Chinese tissue maker Vinda International Holdings Ltd. (03331.HK) is gearing up to become No. 1 in the booming Chinese household paper industry.
Chief executive Donna Zhang Dongfang said the company, ranked among the top three in China’ tissue market with a 13 percent market share, is aiming for the top spot in the medium to long term.
“We are resolved to achieve the market scale we have obtained in the past 30 years… It’s not only about sales figures but also market share and market recognition,” Zhang said.
The company will also ramp up its personal care business that covers sanitary napkins and diapers. The business accounts for only 1.4 percent of overall revenue and the plan is to boost its contribution to 20 percent in the coming five years, she said.
Chairman Li Chaowang said Vinda does not have overcapacity problems, although there are concerns about excess production in the industry.
It will continue to expand capacity according to market conditions, Li said.
Major players in the Chinese tissue market include Hengan International Group Co. Ltd. (01044.HK), C&S Paper Co. Ltd. (002511.CH) and Gold Hongye Paper Co. Ltd., a unit of Indonesia-based Asia Pulp & Paper Co. Ltd.
Zhang said disposable hygiene products, which include household paper and personal care products, are among the strongest and fastest-growing industries in China.
“This is a sunrise industry. Growth is fast. People have to buy again after using [disposable hygiene products],” she said.
Vinda’s profit rose 9.3 percent to HK$593.5 million for the 12 months to December. Revenue climbed 17.5 percent to HK$8 billion, of which the core business of household paper accounted for 98.6 percent.
However, the company suffered foreign exchange losses of HK$17.9 million during the period due to exchange rate fluctuations between the renminbi and the Hong Kong and US dollars.
Chief financial officer Toby Lawton said Vinda will gradually move its borrowings toward the renminbi from the Hong Kong dollar this year to hedge against currency risks.
Vinda’s net gearing ratio rose to 73.7 percent for 2014 from 44 percent previously after its acquisition of controlling shareholder SCA Group Holdings’ hygiene business in the mainland in September.
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