Hong Seng Consolidated Marches Ahead
Updated: Jul 19, 2021
The unprecendented COVID-19 pandemic has disrupted all countries and appears to be gaining traction. The solution or end to this global crisis does not seem near. Therefore, as the COVID-19 crisis multiplies, the goal of businesses must be to rebuild and plan for the longer term.
With that in mind, Hong Seng Consolidated Berhad(“Hong Seng”) or formerly known as MSCM Holdings Berhad has recently entered and ventured into a series of strategic partnerships and corporate exercises to form a future whereby Hong Seng would emerge stronger from the crisis as Albert Einstein's famous sayings goes “in the midst of every crisis, lies great opportunity”.
By planning for the current pandemic, Hong Senghas significant plans to transform its business into three (3) main pillars which include gloves manufacturing, healthcare and medical supplies and services and the hire purchase services which are in high demand now and the foreseeable future.
Subsequent to the emergence of Hong Seng Assembly Sdn Bhd (HSASB) as the new major shareholder of the Group, Hong Seng had on 19thOctober 2020 announced its proposed diversification into the relevant businesses as mentioned above and we are on track with our plans to evolve and grow the Group by reducing reliance on our existing core business of search, advertising and data.
We believe that currently, Hong Seng will the only listed Group involved in or undertaking comprehensive end-to-end healthcare.
Eyeing on USD18.8 Billion (And Growing) Global Glove Market
Based on the US-based Allied Market Research's report which estimated that the global disposable gloves market is expected to nearly triple toUS$18.8 billion by 2027, Hong Seng has set its eyes on the opportunity from single-use medical gloves that have become increasingly difficult and costly to come by during this health crisis.
At the end of August 2020, Hong Seng through its wholly-owned subsidiary, Hong Seng Gloves Sdn Bhd (Hong Seng Gloves) has appointed its turn key partner, Howellcare Industries Sdn Bhd to commission six (6) units of Nitrile Rubber (NBR)double former glove dipping production lines with utilities support system for our factory site located at Sungai Petani, Kedah.
Whilst we are currently ahead of schedule, the expected production capacity and output for each of the NBR double former glove dipping production line is 241,920,000 pieces per annum whilst the total expected production capacity and output for all 6units of the NBR double former glove dipping production lines is 1,451,520,000 pieces per annum. Hong Seng Gloves plans to increase up to a total of 16 production lines by early 2023 subjected to obtaining all necessary approvals to produce up to 3,870,720,000 pieces per annum as demand and preorder requests from countries who are unable to procure from big players have been overwhelming.
Furthermore, Hong Seng Gloves have also secured its supply of raw material for NBR gloves and our total cost is estimated about USD24.00 to USD25.00 per carton of 1,000 pieces while the current average selling price is around USD90.00 per carton.
Shareholders or any interested parties who wants to keep abreast with the latest progress of the glove manufacturing plant may do so on our Group’s website at www.hongseng.com.my.
Empowering Malaysians In The Fight Against Communicable Diseases And Beyond
Health is wealth. According to an online article published on the National Center for Biotechnology Information of United States titled “Learning opportunities from COVID-19 and future effects on health care system”, the authors concluded that crisis like COVID-19 pandemic has also offered some unique opportunities for the healthcare sector. It has allowed us to revisit our healthcare delivery. Although, there has been severe disruption in healthcare delivery during this time globally, several positives have also come out of which include the effective use of telemedicine, importance of personal hygiene, and the importance of infection control.
Thus, Hong Seng intends to go full steam ahead in the healthcare industry and be at the forefront of the Malaysian healthcare sector. Its wholly-owned subsidiary, HS Bio Supplies Sdn Bhd (HS Bio) is engaged in the business to provide pharmaceutical, medical and healthcare supplies such as e-medicine, medical consumables, bio supplies, medical equipment or devices, test-kits, vaccines, supplements, and other medical and healthcare related products as well as healthcare related services such as mobile testing facilities in addition to the supply chain management services for the healthcare industry.
The Group believes that HS Bio has promising prospects in the healthcare industry due to various factors. On 28th August 2020, HS Bio has invested and partnered with the Malaysian Medical Association (MMA) linked eMedAsia Sdn Bhd (eMedAsia), which runs a medical digital platform that caters to thousands of private clinics in the nation to be latter’s service provider for healthcare supply chain management services particularly the 3PL and 4PL fulfilments which includes warehousing, process, pick & pack, last mile delivery and purchase of medical and healthcare products. It is a milestone for HS Bio as it shows its seriousness and capabilities to penetrate the above listed markets as MMA is an official body for medical practitioners and clinics.
The strategic partnership between HS Bio and eMedAsia is part of a novel medical initiative to revolutionalise the private healthcare sector. This may be a solution to the estimated USD 3.5 billion valued medical tourism industry in Malaysia by 2024 according to an insight by Malaysia Healthcare Travel Council.
