HLT Global seeks more opportunities
KUCHING: HLT Global Bhd (HLT Global), which is en route to a listing on the ACE Market of Bursa Malaysia on January 10, 2017 will continue to seek opportunities in both domestic and export markets within the glove- dipping line industry to enhance its growth.
The rese a rch arm of Public Investment Bank Bhd (PublicInvest Research) in a report said HLT Global plans to leverage on its track record and reputation in the glove- dipping line industry in Malaysia to further penetrate both local and overseas markets.
Apart from increasing its sales and marketing efforts, the research firm gathered that the company would also increase the frequency of visits to existing and potential customers.
It believed that the efforts are expected to enable the group to secure repeat orders and new sales.
Furthermore, the research firm said the company would use the funds from its listing to expand its production capacity.
It gathered that HLT Global intends to set up a new factory in an area within the southern part of the Klang Valley.
The research firm noted the new manufacturing plant would have a proposed built-up area of approximately 57,000 square feet as the current production facility is constrained by the factory premises with a gross production floor space of 23,666 square feet
Given a larger production floor space, PublicInvest Research believed the production capacity of the company is expected to increase and thereby enable the group to undertake more orders in the future.
Aside from that, the research firm said the company would also use the proceeds from the listing exercise to expand its product offering.
It noted HLT Global would be able to manufacture automated components in-house together with the proposed expansion of production capacity, setup of dedicated research and development ( R& D) team and purchase of computer numerical control machinery.
The research firm added currently some of the company’s products are procured by customers directly and then supplied to the group to be integrated into its glove- dipping lines.
Hence, with more funds, PublicInvest Research said HLT Global would be able to expand its product offering to include more automated parts by manufacturing those components in-house.
Meanwhi le, Publ icInvest Research noted HL Gobal’s wholly- owned subsidiary HL Advance Technologies ( M) Sdn Bhd (HL Advance) was granted a pioneer status certification by the Ministry of International Trade and Industry ( MITI) under the Promotion of Investment Act, 1986 for pioneer activity in machinery for dipped latex products and parts in June 2010.
The research firm outlined that with the pioneer status, revenue that is generated from sale of new lines segment as well as upgrade and modification segment of HL Advance qualifies for income tax exemption for a period of five years from November 2009 to November 2014.
It added in December 2014, the pioneer status was extended from November 2014 to November 3, 2019.
The research firm said the company serves glove manufacturers in Malaysia, China, Thailand, India, Indonesia, Vietnam and Saudi Arabia.
On another note, PublicInvest Research noted local sales generated 67.23 per cent, 65.92 per cent and 53.65 per cent respectively to the group’s total revenue for financial year 2013 ( FY13) to FY15.
The research firm also noted HL Global’s products have been sold to rubber glove manufacturing companies for medical, industrial and food processing industries in China, Thailand, India, Indonesia, Vietnam and Saudi Arabia.
It added, more than 90 per cent of the group’s revenue was contributed by sales of new lines segment.
It also pointed out thatthe sales of new lines segment has been the company’s largest revenue stream.
Publ ic Invest Re s ea rch highlighted that HL Global’s sales of new lines segment has increased 105 per cent in FY15 as compared with FY14.
It noted the strong growth was attributed to higher value orders secured from the group’s customers and the improved performance of its foreign sales.
As for the rubber glove industry prospects, PublicInvest Research opined that the industry is a vibrant and growing industry, of which global rubber glove demand has grown from 65.3 billion pairs in 2009 to 88.0 billion pairs in 2014, registering a compound annual growth rate (CAGR) of 6.1 per cent.
The research firm noted the prospects for growth in the rubber glove industry are positive as the industry is expected to be driven continuously by growth in the global and domestic healthcare industry, increasing demand arising from other end- user markets such as manufacturing, continued growth in the global economy and availability of raw materials utilised in the manufacturing of rubber gloves.
It pointed out that the glovedipping line industry supports the rubber glove industry, where glove-dipping line manufacturers design and build glove- dipping lines in order to enable rubber glove industry players to manufacture rubber gloves.
Citing findings from consultancy and research firm, PublicInvest Research said the glove- dipping line industry in Malaysia has demonstrated a healthy CAGR of 14.8 per cent, growing from RM124.4 million in 2009 to RM284.2 million in 2015, in line with rising rubber glove demand.
Based on HLT Global’s revenue of RM75.7 million for the FY15, PublicInvest Research observed that the group garnered an industry revenue share of 26.6 per cent.
PublicInvest Research forecasts the glove- dipping line industry in Malaysia is estimated to illustrate positive growth at a healthy CAGR of 15.2 per cent, from an estimated RM326.5 million in 2016 to RM575.9 million in 2020.
With a steady growth in the glove- dipping line industry, the research firm is optimistic on the business growth of HL Global going forward.