China Shengda Packaging Group Inc. is a leading paper packaging company in China. Its main focus is on the design, manufacturing and sale of flexo-printed and color-printed corrugated paper cartons. However, the company also manufactures corrugated paperboards which are used for the production of its cartons.
The company announced today that it had signed a letter of intent to purchase the land use rights for a 166,533 square meter plot of land in Yancheng City, Jiangsu Province for $11.4 million. This buy was made in order to build a new paper manufacturing plant. China Shengda plans to fund the purchase through the proceeds received from its recently closed equity financing and internal cash generation.
China Shengda Packaging plans to build the plant in two phases. Phase I, which is expected to be completed by the end of 2011, will involve the construction of 100,000 to 150,000 tons per year of paper capacity. It is expected to require capital expenditures of $34.2 million. Phase II, which is expected to be completed by the end of 2012, will entail the construction of another 100,000 to 150,000 tons per year of paper capacity and is expected to require $18.2 million in capital expenditures.
By integrating upstream through this new paper manufacturing plant, the company believes it will be able to better manage its raw material costs and extend its product improvement and development capability to the raw paper production level. Since raw paper makes up about 70% of its cost of goods sold, the new paper manufacturing plant will be very important to the company’s bottom line.
For more information on China Shengda Packaging, please visit its website at www.cnpti.com