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Fantastic plastic
 Plastics are huge in Asia. From a tiny toy hanging on the end of a mobile phone, to the mobile phone cover itself, to the dashboard of a car: plastics are essential. And the region leads the globe in manufacturing plastics.
At the same time, it also tops world charts for car manufacturing, and – as mentioned – plastics are a key component to interiors of cars. So the two industries go hand in and. And they find themselves as a key segment on the FinanceAsia 100 Index.
This is traditionally a North-Asia heavy sector, with Taiwan dominating the index thanks to the Formosa conglomerate (which includes the companies with the Formosa name, as well as Nan Ya Plastics, which is part of the Formosa family, and the world’s largest processor of plastics for pipes and imitation leather). A key company on the list is Taiwan’s Formosa Petrochemical, which is feeding the region’s workshops with olefins by turning petroleum into plastic for all this production. Formosa’s products stretch upstream and down; it refines crude oil, turning some into petroleum products and others are used for plastics and synthetic fibers.
Meanwhile, South Korea’s Hyundai Motor is churning out top-notch cars that are sold worldwide – indeed, outside of South Korea, it has manufacturing plants in China and India. Both the Formosa family of businesses and Hyundai’s companies improved their revenues this year.
As of press time Hyundai Motor was expected to post a 40% jump in third-quarter 2007 profit, thanks to higher domestic sales. Faster growth in private consumption in Asia’s fourth-largest economy is expected to provide a further boost in coming quarters to profits at Hyundai, which controls about half of South Korea’s high-margin auto market.
Indeed, as more Asians buy cars, the sales trickle down to help FinanceAsia 100-listed plastics companies supplying components, as well as smaller, largely unheard of companies that drive regional employment.
For example, increasing demand from end-user markets, rapid development of the engineering plastics industry, and low-cost labour are stimulating rapid growth in the engineering plastics market in Southeast Asia. In fact, the markets in Malaysia, Singapore, and Thailand were among the most robust engineering plastics markets in the region.
Industry analysts expect the current growth levels to continue, with Thailand as the main region for consumption of engineering plastics, driving the growth of the overall engineering plastics market in Southeast Asia. “Thailand represents 58.5% of the total units, followed by Malaysia with 23.7% and Singapore with 17.8%, and is expected to maintain higher growth compared to the other countries,” says Frost & Sullivan Industry Analyst Xu Dan. “By 2013, it is expected to hold approximately 67.6% of the unit share in the total engineering plastics market.”
Similarly, Thailand and Malaysia continue to invest in their car industries – making these sectors profitable for their respective countries. Indeed, Thailand has become one of the global production bases for automotives, gaining a reputation for being the Detroit of Asia. Growth in Thailand can be attributed to an increase in end-user demand following the imminent expansion and growth of its automotive industry.
Meanwhile, Indonesia’s largest automotive business group, and FinanceAsia 100-listed company, Astra International, is helping to boost the Indonesian components business. On December 4 it reported that it expects to have ordered automotive components worth about Rp4.2 trillion (about $451.6 million) from small and medium enterprises by the end of the year, up from Rp 3.6 trillion last year.
And so these big industrials help keep smaller companies in business, which motors the cycle of employment, and thus consumer spending in Asia.
| Ranking by revenue |
| Country |
Company |
(million $) |
| SK |
Hyundai Motor |
$70,076.08 |
| TW |
Formosa Petrochemical |
$16,338.61 |
| SK |
Hyundai Mobis |
$8,992.92 |
| IJ |
Astra International |
$6,102.73 |
| TW |
Formosa C&Fibre |
$5,614.62 |
| TW |
Nan Ya Plastics |
$5,604.49 |
| TW |
Formosa Plastics |
$4,549.50 |
| |
| Ranking by revenue growth |
| Country |
Company |
|
| TW |
Formosa Petrochemical |
19.5% |
| TW |
Formosa C&Fibre |
13.9% |
| TW |
Formosa Plastics |
8.7% |
| TW |
Nan Ya Plastics |
8.4% |
| SK |
Hyundai Mobis |
8.2% |
| SK |
Hyundai Motor |
8.2% |
| IJ |
Astra International |
-10.1% |
| |
| Ranking by net profit |
| Country |
Company |
(million $) |
| TW |
Nan Ya Plastics |
$1,465.55 |
| SK |
Hyundai Motor |
$1,386.15 |
| TW |
Formosa Petrochemical |
$1,372 |
| TW |
Formosa C&Fibre |
$1,002.05 |
| TW |
Formosa Plastics |
$953.02 |
| SK |
Hyundai Mobis |
$756.38 |
| IJ |
Astra International |
$408.11 |
| |
| Ranking by ROE |
| Country |
Company |
|
| TW |
Nan Ya Plastics |
21.43% |
| SK |
Hyundai Mobis |
21.06% |
| TW |
Formosa Petrochemical |
20.79% |
| TW |
Formosa Plastics |
18.01% |
| TW |
Formosa C&Fibre |
17.99% |
| IJ |
Astra International |
17.35% |
| SK |
Hyundai Motor |
9.62% |
| |
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|
| Country Top industrials companyTotal Points: |
| Country |
Company |
|
| TW |
Formosa Petrochemical |
35 |
| TW |
Nan Ya Plastics |
32 |
| SK |
Hyundai Motor |
29 |
| SK |
Hyundai Mobis |
28 |
| TW |
Formosa C&Fibre |
28 |
| TW |
Formosa Plastics |
25 |
| IJ |
Astra International |
21
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