Besides that, HS Bio is also currently in talks with several leading healthcare and pharmaceutical companies in China to be their distributor in Malaysia and the region. We are in the midst of helping these Chinese companies to get their products registered and approved by the relevant local authorities. The said products include amongst others, supplements which had been empirically proven to be effective in boosting immunity against SARS and Covid-19 and is much sought after globally at the moment, and real-time PCR Test Kits for detection of Covid-19 which was tested and used in Malaysia at the start of the Movement Control Order back in March 2020.
Once these are registered and approved, Hong Seng aims to make Covid-19 testing very efficient, affordable and accessible via our network of clinics within the eMedAsia community since it is possible that hotspots will require testing to be done before employees are allowed back to work. Again, our efforts will supplement and complement our government’s efforts and strategy to combat the current wave.
Pursuant to positive discussions, HS Bio has also been invited to submit letters of intent to be the distributor of China developed vaccines to three (3) separate China parties. To undertake this endeavor of distributing the Covid-19 vaccines in Malaysia, we have tied up with one of the oldest and most established local pharmaceutical company, Royce Pharma through a consortium agreement. We would like to highlight to our shareholders and investors that to be accredited and licensed as a pharmaceutical company in Malaysia entails stringent steps such as lengthy regulatory applications. Further, to deal in vaccines, a distributor has to be properly equipped with the necessary infrastructure such as cold room warehousing, handling facilities and knowledge. These need time to construct and thereafter, be audited by the relevant innovators or manufacturers.
Therefore, a tie-up like our consortium agreement with Royce Pharma is the most practical and realistic approach compared to other non-pharmaceutical licensed companies claiming to distribute Covid-19 vaccines. This is also because Royce Pharma is able to carry out fill and finish processes required. In due course, we envision testing and vaccination to take place in private clinics for maximum reach and penetration and we will be best positioned to support our nation. We truly understand efforts by our Malaysian government in its participation in COVAX, which is costly yet unable to cover 100% of the Malaysian population and residents and this is where Hong Seng will be able to support our nation in her fight against Covid-19.
This is the reason why we believe we are at the forefront at this point of time as we have also written in to the relevant government ministry to indicate our readiness to support all governmental efforts to vaccinate our population once the vaccines are available.
Moreover, we are working closely with our strategic partner, Line Clear Express & Logistics Sdn Bhd to boost our supply chain management capability in providing 3PL and 4PL services to support our businesses such as eMedAsia’s collaboration which includes mobile testing and vaccination trucks, glove fulfilment, vaccines and also other significant health products and services. All of these are just a small part of our vision to empower our nation in the fight against the pandemic.
Hong Seng is working very hard to delve into the healthcare sector and serve our nation. Our latest development is to be involved in supplying PCR Test Kits to government agencies especially to assist in the ongoing outbreak in Sabah. Discussions are also taking place to assist in building additional Test Labs for processing samples from the mass Covid-19 screenings. Hong Seng will make the relevant announcements when these come into fruition.
Filling Up The Vital Vacuum In The Financing Sector
Although the government has poured in hundred of billions in subsidies to help the people, however there are still many people and businesses who are greatly affected by the pandemic. Therefore, in July 2020, our Group has ventured into the hire purchase and related business through our wholly-owned subsidiary, HS Priority Management Sdn Bhd (HS Priority) to complement our Group’s existing moneylending business with focus on extending our hire purchase facilities for commercial vehicles as well as industrial machineries and equipment.
The pervasiveness of the e-commerce landscape in Malaysia, in particular after the MCO implemented by the Malaysian government, has led to flourishing demand for logistics services in particular the last-mile delivery. This has generated growth for the domestic transportation industry, particularly for those who supply vehicles to last-mile delivery service providers as well as demand for loans to automotive for commercial vehicles.
Many industry players such as logistics, shipping ports and yards, mining, manufacturing and many others are facing issues in their cash flows but there is a need and opportunity during this tough time to expand their vehicle fleet and production capacity to meet the surging demands and HS Priority is here help ease their burden to own the much needed vehicles and heavy machineries such as lorries, trucks, cranes, forklifts and etc.
At the moment, due to cashflow impact, many borrowers may not have access to the types of loan facilities made available by licensed banks and other financial institutions due to stringent lending requirements imposed.
Hence, we believe that HS Priority will be able to help fill the vital vacuum which exists in the current financing sector as we aims to provide financial support to all industries by providing our customers with flexible financing schemes and competitive interest rates.
With the above initiatives, Hong Seng believes that our Group will be able to create a good sustainable future together with our stakeholders. As we are committed to be a good corporate citizen, we are working hard to support the nation in our own capacity by not just focusing on a single segment of healthcare to make profits but end-to-end healthcare for maximum efficiency.
At Hong Seng, we take aim to not to only to deliver commercial objectives and meet legal requirements, but also have a positive social impact on our community and those communities of our customers.