This article first appeared in The Edge Financial Daily on June 19, 2017 - June 25, 2017
PETALING JAYA: They pursued different disciplines at different universities in Perth, Australia. And despite landing big-city jobs, the two friends were determined to follow their dream to start their own business.
Kenny Woo, 33, studied accounting and finance at Curtin University of Technology and Richard Khong, 34, electrical and electronic engineering at University of Western Australia. The knowledge they obtained at school and the workplace, however, would later serve them well.
“We initially wanted to open a high-end cafe, but cafes are a dime a dozen and many end up closing. So, we thought what are the things we can sell to cafes, and we came up with the idea of selling disposable coffee cups,” Woo told The Edge Financial Daily in an interview.
They left their jobs and began Facilipack Industries Sdn Bhd in 2011. Woo owns almost 50% of the company and Khong almost 30%, while the remaining 20% is held by their friend and business partner Ta Shun Dher.
Six years on, Facilipack operates a plant in Kota Damansara here, manufacturing in excess of 1,000 tonnes of plastic products per month and employing a workforce of 120.
On Oct 7, 2014, Facilipack acquired Greatpac Sdn Bhd’s business from Wawasan TKH Holdings Bhd.
Greatpac was a plastic injection moulding manufacturer, whose Jasa brand is synonymous with the white polystyrene foam boxes used to pack lunches and food until today. However, the company had been making losses for several years largely due to mismanagement of its machinery and raw materials and its unprofitable supply contracts.
“We took over the business of Greatpac, that is, the machinery, the Jasa brand name, goodwill, clients and trucks, but not the property [in Kota Damansara] where our manufacturing plant is currently sited,” explained Woo.
Today, Facilipack has three core businesses namely polystyrene forming division, plastic injection moulding division and thermoforming division.
“Our plastic injection moulding division contributes 65% of our total revenue. About 90% to 92% of the products are exported to countries such as the UK, France, Australia, New Zealand, the United Arab Emirates, Qatar and Bahrain.
“Selling internationally gives us a much better price point. In fact, the weakening ringgit has been beneficial to us considering that this division mostly derives its business from exports and transacts in US dollars,” said Woo.
Meanwhile, the polystyrene forming and thermoforming divisions contribute 27% and 10% of the group’s revenue respectively.
For the financial year ended Dec 31, 2014 (FY14), Facilipack posted a net profit of RM2 million on revenue of RM20.8 million. Following the acquisition of Greatpac's business, the group’s net profit jumped 410% to RM10.2 million in FY15, while revenue surged almost five times to RM91.5 million.
Woo said financial statements for FY16 are being audited, but noted that the group is expected to see a decline in revenue due to lower resin prices last year, which affected average selling prices. “However, net profit will still grow due to better margins,” he added.
“For FY17, we should do quite well. We forecast revenue to grow double-digit largely due to capacity enhancements. Profits may be affected but there will still be growth due to the investment in capacity enhancements,” said Woo.
Facilipack is also all set to diversify into the higher-margin medical plastic disposal market by the end of the year.
It has set its sights on manufacturing plastic pill cups, syringes and urine specimen cups, said Woo, which will fall under the injection moulding business segment.
“We know the demand [in this market] is quite sizeable, but we don’t know whether there is excess demand. We know that we can gain market share from other players that are less competitive as we have the manufacturing know-how and the economies of scale.
It is understood that Facilipack is eyeing an ACE Market listing on Bursa Malaysia this year. However, Woo declined to comment except to say that any additional capital will be useful for it to pursue its expansion into the medical plastic disposal industry.