PETALING JAYA: AKN Technology Bhd (AKN Tech), formerly an electronics lead frame manufacturer, successfully changed its core business to the production of coating chemicals for glove makers, enabling it to post markedly higher earnings.
The company recently reported a net profit of RM3.5mil for its first quarter (Q1) ended June 30, compared with a net profit of just RM509,000 in the preceding quarter and RM439,000 in the previous corresponding period. “Its core business is now in the supply of coating chemicals, an industrial consumable item, to the glove manufacturers. It’s a stable business and can grow with the glove industry,” said a fund manager.
An official of AKN Tech told StarBiz yesterday that 70% of the group’s earnings came from Paramount Discovery Sdn Bhd, which was acquired for RM30.8mil last year.
Paramount Discovery formulates polymer coating solutions used in the production of powder-free rubber gloves, at its factory in Bangi, Selangor.
Powder is used in the production of rubber gloves so that the gloves do not stick together, but some people have an allergy to the powder. Thus, many customers in the developed countries prefer powder-free gloves.
Such gloves are produced using polymer coating solutions instead of powder. “Polymer is a substitute for powder,” the official said.
Paramount Discovery had a market share of over 80% of the product in this country, he added.
In addition, the chemical coating can also be used in the production of synthetic rubber gloves. Hence, the company plans to supply its product to the synthetic rubber glove makers in China, which is a big market.
“Malaysia is the world’s biggest producer of natural rubber gloves but China is the world’s biggest producer of synthetic rubber gloves,” the official said.
A fund manager said: “The earnings of Paramount Discovery could surface this quarter because the group completed the sale of its semiconductor development and distribution division in May.”
Two years ago, its lead frame plant was destroyed by fire, causing the company to outsource its production to fulfil its orders or it would have had to face legal suits.
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