Philippine pipe maker and compounder Crown Asia Chemicals Corp. is using funds from an initial public offering to build a new plant to meet growth in the local construction sector and upgrade to deal with challenges from a new Southeast Asian free trade zone.
The firm is building a new facility at its Guiguinto headquarters to extrude polypropylene and high density polyethylene pipe, investments that it said “will take advantage of the bullish construction sector and remain competitive in light of the forthcoming ASEAN Free Trade Area (AFTA) implementation in 2015.”
In its IPO filing with the Philippine Stock Exchange, the company said the country of 107 million people will need an estimated 10 million new homes by 2030 to eliminate a housing backlog.
It said the country's housing plan calls for 3 million new homes to be built by 2022, with the remainder by 2030.
Crown Asia said the building market in the Philippines saw double-digit growth in 2014, with construction permits in both residential and commercial space up 12.5 percent and the value of those projects up 37 percent, it said.
The new factory will mark the company's entrance into PP pipe, and it said it will be the first in the Philippines to manufacture PP fittings locally. It began making HDPE pipe in 2013.
The company raised $4.4 million from the April stock offering, which sold a 25 percent stake in the firm, and plans to spend about half that on the pipe making expansion.
It will add capacity for 4,800 metric tons per year for PP pipes and 4,500 metric tons for HDPE, in addition to general upgrades to its compounding capacity.
The firm currently has PVC compounding capacity of 15,000 tons per year and 8,500 metric tons of pipe-making capacity. Its compounds are sold into the cable and wiring, tubing, film and bottle markets, among others.
Compounding represented about 65 percent of its 850 million Philippine pesos ($18.6 million) in sales in 2014, with net profit of 65.39 million pesos ($1.4 million).
Two families who founded the company in 1990, the Villanueva and Perez families, will collectively own the remaining 75 percent of the company. The firm has 250 employees.