Rubber gloves a perfect fit for Malaysian mogul

Kuan Kam Hon saw a need for latex gloves in the medical sector and now makes 45,000 an hour

PUBLISHED : Saturday, 21 September, 2013, 12:00am
UPDATED : Saturday, 21 September, 2013, 2:29am

Kuan Kam Hon saw the need for rubber gloves during the early years of the Aids epidemic.

At the time, health-care workers and others were increasingly using the gloves to protect themselves against the virus and other infectious diseases. So Kuan turned his stagnating woven-label and badge manufacturing plant into a maker of latex gloves.

The decision has made Kuan, 66, a billionaire. His Kuala Lumpur-based company, Hartalega Holdings, has soared 56 per cent this year, reaching an all-time high yesterday. Kuan and his family own 55 per cent.

"He is very involved in the installation and design of equipment, in the day-to-day production," said Ang Kok Heng, Kuala Lumpur-based chief investment officer at Phillip Capital Management, who has known Kuan since Hartalega's listing in 2008.

"He is the person who is everywhere in the factory."

Hartalega - the company's name is a combination of two Malay words that mean "relief assets" - is now the world's biggest synthetic-glove maker, and one of its most efficient.

A robotic system that mimics the human hand motion of stripping gloves off moulds has helped it reduce costs and make its production lines some of the fastest in the industry, churning out as many as 45,000 gloves an hour.

Hartalega's ebitda margin was almost 34 per cent in the fourth quarter of its financial year ended March 31, about double its competitors', including Malaysia-based Top Glove.

"He enjoys higher margins because of low raw material costs, low usage of materials, higher productivity and lower labour requirement," said Ang. "They can produce more gloves per line, which other glove companies cannot do."

[Kuan Kam Hon] is the person who is everywhere in the factory

Hartalega has six plants that can produce 13.6 billion gloves a year, according to company reports, and is spending as much as 1.9 billion ringgit (HK$4.65 billion) to build a manufacturing complex with 72 production lines by 2021. The new lines will produce an additional 28.5 billion gloves a year, the company said.

Kuan started working in 1969 at his father's property development company, Kuan Yen & Sons, building high-end homes in Kuala Lumpur and its suburbs. In 1978, he made his foray into manufacturing by setting up Timol Weaving, a maker of woven labels and badges.

He decided to venture into rubber glove manufacturing when the recession in the 1980s "coincided with the end of the building and weaving businesses", his 37-year-old son Kuan Mun Leong, Hartalega's managing director, said.

In 2002, Hartalega invested in R&D for thin nitrile gloves that can be used by health-care personnel and patients allergic to rubber protein.

"At the time, nitrile gloves were chiefly used in industrial applications and not in the medical sector owing to their heavy weight and thickness, which was a hindrance for medical practitioners in the examination of patients," Kuan Mun Leong said. "Nitrile gloves are a necessity."

Kuan Kam Hon introduced the world's first 4.7-gram nitrile glove that bore the elasticity and softness of natural rubber, without the protein allergy risk. The lightest nitrile glove that Hartalega produces weighs 3.2 grams, his son said. Global demand for the synthetic gloves is set to grow as much as 20 per cent a year until 2014, he said.

Kuan Kam Hon has a net worth of at least US$1 billion, based on the value of Hartalega shares and warrants held by him and his family, as well dividend income since 2008.

He owns his shares through holding companies Hartalega Industries and Budi Tenggara, according to the latest annual report. His two sons also directly own shares in the glove maker.

Kuan Kam Hon stepped down as managing director in November while remaining executive chairman. Kuan Mun Leong holds a mechanical engineering degree and an MBA and joined Hartalega's engineering department in 2001. The patriarch's older son, Kuan Mun Keng, 38, an accountant, is executive director at the company and oversees sales and marketing as well as corporate finance.

"Now, he is slowly handing over to his sons," Ang said.


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