Aiming to be global ‘funeral’ leader

Kong: Hong Kong is a good platform to expand into the international market, particularly China.’

AFTER taking Nirvana Asia Ltd to list on the Hong Kong Stock Exchange for nine months, its founder Tan Sri Kong Hon Kong is planning to turn this funeral service provider into a world leader.

The Hong Kong listing has been a good experience for Kong. Compared to Bursa Malaysia, share liquidity is much higher. Profit has soared and the company has cash of US$250mil (RM1.06bil), arising mainly from its December 2014 initial public offering (IPO) that raised US$246mil.

This is a far cry from Nirvana’s old days on Bursa. Due to taboo, there were hardly 10,000 shares traded daily. Fund raising was also tough. Hence, Kong privatised Nirvana in 2010.

“Hong Kong is a good platform to expand into the international market, particularly China. It was a right decision. With current PE of around 14, our market capitalisation of HK$5.2bil is much bigger than we used to be on Bursa,” says Kong, 61, in an interview with StarBizWeek.

“I am very ambitious. In the long term I want to be No. 1 in the world in the funeral service sector. I am planning and positioning my team. Organic growth is too slow. The quickest way is to go through M&A (merger and acquisition),” adds Kong, chief executive officer of Nirvana Asia.

Kong, who holds about 43% stake in Nivarna Asia, is eyeing M&A possibility with New York-listed Service Corporation International, Stewart Funeral Home, Invacare Corp and Hong Kong-listed Fu Shou Yuan of China.

The billionaire is confident that Nirvana Asia will scale higher in Asia, where the demand for bereavement care services continues to rise. The region, with an aging population, is underserved in this service sector.

Nirvana Asia posted a sharply higher net profit of RM136.1mil for the first half ended June 30, 2015, compared with RM44mil in the same period a year ago, due to better profit margins for tomb design and construction, for niches and funeral services in all its markets – Malaysia, Singapore, Indonesia and Thailand.

Revenue for the period grew 23.5% to RM284.5mil against RM230.4mil last year.

In the near term, Kong has plans to expand further in South-East Asia because investment cost is low now due to the sharp depreciation of their currencies.

Early this month, Nirvana Asia expanded its presence in Indonesia by acquiring 75.2ha of cemetery land in Medan, a city with a mainly Chinese population of about 4.1 million. In the first half of this year, it established its presence in Vietnam and China.

In the near term, the company plans to provide “indepth” service in China rather than buying land.

“We must enter China. The market potential there is huge. But we have to be cautious as land prices there are very high. We have to utilise the IPO money with care,” says Kong.

Back in Malaysia, Kong wants to start a college to train students keen in this field. This college will provide the human resource needs of Nirvana.

Although Malaysia’s sales account for about 70%-80% of Nirvana’s total revenue now, Kong has no intention to re-list Nirvana on Bursa. The ringgit plunge, weak economic outlook, financial scandals and political instability are deterrents.

“The image of Malaysia is not good outside the country. This is a key reason for the low PE of 14 in my company, compared to Fu Shou Yuan’s 35.”

Kong says Nirvana Asia will stay focused and will not expand into other sectors.

Passionate about business

“I am passionate about my business. I love my job. Every week, I must go to our memorial parks in Semenyih and Shah Alam, look at the columbarium expansion in Singapore, construction of a funeral parlour cum columbarium complex in Kuala Lumpur city. I have to make sure we provide high standard professional service and quality products to our clients.”

Kong says the idea to start this “taboo” business was mooted after his unpleasant experience in arranging for a funeral service cum buying a burial plot for his mother-in-law in 1985.

“My mother-in-law loved me deeply. When she died, I was determined to let her rest in peace and with dignity. But when I went to a cemetery to view a burial plot, I had to pass through many graveyards. There was no walkway and I had to utter ‘sorry’ to the dead in all the graveyards I stepped on in that bushy unwelcoming environment.”

But setting out to start this “novice” business was an uphill task. It took the entrepreneur five years to convince the Selangor authorities to allow him to convert private land into cemetery land. In the National Land Code then, there was no category for “cemetary use”. During those days, the state allocated free land for burial purpose to Chinese guilds and the issue of conversion did not arise.

In his various submissions, Kong had highlighted the economic benefits and savings for the government if they approved the conversion.

Recalling his five years of agony and waiting, Kong says: “The day I heard my application was turned down after 3.5 years of hard work, my tears came rolling down non-stop. But after hearing the inspiring song My Future Is Not a Dream the same night, I was determined to charge forth. After 18 months of persistence, I finally got the conversion and operating licence.”

Starting with a single cemetery in Semenyih, Nirvana has grown to become Asia’s largest integrated funeral services provider by revenue and land for burial. It also manages cemeteries, columbariums and crematoriums.

As the Form Five school leaver from Kuala Lipis, Pahang, accumulates more wealth, he feels obliged to give back some to society. He has donated millions to charities, Chinese associations and education bodies. He spearheaded a RM2.5mil donation drive for Nepal after it was devastated by a major earthquake.

“I plan to donate a total of RM100mil to charities. Last year alone, I donated RM15mil. There is no need to leave too much for my children,” says Kong, in the presence of his son Reeno, at the interview.

Reeno says doing charities to help others is “good and meaningful”, and he supports the cause.

Kong’s philanthropic work did not go unnoticed. He was conferred “Tan Sri” by the King in June. The official ceremony took place on Tuesday.

But for Kong, the most gratifying work he has done is the construction of the RM10mil Chinese Calligraphy Stone Gallery, which houses 138 polished rocks with inscriptions of major events in China’s 16 dynasties starting from the Shang Dynasty to modern era.

Located in Semenyih, this huge gallery also showcases the evolution of Chinese calligraphy. Masterpieces of Chinese, Japanese, Korean, Taiwanese, Malaysian poets, painters and craftsmen were featured prominently.

“This scenic gallery represents the heart and soul of many local and foreign experts in Chinese history, arts, literature and culture. Their work highlights the beauty of China’s 5,000 years of culture. This is the most meaningful work I have ever done. It is now a learning place for students, Malaysians and tourists,” says Kong, beaming with pride.

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