Plastic packaging firms face subdued demand

PETALING JAYA: Order recovery visibility remains cloudy amid subdued external demand and cautious client replenishment for the plastic packaging industry.

Kenanga Research said the valuation pullback seen across the companies stemmed from persistent headwinds including global trade uncertainties, rising regional competition and unfavourable foreign exchange movements, as it anticipated the ringgit to further strengthen against the US dollar in 2026.

“This is consistent with the muted guidance from plastic packaging producers, who indicate that order recovery visibility remains cloudy amid subdued external demand and cautious client replenishment,” the research house said in a report yesterday.

Kenanga Research said waste management is the biggest concern in the plastics packaging industry, and to address this, manufacturers turned to sustainable packaging using fewer virgin materials and more recycled and biodegradable materials.

The research house said although persistent challenges remained, particularly the limited supply of recycled materials, Scientex Bhd, Thong Guan Industries Bhd, BP Plastics Holding Bhd and SLP Resources Bhd had continued to invest in research and development, pursuing product safety and quality beyond regulatory requirements.

Kenanga Research added that each company is progressing at its own pace, balancing between the pursuit of sustainability, profitability and business continuity.

“The companies’ commitment to responsible waste management is commendable. Scientex, Thong Guan, BP Plastics and SLP Resources are showing strong commitment towards making plastic manufacturing more sustainable.

“Both Scientex and Thong Guan are constituents of FTSE4Good Index, reflecting their strong environment, social and governance practices,” the research house said.

Kenanga Research said Scientex had established a framework with tight monitoring and reporting to increase its production of recyclable mono-material laminates and use of post consumer recycled plastic.

The group converted 2,650 tonnes of waste into processed engineered fuel in the financial year 2024 (FY24).

“Thong Guan’s recycled wooden pallet programme has gained momentum since FY22 with its use rising from 50 pieces a month to 3,500 in FY24.

“BP Plastics applies a 3R framework –prevention, reuse, and recycling. SLP reports zero environmental fines and aligns its waste strategy prioritising waste prevention, reuse, and recycling.

“It continuously maintains equipment to prevent leakage or contamination and develops eco-friendly packaging that lowers total material input,” the research house said.

From FY22 to FY24, Scientex’s non-hazardous waste generation was relatively stable with recycling reaching over 85% while Thong Guan generated more waste but it had diverted over 80% of its waste from plastic packaging from landfill.

Meanwhile, BP Plastics showed a steady decline in landfill waste intensity: roughly 85.3% of total waste was internally recycled in FY24, leaving only about 0.8 % for disposal, indicating improved efficiency versus prior years.