Tech manufacturing company Papyrus (ASX:PPY) caught the market’s attention again this morning with a new trading update.

The company advised that its manufacturing operations in Egypt, through its joint venture subsidiary Papyrus Egypt, are now profitable.

And the company said confirmation of its track record will bolster its broader strategy to gain a full manufacturing licence in the region.

The news was enough to send PPY shares up more than 300 per cent in morning trade to a peak of 9.5c, their highest level since 2011.

Strong month

PPY shares have been steadily gaining momentum since early October, when the company announced it had taken on a $500,000 strategic investment from L39 Capital, a Melbourne-based fund manager.

The shares were issued to L30 at 1.2c, resulting in a paper gain of 4x-5x the initial outlay at current prices.

Papyrus said its momentum in Egypt is the culmination of the search for an established manufacturing base which has taken the better part of a decade.

The company operates a veneering technology that turns the waste trunks from banana palms into a more eco-friendly and cost-effective alternative to traditional wood veneer.

Initially, the company established operations at Walkamin in Far North Queensland but its plans to use banana-waste in the production of veneer and paper products fell through, partly due to high operating costs.

It then pivoted to explore potential opportunities in Egypt, with a revised product strategy based around fibre-based products.

In the wake of significant political turmoil in Egypt which ran from 2011 to 2016, the company eventually established an operating factory in Sohag, around 500km south of Cairo.

PPY said 2020 has seen an extensive period of product development convert into actual sales in the 2020 year.

The company said it booked 256,000 Egyptian pounds (~$20,500) of sales in October, up from 190,900EGP (~$15,270) in July. And as a result, its prospects of becoming a licensed technology provider in Egypt have been “very much enhanced”.

In addition, “such licensing is likely to be significantly more profitable for PPY than simply the manufacturing undertaking”, PPY said.

PPY operates its Egyptian operations in a 50/50 joint venture with the Egyptian Banana Fibre Company, a company incorporated in Egypt.

Through a 13.16 per cent equity stake in EBFC, the company has a controlling stake in the venture.