The contribution from the business diversification is expected to account for 25% or more of the group’s net profit
by HARIZAH KAMEL / pic by MUHD AMIN NAHARUL
MAH Sing Group Bhd unveiled an ambitious diversification plan into the healthcare sector with its proposed move to venture into glove manufacturing business with a target to become one of the top five glove producers in Malaysia in due time.
The property developer’s new venture will be spearheaded by Mah Sing Healthcare Sdn Bhd, a wholly owned subsidiary of Mah Sing Plastics Industries Sdn Bhd, with plans to instal 12 production lines with a capacity to produce up to 3.68 billion pieces of gloves per annum, or 38,000 pieces of gloves per production line per hour within the year in Phase 1.
Mah Sing CEO Datuk Ho Hon Sang (picture) said the group is no stranger to the business as its plastic division comes with over four decades of experience in manufacturing and supplying a wide range of products and services to local and international businesses.
“This serves as a solid foundation for us to expand our manufacturing division and grab the opportunity to venture into the promising glove manufacturing business right now,” he said during Mah Sing’s virtual signing ceremony yesterday.
Ho said Mah Sing Healthcare will be converting a warehouse in Kapar, Klang, into its first glove manufacturing factory.
The warehouse is strategically located within an industrial area equipped with ready infrastructure, allowing swift and easy set-up of the production lines.
The rented facility will have a build-up area of 228,800 sq ft with six lines expected to be installed and commissioned by the second quarter of next year (2Q21).
Mah Sing Healthcare already signed the letter of award to purchase new machinery for 12 production lines to expedite the set-up process for Phase 1 of Kapar fatory.
“The first six production lines are expected to be ready for operation as early as 2Q21, followed by another six production lines expected to be ready by 3Q21,” he said.
ED Datuk Steven Ng said the total capital expenditure for the 12 production lines and factory set-up is up to RM150 million. The group is also applying for the related certificates needed to export overseas to markets like the US and Europe, and elsewhere with little focus on the domestic market.
“We are in the process of getting consultants to apply for not just the FDA, but the CE and other certificates that are required for us to do exports to various countries during this pandemic,” he said.
To fund the project, Ng said the group plans to raise RM100 million from convertible bonds, adding that its balance sheets reported in the latest quarter have about RM1.13 billion that can be used for not just expansion in healthcare, but also in property development.
Mah Sing Healthcare also entered into letters of intent (LoIs) with several raw material suppliers for supply of both nitrile-butadiene rubber and latex raw materials when operations commence.
Once the Phase 1 is commissioned, the company will prepare for a Phase 2 of expansion to build and commission another 12 new production lines with capacity up to another 3.68 billion pieces of gloves per annum.
The Phase 2 expansion is targeted to happen when demand outstrips supply for Phase 1.
At this juncture, Mah Sing Healthcare has secured LoIs from several prospective customers and the cumulative indicative orders have already exceeded the estimated maximum capacity for both phases of the proposed Kapar factory.
Mah Sing founder and group MD Tan Sri Leong Hoy Kum said there is excess demand now as the top four producers’ supply lines are booked solid into 2021 and even early 2022.
“Besides original brand manufacturing gloves under our MS Glove brand, we will also be able to produce original equipment manufacturing gloves. We are optimistic in the prospects of our new venture and if demand permits, we will gradually expand up to 100 production lines as part of our future expansion plan.
“These 100 production lines could potentially produce up to 30 billion pieces of gloves per annum,” Leong said.
The rubber glove industry has been growing at an average of 8% to 10% for the past 25 years even before the Covid-19 pandemic, based on the information from the Malaysian Rubber Glove Manufacturers Association.
The demand for gloves is expected to persist post-pandemic, underpinned by the increase in awareness of the importance of hygienic practices.
Given the promising global prospect of glove business, Leong said Mah Sing is committed to being a long-term player and delivering greater value to shareholders.
“We can even explore specialty gloves in the future. We are also planning to tap into other healthcare and medical device-related ventures and explore the possibility of listing our manufacturing division separately from the group to further unlock its value in the future,” he elaborated.
Mah Sing will seek approval from its shareholders for the new business venture at a forthcoming EGM as the contribution from the business diversification is expected to account for 25% or more of the group’s net profit.
On another note, Mah Sing will be launching some landed residential properties before the end of the year, said Ho.
“One is our M Aruna development in Rawang, Selangor (selling for about RM550,000), and also two landed projects in Johor — namely Jasmine and Acacia, selling about slightly less than RM500,000.
“We believe that properties at any time will have buyers, depending on what product we roll out to the market. We have rolled out properties in the affordable range to cater the medium 40% income group and so far, the pickup rate has been quite encouraging,” he added.