Hong Seng banks on gloves and healthcare

In a virtual interview with StarBiz, Teoh (pic) said the company’s focus was now to grow its glove manufacturing and healthcare businesses.

PETALING JAYA: Hong Seng Consolidated Bhd which has been on a buying spree since the emergence of a new shareholder has its sights set on the glove and healthcare industries to carry the company forward.

Previously known as MSCM Holdings Bhd, a search and advertising company, the group saw the entrance of Penang businessman Datuk Teoh Hai Hin last August.

After announcing its interest to manufacture gloves, the company, relatively unheard of until then, shot unto the radar of investors.

Teoh is now the single largest shareholder in the company, holding a stake of about 26%.

Since his emergence into the group, Hong Seng has announced a string of proposed acquisitions including that of a 50% stake in Pantasniaga Sdn Bhd, a company which provides polymerase chain reaction (PCR) test kits and test labs set-ups for government and medical agencies, a 20% stake in eMedAsia Sdn Bhd which runs www.emedasia.com, an e-health digital platform and a 60% stake in NeoGenix Laboratoire Sdn Bhd, a medical diagnosis and research laboratory company.

In a virtual interview with StarBiz, Teoh said the company’s focus was now to grow its glove manufacturing and healthcare businesses.

It also has an ongoing third business pillar, a financing segment where it is involved in the moneylending business.

The plan is to eventually phase out the company’s original core business of search and advertising, Teoh added.

Under its glove manufacturing business, Teoh said the company expects its glove factory – currently being constructed in Sungai Petani, Kedah – to be up and running by April this year.

The company he said, will first have two production lines with a capacity of producing 40 million pieces of nitrile rubber gloves per month, and eventually ramp this up to six production lines by September.

It will pay some RM59mil to get all of this going, and has so far raised about half of this amount, Teoh said.

“We think demand for gloves will continue to remain strong for the next two years at least but even before the Covid-19 pandemic, demand has been on an uptrend, ” Teoh said.

Amid concerns that the average selling price of gloves will continue to come under pressure even as demand steadies post Covid-19, Teoh said he was looking at prices easing and settling at about US$65 per carton, from the current spot price of US$120 to US$150 per carton.

“But even at US$65, the gross margins are around 30% to 40%, ” he said.

Under its healthcare segment, Teoh said the company wants to help digitalise the private healthcare system via eMedAsia.

Pantasniaga meanwhile recently obtained a RM34.25mil contract to supply PCR test kits for Covid-19 to the Institute for Medical Research (IMR) while NeoGenix also recently obtained a letter of award from the Health Ministry, enabling it to be one of the private labs to provide real-time PCR Covid-19 sample testing.

Teoh said for its glove manufacturing business, Hong Seng will source raw materials from China for now but plans to set up its own factory to produce raw materials for more efficiency and productivity in the future.

The company made some RM1.4mil in net profit in its most recently-concluded financial quarter.

Based on its latest closing price of RM1.29 per share, the entire company is valued at over RM670mil.