Supermax’s 20/20 vision

  • Business
  • Saturday, 06 May 2017

Homegrown brand:: Thai seen here with a visual of the company’s contact lens brand. Aveo Vision contact lens are already on sale in South Korea, Singapore and Hong Kong.

Rubber glove manufacturer eyes becoming a leading contact lens maker

Supermax Corp Bhd group managing director Datuk Seri Stanley Thai is clearly jubilant as he speaks about the company’s relatively new venture in the contact lens business.

Known for its world class latex glove manufacturing business, Supermax’s entry into the eye care sector may seem peculiar and even risky to many.

But Thai is unfazed, despite being involved in the business of contact lens manufacturing for barely three years. In fact, he is confident in disrupting the fast-growing industry and aims to become one of the dominant soft contact lens manufacturers globally.

All within the next 10 years.

The Main Market-listed Supermax’s venture into the business of contact lens manufacturing follows the establishment of SuperVision Optimax Sdn Bhd. SuperVision, which is Malaysia’s first home-grown contact lens maker, is 98%-owned by Supermax International Sdn Bhd, a wholly-owned subsidiary of Supermax.

Through SuperVision, Supermax manufactures high quality semi-finished soft contact lenses, as well as hydrated fully packaged sterilized soft contact lenses. Its very own Aveo Vision contact lens brand is being gradually exported. The brand is also en route for its Malaysian official launch in the second quarter of 2017.

The Aveo Vision contact lens brand is already on sale in certain countries and territories such as South Korea, Singapore and Hong Kong, as regulatory clearances have been obtained earlier.

SuperVision also serves as an original equipment manufacturer (OEM), making semi- and fully-finished private labelled-products for its clients around the world.

“Our entry into the contact lens business was definitely not easy. We started SuperVision from scratch, following research and development from the United Kingdom using the latest state-of-the-art technology.

“We are serious in capturing a significant market share in the global contact lens business and we aim to be among the top 5 global contact lens players in the future,” Thai tells StarBizWeek.

To date, Supermax has invested more than RM100mil in its contact lens business, in tandem with its drive to grow bigger. SuperVision’s present production facility in Sungai Buloh is highly-automated, with robotics involved predominantly in the process of manufacturing.

Thai who is the single largest shareholder of Supermax, says that the latex glove maker’s entry into the contact lens business does not mean that it is focusing less on its traditional business.

“Latex glove manufacturing will continue to be our main stronghold. However, I cannot guarantee that in the next 30 years, the glove industry would have the same growth as the last 30 years.

“It is highly important for us to find another sustainable revenue stream to complement our glove manufacturing segment, which will remain as our primary top line contributor. The contact lens business is the one,” he says.

Thai notes that globally, the prospects of the contact lens industry is promising. In fact, he says that the industry is worth US$2bil more than the global latex glove industry’s total value.

Between 2009 and 2016, the global contact lens industry has recorded a compounded annual growth rate of 4.75%, reaching a wholesale value of US$8.6bil last year. According to the California-based press release distribution company, GlobeNewswire, the global contact lenses market is expected to reach US$12.48bil in wholesale value by 2020.

SuperVision has four contact lens production lines, currently running at full capacity. At present, the company which commenced its production a year ago, manufactures approximately 70 million lenses on an annual basis.

New kid on the block

Being a new kid on the block, Supermax’s contact lens business is gaining traction. Thai expects this business to break even this year and contribute positively to its earnings beginning in financial year 2018 (FY18) ending June 30.

His projections echo the expectations of CIMB Research with regard to its contact lens business. The research house has also said in an earlier report that Supermax’s contact lens division will contribute significantly to its overall earnings only in FY18.

Moving forward, Thai says that a further expansion of SuperVision’s production facilities is vital. He indicated that a second plant will be developed in three years time, in line with his aim to grow bigger in the contact lens business.

He also envisages further geographical expansion worldwide, in order to grab a bigger share of the global market. SuperVision has exported dry contact lenses to the European markets and is making inroads into the Asian markets with its own brand of contact lenses for the consumer market.

“At the moment, we have several authorised distributors worldwide, including the United States of America, Canada, United Kingdom, Brazil and Hong Kong.

“We are actively seeking authorised distributors around the world to distribute our contact lenses,” states Thai.

Supermax is planning to penetrate more new markets abroad for its contact lens division, with Italy and China being on the list. However, Thai is quick to stress that Malaysia will continue to be Supermax’s primary production destination, even as it becomes a global player.

“Our primary production facility will always remain in Malaysia to produce high-value products domestically and to provide high-end employment opportunities for the locals,” says Thai.

Supermax’s share price has been on a downtrend over the last one year. As at closing of trading on May 4, 2017, the price stood at RM1.90. This is about 29% lower than the RM2.68 price on May 10 last year.

Supermax made a net profit of RM143.97mil on the back of a RM1.55bil top line.

The figures represent a 18-month duration from January 1, 2015 to June 30, 201, following a change in the company’s financial year-end.

With a market capitalisation of RM1.27bil, Supermax’s price-to-earnings ratio is about 18.74 times.

Commenting on Supermax’s traditional latex glove business, Thai says that numerous measures have been consistently taken to increase its production yield as well as to increase its earnings before interest, tax, depreciation and amortisation (EBITDA) margin.

“Over the next 18 months, we will be rebuilding and re-developing our glove production plants to increase our yield,” he says. To note, Supermax has a total of 11 production plants and has been exporting its gloves to about 160 countries globally.

Taking a reality pill, Thai however says that there are certain challenges that prevents the domestic glove industry from achieving its optimal performance.

Among them are lack of labour supply, water supply shortage and the weakened ringgit condition.

“These issues must be resolved in order to improve the competitiveness of the domestic glove manufacturing industry,” he says.

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