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Reinforced Engineered Fibreboard

Reinforced Engineered Fibreboard

Converting the local agricultural waste and biomass materials into high value added green product – Reinforced Engineered Fibreboard

Market Demand

Reinforced Engineered Fibreboard is an essential wood panel supply, and a popular substitute for plywood and solid wood timber. This product is suitable and crucially required to fulfil the high demand of the many industries and sectors, and these include: 1. Office Furniture products, e.g. workspace, desks, storage system, 2. Home Furniture products, e.g. Wardrobes, hall dividers, bedroom/living room furnitures, 3. Construction, 4. Wall Panelling, 5. Shelving, 6. Roofing, siding and insulation, 7. Decorative and Renovation, 8. Door, frames, jams, etc.9. Laminate Flooring, and Plywood Flooring,10. Electronic PCB,11. Speaker Box,12. Toys, Premiums and Gifts,13. Kitchen Cabinets,14. Wooden Fan,15. Shoe heel,16. Container flooring,17. Automobile,18. Commercial & Institutional Fixtures, and19. Packing and packaging,20. Other wood-products such as shoe rack, bookcases, etc.

Market Size

According to FAO, the production of fibreboard in Malaysia is expected to grow from 1.5 million m3 in 2005 to 2.0 million m3 in 2010. Malaysian consumption of the fibreboard recorded 290,000 m3 in 2005 to a projected estimate of 417,000 m3 in 2010. The export of fibreboard from Malaysia is anticipated to be 1.583 million m3 in 2010, with zero import of fibreboard since 1995. Global Production of fibreboard, therefore, is expected to increase from 60.9 million cubic metres in 2009 to 76 million cubic metres in 2013, based on current expansion plans and estimated capacity utilisation rates. By 2013, North Asia will be producing 45 per cent of the worlds MDF, and China alone will be producing 41 per cent. Global wood panel consumption will exceed 282 million m3 by 2010, according to a new report by Global Industry Analysts Inc (GIA).

Market Growth

Fibreboard is the fastest-growing product segment with consumption poised to grow at a compounded annual rate of 9.46% over the period 2001-2010. BIS Shrapnel is forecasting consumption of fibreboard to grow at an average rate of about five per cent per year over the five year period 2009 to 2013. This rate of growth is approximately the same as the forecasts for production and should result in a reasonably balanced global market.

Target Market

The target markets are Malaysia, and the Asia Pacific region particularly the China region and Indian subcontinent region, Japan and Korea that demands higher share of quality fibreboard consumption due to its robust industrial growth domestically. With rapid development of real estate sector in recent five years, China’s furniture and flooring manufacturing both have increased at double-digit growth rate, leaving vast space for high speed development of fibreboard in China. As of 2009, fibreboard consumption recorded 38.48 million cubic metres, up 8.7% year-on-year basis.

Price Competitiveness

Attributing to its low costing for its agricultural waste materials being the major raw material feedstock, there are ample room for strategic pricing strategy at different market levels. The product is environmental friendly and an excellent cost efficient substitute for plywood, and in general at a discount of 35% to plywood prices, and a discount of 10% to traditional fibreboard prices

Industry Competitors

The fibreboard industry in Malaysia currently has 14 plants with a total annual installed capacity of 2.9 million. For 2008, the export of MDF totalled at RM1.2 billion. With excellent technical properties of the project’s reinforced engineered fibreboard, it will be a much cheaper option, and yet an excellent substitute for the traditional formaldehyde-glued fibreboard, and hence there is no direct competition per se.

Entry Barrier

The entry level is considerably higher as the wood being the primary feedstock for fibreboard manufacturing is a scarce resource, and mostly involves expensive and huge investment.

Niche Market

The company is synergized to address a niche requirement in the wood panel industry to offer an alternative supply of reinforced engineered fibreboard with excellent properties that the traditional fibreboard suppliers unable to satisfy

Financial Projection

Return of Investment (ROI) = 753%
IRR = 83%