it is bound to get saturated very easily as it is a very small market, Cheung told reporters at the company’s interim results announcement.
The Chinese paper manufacturer will invest 1 billion yuan (US$163.55 million) in its production base in Vietnam in 2014 and 2015, while 500 million yuan will also be set aside in those two years to meet the country’s stringent environmental standards.
Cheung said production capacity is expected reach more than 12 million tons this year, or between 5.5 million and 5.8 million tons in the first half.
Sales volume for the six months to December 2013 reached a record 5.63 million tons. Profit for the period surged 45.1 percent to about 983 million on a revenue of 14.7 billion yuan.
Overcapacity in the paper industry is nearing its end, Cheung said, noting that there is already zero or even negative growth in supply. The whole industry is expected to see a 4 to 5 percent growth in the coming years, she added.
– Contact HKEJ at [email protected]