Sateri Holdings Limited (SEHK: 1768) is a manufacturer of dissolving pulp and viscose staple fiber. It is one of the largest companies[1] in the specialty cellulose industry, supplying more than 10% of the world’s dissolving pulp.
Sateri produces both rayon grades and specialty grades of dissolving wood pulp and regular viscose staple fibers. The products, which cater to a wide range of applications such as textile yarn, non-woven products, baby wipes, pharmaceuticals, tire cord and sponges, have benefitted from China’s increasing urbanization and consumption as demand for consumer goods broadened and grew. Sateri operates through two main subsidiary companies: Bahia Specialty Cellulose, a dissolving wood pulp producer in Brazil, and Sateri (Jiangxi) Chemical Fiber, a viscose staple fiber mill in China. The company’s corporate offices are in Shanghai and Hong Kong.
Through Bahia Specialty Cellulose, Sateri operates its own renewable eucalyptus plantations in Brazil from which it obtains the raw material for manufacturing. Its dissolving wood pulp mill is located at Camacari, in Bahia State, Brazil, near to the plantations. The mill was expanded in 2008 and has a design production capacity of 465,000 tonnes per year, making it among the largest in the world. The viscose staple fiber mill is located in Juijiang, Jiangxi Province, China.
Sateri’s integrated business model which includes secured wood supply, state-of-the-art production line at its Bahia Specialty Cellulose mill in Brazil, and a modern viscose staple fiber facility in China, means that the Company is able to enhance its cost competitiveness, have product diversity and flexibility to plan its production according to prevailing market conditions.
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Sateri commenced operations in 2002 when it began constructing a viscose staple fiber mill in Jiangxi Province, China. The mill went into commercial production in 2004. In 2003 the company acquired its Brazilian manufacturing and sustainable plantation operations. At that time, the Bahia Specialty Cellulose mill was capable of only producing 115,000 tons of dissolving pulp. In 2006 work began to expand the mill through construction of a second production line. Construction of the second line was completed in 2008, raising design annual capacity to 465,000 tons.
In 2009, Sateri was the largest dissolving wood pulp supplier by volume to China and accounted for 40% of China’s total imports of rayon grade of dissolving wood pulp, a principal raw material used in the production of viscose staple fiber. China is the world’s largest dissolving wood pulp market by demand, according to PCI Fiber.
Sateri’s products are sold to different geographical markets across Asia, the Americas and Europe, with revenue from China accounting for 86.1% in 2009. The Company’s revenue increased from US$272.2 million in 2007 to US$552.0 million in 2009, representing a CAGR of 42.4%. Profit attributable to shareholders as of 31 December 2010 is forecasted to be US$302.0 million, compared with US$107.0 million in 2009. Based on the offer price range of betweenHK$6.60 and HK$9.20 per share, the 2010 profit forecast gives a P/E ratio range of 9.5 times to 13.2 times.
Sateri was listed on the Hong Kong stock exchange on December 8, 2010.