Market Reaction to Fuling Global’s Commentary: Not Much, Down 2 Percent

Fuling Global Inc., a maker of plastic and paper disposal ware for fast-food restaurants, released a statement to shareholders this morning that covered three issues: its plant in Mexico, 2018 earnings and the prospects for more environmentally friendly utensils.

Fuling Global shares (NASDAQ: FORK) fell 4 cents, or about 2 percent, to $2.09 each.

The outlook on recycling and the use biodegradable materials may have been the most pointed part of the statement from Chief Executive Officer Xinfu Hu.

The comments on the Mexico plant are similar to what’s been said before. The company wants to sell more in Latin America yet have the plant close to its main market, the U.S. Also the location will help China-based Fuling Global avoid tariffs as the U.S. and China spar over trade. Fuling Global also has plants in China and Allentown, Pennsylvania.

The 2018 earnings were posted April 5.

Fuling Global’s discussion of its attempts to be more friendly to the environment, at a time when disposable plastic ware is under attack in some quarters, was blunt. Biodegradable materials cost more and consumer tend not to recycle them, perhaps because they don’t recognize them as biodegradable.

The company said it doesn’t expect the use of such disposable products to exceed 20 percent within 10 years.

What’s unsaid is that Americans aren’t very good at recycling. Some don’t bother to recycle, while others put trash in recycling bins.

The company did say that 20 percent of its straws are now made of paper. With 5 milllion paper straws being made daily, that means about 20 million plastic straws are also being made daily, and being used by Fuling global restaurant customers including Subway, Wendy’s, Burger King, KFC and Taco Bell.

Fuling Global said it will work with the recycling industry to ensure that more material will be reused, but warned, “Investors must be patient.”

That is not something investors are noted for, particularly with stocks in the $2 range.

Time will tell.

 

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