STATE OF THE ART

Malaysia 2017 | INDUSTRY | VIP INTERVIEW

TBY talks to Lim Kon Lian, Managing Director of LKL International Berhad, on export markets, R&D, and the benefits of trade missions.

How has your business advanced in recent years, especially in light of the recent listing?

We started operations in 1996 as a manufacturer and trader of medical and healthcare beds, peripherals, and accessories, and our business operations and customer portfolio have seen a significant expansion over time. Between 2002 and 2008 we were exporting to 10 countries, while today we deliver our products to numerous public and private hospitals and medical centers as well as other healthcare-related facilities in Malaysia and in more than 30 countries across six continents. We have four objectives for our listing: to increase our local and global presence, recruit skilled employees as this will add more value to the company, invest in new machinery to increase our production efficiency, and repay one of our existing bank loans.

What international markets do you target?

Africa is one of the markets that we target as we already have some presence there. We are also targeting the ASEAN region. We currently sell to over 30 countries, or roughly 16% of all countries. There are still many markets for us to tap into, good opportunities for our product line that can serve any healthcare sector in the world. Through the listing process, we can brand our company internationally and tap into new markets.

How would you break down your current revenue and key markets?

The key market is still Malaysia, accounting for approximately 80% of our total revenue. Our market share in Malaysia is 40.5% in year 2014 and we are one of the major local player. As of 3Q2016, our export markets are Asia (excluding Malaysia) with 14.68% and the Middle East with 2.13% of the total. These are followed by Africa at 3.79%, Central America at 0.17%, and Europe at 0.01%. In most markets, we have distributors and agents that help us with servicing and promotion.

Can you tell us a bit more about your products?

Our core business is the manufacturing of medical and hospital beds, including manual, hydraulic, and electric beds. We also produce medical peripherals and accessories such as medical carts, instrument trolleys, and patient transport trolleys. Our production facilities are all in Kuala Lumpur, and we intend to keep on producing there. Perhaps if we find a place where we can set up a second supply chain to expand our operations in another country, we might do so. We currently have our manufacturing, fabrication, and warehousing on the same premises, this saves us a great deal on logistics. We even source most of our raw materials locally except for electrical components and hydraulic system which are from overseas such as Germany, Denmark, and China.

What are some of the services provided by your in-house R&D center?

We have close relations with our clients and listen to their feedback on our products and how we can improve them. Our R&D is based on market trends and demand as well as customer feedback. Other input comes from exhibitions or interesting designs by other players in the market. We do not copy designs and instead take inspiration to improve our own production line. Another service that our R&D team offers is customizing products according to the needs of our clients. Our industry is increasingly becoming demanding, and we are always on the lookout to improve the safety and comfort of patients.

Do you see a great deal of growth coming from the medical tourism industry in Malaysia?

The government of Malaysia has launched various national plans and programs to support the growth of healthcare services. The national initiative implemented by the government supports the development of the healthcare industry from the provision of medicines to the construction of healthcare facilities. Our group is poised to increase its presence in the local medical beds industry as well as future opportunities in the export market.

The government has identified medical equipment as a key area for growth. Have you seen an increased effort to push the industry forward?

The government supports us by inviting us overseas on trade missions where we promote our products. We have often done this by ourselves, and that works well, but the government's presence helps us open doors that would have remained closed otherwise. Under the Eleventh Malaysia Plan, the government announced that it wants to increase access to public medical healthcare. We see our growth in those terms: a need to expand public hospitals leads to higher medical furniture and equipment requirements. We are the one of the largest manufacturers in the nation in terms of revenue in our segment, and we see our domestic market share expanding to meet the growing needs of these new public hospitals and medical centers.

What are your key objectives for the year ahead?

We would like to acquire new CNC machinery, which allows for high-speed precision cutting, shearing, and punching. These machines will increase our productivity by approximately 30%. Another plan is to amalgamate the two pieces of our existing properties that are currently separated by an empty lot. We would like to utilize this space and include it in the production process, reducing costs and making our operations more lean and efficient. The listing has been fruitful for all the stakeholders involved. Our share price is stable. The issue price upon listing was at RM0.20 and closed at RM0.28. We are in the right industry for the current state of the economy and were one of the top 10 listed companies in terms of share trading volume during our listing day.