For more infographics: visit

http://www.donkeystock.biz/

https://www.facebook.com/donkeystock/

NTPM, Nibong Tebal Paper Mill is a company involved in manufacturing tissue and personal care products. Its range of product include facial tissue, kitchen towel rolls, napkins, toilet paper, cotton product and baby diapers.

NTPM started its paper milling business in Nibong Tebal, Penang in the year 1975. From a humble beginning of 1800 tonnes annual capacity, it has grown into producing more than 1.2 million tonnes of paper product. In 2001, NTPM diversified into cotton product and personal care product. With its 6 manufacturing plant in Malaysia and 1 manufacturing plant in Vietnam, it has successfully exported its product to Australia, United States, Hong Kong, Thailand and Philippines.

Recently NTPM has expanded significantly in both its tissue segment and personal care segment.  Below is a corporate mile stone for NTPM:

Tissue Segment

·         2012: Acquire a tissue mill in Bentong to reduce cost for servicing Singapore and Malaysia central region customers. At the same year, it increased an additional waste paper warehouse and a sales office in Melaka.

·         2015: NTPM increase its capacity for diapers and toilet roll in Both Nibong Tebal and Kota Kinabalu plant.

·         2016: NTPM commenced its Vietnam operation producing tissue paper and setting up 2 sales office in Hanoi and Ho Chi Minh City

Personal Care Segment

·         2013: NTPM launched Diapex wonderpants, a pants-type diapers. At the same year, NTPM set up a cotton range manufacturing facility to replace outsourcing

·         2014: NTPM added 3 baby diaper machines

·         2015: Completion of new warehouse and plant manufacturing sanitary napkin and cotton in Nibong Tebal plant. Launch new product which is wet tissue and baby wipes.

NTPM has a significant existence in Malaysia paper product market, with 47% market share in retail tissue, 54% market share in facial tissue, 15.8% market share in diapers sector and 5% market share in sanitary protection sector.

NTPM has registered 8.45% compounded annual growth rate (CAGR) from year 2011 till year 2016. Pre-operating cost in setting up manufacturing plant in Vietnam is a factor dragging NTPM financial performance. This cost is not expected in the future.

NTPM has a stable financial position with RM683mil of core assets and RM254mil of core liability. The management has reduce RM33.6mil of debt in financial year 2016 which align with management plan of actively reducing debt after Vietnam expansion.

We believe getting into Vietnam market will be a catalyst for NTPM growth due to the several reasons below:

·         Low per-capita tissue consumption in Vietnam. Low penetration rate and per capita usage due to lack of health awareness and its limited accessibility to clean toilets is a factor dragging Vietnam tissue consumption.

·         Increasing disposable income. Continual minimum wage adjustments with rapid urbanization increase Vietnamese purchasing power.

·         Rising living standards. Trends of seeking for higher standard of living where an increase spending on tissue and personal care product is seen.

·         Young emerging market. Vietnam is a fast growing market with 70% of the consumer aged between 15-64 years old.

·         Both Vietnam and Malaysia has a lower per capital usage on both diapers and tissues compared to North America and Western Europe counterpart.

Positive for NTPM:

·         Diapex being the only significant domestic brands of diapers in Malaysia market and has been receiving good response from consumers.

·         Products with affordable prices targeted at the mass market.

·         License to print Warner Brothers cartoon characters on its packaging.

·         Bright outlook for tissue and personal care product due to current low per capita usage.

Negative for NTPM

·         Intense competition pressure from China and Indonesia, placing pressure on profit margin.

·         Trend of consumer switching to more economy brand as consumer is highly price sensitive.

·         More consumer are now using toilet paper as substitute for boxed facial tissue.

·         More restaurants and public toilet provides tissue

Conclusion

·         NTPM is suitable for investors who believe in Vietnam’s economy growth pace and would like to tap on it.

·         NTPM is suitable for investors who is seeking for growth rather than receiving stable dividends,

·         NTPM is suitable for investors who would like to hold this firm for 3-5 years and grow along with the firm