Texchem to pour Rm44mil into expansion

Firm sees growth opportunity as economy opens up

“Investments pumped into research and development to create new medical devices will drive growth.” Tan Sri Fumihiko Konishi

George Town: Texchem Resources Bhd is investing Rm44mil to expand and improve its business operations this year and will ride on the growth prospects of its hard disk drive (HDD), medical device and restaurant businesses.

Group executive chairman Tan Sri Fumihiko Konishi told Starbiz that in 2021, the polymer engineering, industrial and food divisions contributed positively to the group’s profits, negating the restaurant division’s loss-making impact that resulted from the nationwide lockdown.

“Now that the lockdown is lifted, we see opportunities for all the four business segments to grow.

“We are investing approximately Rm18mil and Rm20mil to grow the restaurant and polymer engineering divisions, respectively.

“Another Rm6mil will be allocated for the food and industrial segments,” Konishi said.

Konishi added that the group saw good prospects for the polymer engineering segment, as the worldwide demand for HDD was on a growth trajectory.

The HDD and medical device business, which comes under the polymer engineering division, should contribute to the group’s growth in 2022, he said.

“Although HDD is facing challenges from solid-state drives, the International Data Corp, for example, has projected the HDD petabyte shipment for the 2020-2025 period to grow at an 18.5% compounded annual growth rate (CAGR).

“The pandemic has spurred the demand for various HDD data storage to store newly created data,” said Konishi.

According to a new Future Market Insights (FMI) report, the HDD market currently accounts for Us$32.5bil (Rm143bil), which is expected to increase at a 10.4% CAGR until 2029.

“This would be a continuing trend in the global HDD market over 2022 to 2029,” the FMI report said.

The polymer engineering division also makes components for medical devices, which is another potential growth sector.

According to research house Precedence Research, the global medical devices market, valued at Us$550bil (RM2.4 trillion) in 2021, is expected to reach Us$850bil (RM3.7 trillion) by 2030, growing at a 5.5% CAGR for the 2020to-2030 period.

“Investments pumped into research and development (R&D) to create new medical devices will drive growth,” said Konishi.

“Texchem produces the mechanical parts and provides the packaging solutions for medical devices,” he added.

According to Konishi, the group’s polymer engineering production floor is currently over 80% utilised.

“However, we have vacant land in Penang and Thailand totalling about 16.5 acres to expand the polymer engineering business with another manufacturing facility, should the need arise.

“We expect to build such a facility over three to five years,” Konishi said.

According to him, the strategy is to open 20 kiosks and satellite outlets at petrol stations, hospitals and supermarkets, serving takeaway dishes for its restaurant business.

“Strategically located at new locations with high footfall, these outlets will enable us to target a more extensive customer base while leveraging Sushi King’s existing kitchen facilities.

“This will drive incremental revenue without incurring high investment costs.”

Konishi said the restaurant division would continue to manage resources and cost structure to optimise profitability, build customer loyalty through its Sushi King membership apps and introduce fresh concepts in the company’s brands.

“A positive outcome of the Covid-19 pandemic is the strategy to localise more of our raw materials, thus promoting lower carbon footprint and sustainable local businesses.

“The industrial division will continue its value-creation journey to pursue value-accretive product segments in its transformation roadmap, while driving R&D activities to intensify development into latex glove chemicals,” said Konishi.

He added that the food division will continue to move up the value chain by leveraging on its network of suppliers and customers, including building its Seapack brand through wider product offerings and geographical coverage.