Next Investors logo grey

SECOS cashing in as shift to bioplastics ramps up


Published 31-OCT-2018 09:19 A.M.


3 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Sustainable and eco-friendly bioplastics developer, SECOS Group Limited (ASX:SES), today provided its quarterly report and cash flow statement for the quarter ended 30 September 2018.

Sales for the quarter were up 39% on the prior year to $1.7 million, while cash flow improved by $0.5 million on the September 2017 quarter.

But the stand-out highlight came from the growth in the company’s bioplastic resin sales, which grew by 296% on year. And this is where the company is anticipating strong growth going forward. Further to this, positive feedback from prospective packaging customers in the US, Europe and Asia provides confidence in continued growth in SES’s global bioplastic resin sales.

The company commenced bioplastic resin production at its new Malaysian bioplastic plant in July this year. It has delivered initial orders to local customers and is now ramping up production to meet growing demand.

The new 30,000sq ft. facility is ideally located close to Malaysia’s largest port, and will provide the company with additional capacity and sales to meet the growing global demand for bioplastics.

Additionally, trials of SECOS’s bioplastic resin have been approved for commercial supply to major bag makers in Malaysia. This generated significant interest from other bag makers, who are keen to source locally made bioplastic resin to comply with the regulatory ban on all single use traditional plastic bags, coming into effect in Malaysia on 1 July 2019.

The company’s sales growth, particularly in bioplastic resins, is underpinned by the continuing global shift to bioplastics — an annual industry sales expected to grow by 15% and to double to $6 billion by 2023.

Next Investors Image

SES ended the quarter with $0.5 million in cash. This excludes a placement and rights issue announced on 23 October 2018 to raise up to $3.8 million before costs. A further $2 million cash will come in during November 2018 from settlement of its Malaysian land and building sale, following the repayment of $1.3 million in debt at settlement.

SES will consider further cost-saving initiatives during the year and believes further improvements are possible.

Net cash outflow from operations was $0.7 million — this is an improvement over the previous quarter while investing in the start-up of the new bioplastic resin plant in Malaysia. Operating cash outflow for the September quarter improved by $0.5 million year-on-year.

SECOS Managing Director, Stephen Walters, said: “The start of production from our new bioplastic resin plant in Malaysia was an exciting milestone for SECOS, which should enable us to meet growing demand for our resin products at improved margins. We will be ramping up production of both our Malaysia and China plants to keep pace with growing global demand.

“We are undertaking a review of our Australian subsidiary Stellar Films to identify how to best utilise the assets going forward, given our strategy to be a world leader in bioplastics.”

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.