Hong Seng to acquire land in Kedah Rubber City for RM45.74 million
KUCHING: Hong Seng Consolidated Bhd (Hong Seng) through its whollyowned subsidiary Hong Seng Industries Sdn Bhd ( HS Industries) has accepted a Letter issued by Northern Corridor Implementation Authority (NCIA) in relation to its interest to acquire a federal land in Kedah Rubber City ( KRC) measuring approximately 105 acres at an offer price of RM45.74 million.
This is for the purpose of setting up its nitrile butadiene latex (NBL) manufacturing plant there.
Commenting on the latest corporate exercise, Hong Seng executive chairman Datuk Teoh Hai Hin said, “HS Industries was incorporated with the intention to engage in the business of manufacturing and trading of NBL.
“NBL which is also referred to as butadiene is the main and crucial raw material used for the production of nitrile gloves which accounted for 70 per cent of the total gloves exported from Malaysia according to Malaysian Rubber Glove Manufacturers Association (Margma).”
Due to the unprecedented demand and production of highly sought-after nitrile gloves caused by the pandemic, Teoh said there is a shortage in NBL across the world leading to all-time high cost in securing NBL supply.
“Currently, there are many gloves players emerging in the market,” Teoh continued. “However, not all of them have secured their NBL supply which may cause serious operational risks and unexpected material costs in the nitrile glove production as they may face a supply cut causing operation halts or procure its NBL supply at a premium cost thus affecting their margins.
“Hence, by setting up our own NBL plant, it will provide a timely opportunity to secure constant internal supply for our subsidiary, Hong Seng Gloves Sdn Bhd’s plant in Kedah and at the same time, filling the vacuum in the NBL shortage to capture the market.
“Ideally, this will enable us to be an integrated glove and NBL manufacturer in Malaysia by having both upstream and downstream segments of the glove manufacturing supply chain,” he elaborated.
NCIA is the statutory body established in 2008 under Act 687 and responsible for providing direction, devising policies and strategies that promote and accelerate the development of Northern Corridor Economic Region (NCER), while KRC is the first dedicated Rubber Industrial Park in Kedah. Covering an area of 1,244 acres, it is envisioned to accelerate the development of Malaysia’s rubber industry.
A filing with Bursa Malaysia showed that there is no upfront payment required to be made by HS Industries upon accepting the Letter. The details of the land and the salient terms of the purchase (including the manner of payment) will be detailed out in a letter of offer to be issued by NCIA to HS Industries at a later stage upon HS Industries’ acceptance of the Letter.
In the event that HS Industries
Ideally, this will enable us to be an integrated glove and NBL manufacturer in Malaysia by having both upstream and downstream segments of the glove manufacturing supply chain.
Datuk Teoh Hai Hin
enters into the letter of offer and sale and purchase agreement with NCIA for the proposed land acquisition, the company will make the necessary announcement and/or seek the shareholders’ approval in a general meeting, if required, in accordance with the Main Market listing requirements of Bursa Malaysia.