Mah Sing Group Berhad has announced that the Group is diversifying into healthcare by venturing into glove manufacturing via Mah Sing Healthcare Sdn. Bhd (Mah Sing Healthcare).
This new venture is part of the Group’s plan to expand its manufacturing division by venturing into the healthcare sector, leveraging on its experience as a plastics manufacturer over the past four decades, and is supported by potential synergies to be derived amongst the Group’s gloves business, plastic business and property business.
The Group will be converting a warehouse in Kapar, Klang into its first glove manufacturing factory. The factory is strategically located within an industrial area equipped with ready infrastructure, allowing swift and easy set-up of the production lines.
With a build-up of approximately 228,800 sq ft, phase 1 of the factory could house 12 new production lines with a maximum capacity up to 3.68 billion pieces of gloves per annum – at a speed of 38,000 pieces of gloves per production line per hour.
Mah Sing Healthcare has already signed the letter of award to purchase new machineries for 12 production lines in an effort to expedite the set-up process for the phase 1 of Kapar factory. The first 6 production lines are expected to be ready for operation as early as 2Q 2021, followed by another 6 production lines expected to be ready by 3Q 2021. Mah Sing Healthcare also entered into letters of intent with several raw material suppliers for supply of both Nitrile-butadiene rubber and latex raw materials when operation commences.
The healthcare arm of the property developer is targeting a second phase of the expansion plan, which includes exercising the option to take up the other portion of the Kapar factory (build-up of approximately 287,500 square feet). This could accommodate another 12 new production lines and increase the capacity up to another 3.68 billion pieces of gloves per annum.
Phase 2 expansion is targeted to happen when demand outstrips supply for Phase 1. At this juncture, Mah Sing Healthcare has secured letters of intent from several prospective customers and the cumulative indicative orders have already exceeded the estimated maximum capacity for both phases of the Kapar factory.
Mah Sing’s Founder and Group Managing Director, Leong Hoy Kum said, “Everything is in place. The factory in Kapar is strategically located, and in close proximity to our existing MSPI factory which will ease monitoring. It is also within an established glove ecosystem as there are many big players’ manufacturing plants in the vicinity. This means that besides ready infrastructure, there will also be a large pool of workers with the right expertise which we can recruit for the factory. Set up will be expedited as we have already planned everything including securing the new machineries and raw materials. There is excess demand now 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 exceeds 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. Besides OBM gloves under our MS Glove brand, we will also be able to produce OEM gloves. These 100 production lines could potentially produce up to 30 billion pieces of gloves per annum. We target to be one of the top 5 producers in Malaysia in the future,” he added.
Mah Sing will seek the approval from the shareholders of Mah Sing for the new business venture at a forthcoming extraordinary general meeting (EGM) as the contribution from the business diversification is expected to be 25 percent or more of the Group’s net profit.
As the factory is expected to start its operation with 6 production lines as early as 2Q2021, the Group is in a good position to take advantage of the high spot price of gloves. Mah Sing expects the glove manufacturing business to be able to generate revenue for the Group relatively quickly with the projected contribution estimated to come in as early as 2Q 2021.
The new business diversification, which predominantly is targeting the export market, will allow Mah Sing to ride on the booming glove-manufacturing segment and further strengthen its manufacturing division, which is currently focusing on plastics business.
The new business is expected to provide the Group access to the global market and generate more recurring and steady income for the Group. It will be a good complement to the property business which focused on the domestic market, and more cyclical in nature.
The Group’s target market for the export of gloves are countries such as the United States of America (US), Europe, and other countries to capture the high demand of medical gloves in those countries.
Mah Sing has identified the new venture as a good complement to enhance its financial performance and reduce reliance on its property business.
“In view of the promising global prospect and vibrant of glove business, we are committed to be a long term player and deliver greater value to our shareholders as well as strive to be one of prominent glove manufacturers in the industry moving forward. We can even explore specialty gloves in the future. We are also planning to venture 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,” Leong elaborated.