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PETALING JAYA: Mah Sing Group Bhd
, a real estate developer, has its eyes set on becoming a manufacturer of rubber gloves with a production of 30 billion gloves a year.
At a signing ceremony yesterday, it announced plans to diversify into the manufacture of gloves and other related health products through the subsidiary Mah Sing Healthcare Sdn Bhd to take advantage of the boom in demand for gloves caused by the coronavirus pandemic (Covid- 19).
“In light of the promising global outlook and vibrant glove business, we are committed to being a long-term player and delivering greater value to our shareholders, as well as striving to be one of the largest glove manufacturers in the industry. , in the future.
All systems work: (Left to Right) Malaysia Investment Development Authority Chairman Datuk Abdul Majid Ahmad Khan Introduces Miti Interim Approval for Surgical, Examination and Other Glove Manufacturing License to the founder and group of Mah Sing, MD Tan Sri Leong Hoy Kum, and the group strategy of Mah Sing and COO Lionel Leong yesterday.
“We are also planning to venture into other healthcare and medical device related businesses and explore the possibility of including our manufacturing division separately from the group to further unlock its value in the future,” said the founder and managing director of Mah Sing, Tan Sri Leong. Today Kum.
To start with, CEO Datuk Ho Hon Sang explained that Mah Sing has allocated approximately RM150,000 to establish the first phase of its glove manufacturing factory in Klang, which will have a production capacity of 3.68 billion gloves per year.
The factory is expected to start operations in the second quarter of next year. The first phase of its expansion into glove making would see the production of 3.68 billion gloves on 12 production lines.
“Phase two expansion is expected to occur when demand exceeds supply from phase one,” he told reporters, adding that phase two would see another 3.68 billion gloves added per year to its capacity.
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Mah Sing yesterday signed several agreements, including a letter of intent (LoI) with various raw material suppliers for the supply of both nitrile butadiene rubber and latex rubber, as well as machinery for the factory.
The group said it had also obtained LoI from several potential customers and that cumulative indicative orders had already exceeded the estimated maximum capacity for both phases of the Kapar factory.
“As a new player, the group is in a good position to take advantage of the cash price of the gloves, which is between US $ 80 and US $ 160 per 1,000 pieces,” said Ho.
Mah Sing expects the glove manufacturing business to be able to generate revenue for the group relatively quickly, with the projected contribution expected to come as early as the second quarter of 2021.
This came in light of the weakening of the housing market led by the fallout from Covid-19.
“The group anticipates that the proposed diversification may help mitigate the potential downside risk to the group arising from the wide-ranging effects of the Covid-19 pandemic on local and global economies,” said Mah Sing.
The Covid-19 pandemic has seen a surge in demand for rubber gloves that skyrocketed the stock prices of local glove manufacturers. Malaysia’s glove export has risen nearly 20% to 230 billion pieces today, up from 192 billion pieces in 2019 amid increased global demand for medical gloves among medical professionals due to the protracted pandemic. .
Global glove demand is expected to reach 330 billion pieces this year, an increase of 11.49% from 296 billion gloves in 2019, giving Malaysia a 67% market share. .
Top Glove Corp Bhd and Hartalega Holdings Bhd They are among the five largest companies in Bursa Malaysia by market capitalization.
“Based on our 40 years of being in the plastic products manufacturing business, we feel like we can get in (glove manufacturing). Our response period is also very fast, ”Leong said.
He said the group was considering converting its glove manufacturing division into a separate listed entity in the future.
Meanwhile, Ho said the company had already applied for the necessary certification for its gloves, including from the US Food and Drug Administration.
He believes the glove shortage will persist for a long time, even if a vaccine for the virus is available.
Mah Sing will seek shareholder approval for the new business venture at its next extraordinary general meeting as the contribution from business diversification is expected to be 25% or more of the group’s net profit.
Mah Sing Healthcare has already obtained provisional approval from the Ministry of International Trade and Industry (Miti) for the license to manufacture surgical, examination and other gloves. Mah Sing’s shares closed unchanged yesterday at 72.5 sen / share, valuing the company with a market capitalization of RM1.76 billion.
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