INVESTOR RELATIONS

Chairman’s Message
Dear valued shareholders,

I am both elated and honoured to assume the role of Chairman of Daibochi Plastic and Packaging Industry Berhad (Daibochi or the Group). Before continuing, I would like to extend my deepest gratitude to our former Chairman and my friend P. James Edwin who has overseen the Group’s illustrious history since 2003.

I look forward to work alongside my entire team at Daibochi for the coming years, as we strive for greater achievements and reinforce our position as a leading player in the flexible packaging industry.

2017 Economic Review

The global economy grew 3.7% in 2017 (2016: 3.2%) driven by recovery in investments, rebound in global trade, higher industrial production, and rising business and consumer confidence. The strengthening of the global economy is broad based with around 120 economies seeing an uptick in gross domestic product (GDP) growth.

At home, the Malaysian economy grew 5.9% in 2017 (2016: 4.2%) as the agriculture sector recovered from a contraction in the previous year, while the services and manufacturing sectors expanded at a faster pace. The mining and construction sectors saw slower growth in the year under review.

Meanwhile, global commodity prices recovered as oil output cuts by major producers reduced global oil inventories, which led to an increase in crude oil prices. The resulting resin price escalations posed cost challenges to various players in the manufacturing supply chain, which spurred a renewed focus on operational and cost optimisations.

Additionally, the Ringgit strengthened against the US Dollar which was attributed to higher crude oil prices, expectations for a higher interest rate environment in Malaysia, and the United States administration’s current stance of favouring a weaker currency.

Corporate Developments

Daibochi continued to implement the strategies necessary to reinforce its position in Southeast Asia and the Australia and New Zealand region. These initiatives would ensure that the Group is positioned strongly for sustainable and long-term business growth.

  • Commencement of Myanmar Operations The Group’s 60%-owned subsidiary, Daibochi Packaging (Myanmar) Company Limited (Daibochi Myanmar), commenced operations on July 1, 2017, and is off to a good start. Daibochi Myanmar’s shareholders are the Group’s wholly-owned subsidiary Daibochi Flexibles Sdn Bhd and Myanmar Smart Pack Industrial Company Limited.Daibochi Myanmar operates a production facility in Yangon, Myanmar, which mainly serves local food and beverage (F&B) and fast moving consumer goods (FMCG) brands.

Alongside robust economic growth, Myanmar’s liberalisation of investment laws should gradually see the entry of more multinational corporations in the F&B and FMCG sectors. This would lead to more business opportunities for Daibochi Myanmar going forward, allowing it to leverage on Daibochi’s experience in collaborating and growing with major F&B and FMCG brands, and ride the wave of rapid growth in consumer spending in Myanmar.

Corporate Governance and Sustainability

Daibochi places great emphasis on adhering to strict standards of corporate governance and business conduct.

As testament to our Group’s commendable record on implementing sound corporate governance practices, Daibochi was ranked among the Top 100 Companies for Overall Corporate Governance and Performance as well as among the Top 100 Companies for Good Disclosures at the MSWG-ASEAN Corporate Governance Recognition 2017 event.

The Minority Shareholder Watchdog Group also awarded Daibochi with the Merit Award for Best AGM in 2017 for companies with market capitalisation below RM1.0 billion.

As a responsible corporate citizen, the Group strives to leave a positive impact through the four pillars of our sustainability framework, consisting of people/employees, environmental conservation, sustainable business growth, and communities.

The Group reports on the management of sustainability matters, as outlined in the Sustainability Statement in this Annual Report.

FY2018 Outlook

The global economy is set to maintain its momentum and is expected to achieve solid growth of 3.9% in 2018.

Domestically, the Central Bank of Malaysia forecasted solid GDP growth of between 5.5% to 6.0% for Malaysia in 2018, which should allow for a stable business environment and consumer spending.

Meanwhile, Myanmar’s economy is expected to pick up, with GDP expected to expand at about 7.6% in 2018, supported by the agriculture sector, exports, and higher fiscal spending.

Prospects for the consumer flexible packaging industry in Southeast Asia remain optimistic as consumer spending in the region’s major economies are expected to rise.

The stronger Ringgit versus the US Dollar could result in exporters having to deal with less competitive pricing for their products overseas. However, a major component of the Group’s raw materials cost are in U.S dollars, which serves as a natural hedge to fluctuations in the exchange rate between the Ringgit and U.S. Dollar.

Overall, I am confident that Daibochi will deliver strong results in FY2018 on higher contribution from the Malaysia and Myanmar operations, and continued efforts to enhance operating efficiency and reduce wastage.

Appreciation

My utmost appreciation goes to the Board of Directors, Management, and all employees of Daibochi for their commitment in the Group’s continued growth. The Group’s successes to date could not have been achieved without your contributions.

Additionally, I would like to express my thanks and appreciation to Datuk Wira Wong Soon Lim and Mr. Low Chan Tian, for their services and contributions that have shaped the Group into its stature today as one of the region’s leading companies in our industry. Both have retired from their respective posts as Executive Directors of the Company.

I am also happy to welcome on board Faris Salim Cassim as Independent Director. He had also been appointed as a member of Daibochi’s Nomination Committee, Audit Committee, Risk Management Committee, and Remuneration Committee. I am confident that his extensive corporate experience would grant the Management team an edge, as we steer the Group towards achieving its long-term growth aspirations.

I would also like to extend my sincere gratitude to our business partners, associates, customers, and valued shareholders for their steadfast support for Daibochi. We look forward to not only improve the Group’s operations and business performance, but also record new milestones in the following years.

Heng Fu Joe
Chairman

April 4, 2018

INVESTOR RELATIONS

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Registered Office
DAIBOCHI BERHAD
(formerly known as Daibochi Plastic And Packaging Industry Bhd)
No. 9, Persiaran Selangor,
Seksyen 15, 40200
Shah Alam, Selangor,
Malaysia

Tel No. : 03-55191325
Fax No. : 03-55191884

Daibochi Berhad (12994-W). All Rights Reserved.

Chairman’s Message