Karex expects new plant to boost capacity

SHAH ALAM: Homegrown condom manufacturer Karex Bhd, which has allocated RM30 million capital expenditure (capex) to build a new plant in Thailand, expects the new facility to increase its group-wide condom production capacity to 5 billion by year-end.
The company has factories in Port Klang, Pontian, Johor and Hat Yai in Thailand, with a combined production capacity of 4 billion condoms currently.
"Our 5 billion capacity target for the group this year will be coming from our Thailand operation. We are spending approximately RM30 million to build a new plant there, which will be the first green condom factory in the world," its CEO Goh Miah Kiat told reporters after the group's EGM yesterday.
He said the new factory is currently in the final phase of construction and expected to start operations within two to three months.
"When the capacity increased, we expect revenue to grow about 20-30% this year," he said, noting that Karex's revenue increased between 20% and 30% last year.
Goh said Karex is licensed to export 90% of its products to more than 110 countries across Africa, Asia, the US and Europe.
"We are targeting 5 billion (production capacity) this year, and 6 billion next year. Hopefully we (can) put in another one more billion by 2017, bringing it to 7 billion capacity," he added.
Commenting on its expansion plans, Goh said the group is looking at possible mergers and acquisitions (M&As) of local and overseas condom-related businesses, noting that it has RM200 million cash in hand currently.
"We do see good opportunities for inorganic growth, but right now we are looking at it very carefully, so we are just evaluating everything at the moment.
"It could be a manufacturer, brand, distributor, or someone who has a product that we don't have, but within the condom-business sphere," he said.
Last year, Karex acquired a 55% stake of US-based Global Protection Corp (GP), giving it the rights to distribute brands under GP, like ONE, Atlas and Night Light and Pleasure Plus (a sub-brand under ONE).
"In October last year, we did our first acquisition on GP. Now time has proven that it has been a great investment, where we invested in dollars. And today if we look at the exchange rate, I think we have made it pretty well," said Goh.
Going forward, Goh said rising awareness on the importance of condom usage and growing global population were the main reasons for increased demand for condoms.
"There is still a lot of demand for condoms, given that there are still a lot of issues like HIV, AIDS and STIs (sexually-transmitted infections)."
At the EGM, shareholders approved the company's proposed bonus issue of 222.75 million news shares of 25 sen each on the basis of one bonus share for every two existing Karex shares held.