Glove-Maker That Got Its Start With AIDS Surges on Covid Demand
Glove-Maker That Got Its Start With AIDS Surges on Covid Demand
(Bloomberg) -- Malaysia’s Lim Kuang Sia got into the rubber-glove business in the late 1980s, when the HIV/AIDS epidemic created a spike in demand.
That decision is proving fortuitous in the age of the novel coronavirus. Shares of his Kossan Rubber Industries Bhd., which produces 28 billion disposable latex gloves annually, have soared 35% this year as medical and emergency workers from Shanghai to San Francisco scramble to find protective gear.
Lim, who owns 50% of Kossan Rubber with his family, has inched closer to joining the ranks of billionaires, with the value of his stake now exceeding $800 million, according to Bloomberg estimates. Lim declined to comment.
The company has seen a jump in demand since February, starting with a flood of shipments to China. That was followed by orders from the U.S. and Europe, which has helped the firm secure business through at least September, according to a report last month by RHB Research Institute.
“Even after the pandemic subsides, Kossan Rubber’s earnings should still grow in line with gloves’ consumption growth at 8% to 10% per year,” analyst Alan Lim said in the report.
Lim Kuang Sia founded Kossan Rubber in 1979 after earning a master’s degree in chemical engineering from Imperial College London. The company initially made parts for fishing boats, but Lim saw a new opportunity amid the HIV/AIDS scourge and began manufacturing latex gloves in 1988. The firm has grown from an initial five employees three decades ago to posting revenue of 2.2 billion ringgit ($509 million) last year, according to its preliminary annual report.
Other manufacturers in the Southeast Asian nation, which produces about 65% of the world’s supply of rubber gloves, also have prospered. Shares of Top Glove Corp., the world’s biggest maker, have climbed 51% this year, lifting the net worth of its founder, Lim Wee Chai, to more than $1 billion, according to the Bloomberg Billionaires Index.
Shares of Kuala Lumpur-based Hartalega Holdings Bhd. have gained 32% this year, increasing the value of the stake held by founder Kuan Kam Hon and his family to about $3 billion, according to the index. That includes shares indirectly owned through holding companies.
The Malaysian Rubber Glove Manufacturers Association predicts exports will increase 20% this year to 230 billion pieces.
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