KUALA LUMPUR: Mah Sing Group Bhd aims to venture into glove manufacturing via Mah Sing Healthcare Sdn Bhd by converting a warehouse in Kapar, Klang, into a manufacturing facility and the new business is expected to contribute over 25% of its profit in future.
Mah Sing Healthcare is a wholly owned subsidiary of Mah Sing Plastics Industries Sdn Bhd (MSPI), which in turn is a wholly owned subsidiary of Mah Sing Group.
The group said the venture will be executed in two phases with an initial rollout of 12 production lines with a capacity of 3.68 billion pieces of gloves a year, while the subsequent phase will see an additional 12 production lines with an equal capacity, which would amount to a total of 7.36 billion pieces annually.
According to group CEO Datuk Ho Hon Sang, production will start with six lines which are expected to be in operation in the second quarter of next year, followed by another six production lines which will be ready by third-quarter 2021 (Q3,21).
Phase 2 expansion is targeted to happen when demand outstrips supply for Phase 1.
“We have already received several letters of intent from prospective customers for our glove products and we are confident about this new venture,” Ho told the media at a virtual press conference today.
He expected the glove manufacturing business to contribute to the group’s revenue as early as H1’’21. “The revenue contribution from the glove manufacturing will provide more recurring income to the group and will be complementary to our property business.”
In regard to the new venture, the group has entered into several agreements with machine suppliers, raw material suppliers and a number of prospective customers.
Mah Sing founder and group managing director, Tan Sri Leong Hoy Kum highlighted that there is excess demand for gloves as the top four producers’ supply lines are booked solid into 2021 and even early 2022.
“We have received letters of intent for indicative orders which already exceed our estimated output capacity for both phases of our Kapar factory and there are more prospective customers from both local and overseas who are still enquiring,” he said.
Leong said he is optimistic about the new venture and aims to gradually expand to 100 production lines with a potential capacity of 30 billion pieces of gloves a year if demand permits. “We always aim high and we target to be one of the top 5 producers in Malaysia.”
For the healthcare expansion, the group has allocated a capital expenditure of RM150 million to set up the first phase glove manufacturing via a RM100 million convertible bond already in the pipeline. Alternatively, it could use its cash reserves of RM1.13 billion as at June 30, 2020.
For the business, Mah Sing said it would carry out both OEM as well as own brand manufacturing for nitrile and rubber glove products and it is in the process of securing certification from the US Food and Drugs Administration and CE for exports to the US, Europe and the rest of the world.
It has also secured interim approval from the International Trade and Industry Ministry for the manufacturing licence for surgical, examination, and other gloves.
Asked about the rationale for the move into the increasingly crowded glove sector, the group’s executive director, Datuk Ng Poh Seng, said demand will continue to grow, underpinned by an aging population, more stringent guidelines and low per capita usage in some markets.
He cited the Malaysian Rubber Glove Manufacturers Association which said the outlook of the industry has been encouraging with an average growth of 8-10% in the past 25 years prior to the Covid-19 pandemic.
“We are not new in manufacturing as we have over 40 years of experience in plastics manufacturing and our track record of fast turn around for our projects. In addition, we are gathering a team of professionals in this line,” said Ng.
He pointed out that the plants Mah Sing are commissioning are fully automated. “With the automation, the plant will be more efficient and at the end of the day it is all about cost management.
