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Wednesday, August 16, 2006

 

JER Envirotech Malaysia Production Facility in Operation

In April, we highlighted JER Envirotech as a long-term investment opportunity in a company ramping up production in coming months to meet global demand for their wood plastic composite products. After their first plant in Canada began production last year, JER announced last night that their Malaysian production facility is now also in operation:

"With our Malaysian operation producing, we are the first company to commercially produce 4 feet by 8 feet wood plastic composite panel boards," stated Mr. Ernie Calica, general manager and vice-president of Asian Operations of JER.

From their Corporate Communications newsletter, we can see some detailed production plans:

1. Delta, B.C.: line#1. 2005 began production. Capability to produce up to 1,400 lbs per hour of WPC (wood plastic compound). Running at 33% capacity. Management expects to ramp up to two shifts (67% capacity) in the fourth quarter.

2. Delta: #2 compound line was ordered in March and is expected, at full capacity, to have 60% greater throughput than the existing line, with the ability to generate monthly revenues of US$500,000. It is expected to begin trial testing this month.

3. The Delta panel board facility is expected to begin trial production this month. At capacity it is expected to produce revenues of $500,000 per line, per month.

4. The Philippine Joint Venture panel board plant has been delayed and the trial production is expected to begin by the end of this calendar year.

5. India: JER and Master Trust Ltd expect to order equipment for its first panel board line in October, with installation and trial testing to be completed by March 2007 and initial production beginning in May 2007.

JER was trading just over $1.00 when we first mentioned it in April. After a summer dip, it’s back near the $1.00 level again. While there have been some production delays, the company still expects to grow sales to over $2 million per month next year. We continue to believe that investors from the $1.00 area and below (market cap below $30 million) will be handsomely rewarded over the long term as the company continues to grow.

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