Aiming to be global "funeral' leader
(This is an excerpt from the Star on-line dated 26th September, 2015)
AFTER taking Nirvana Asia Ltd to list on the Hong Kong Stock Exchange for nine months, its founder Tan Sri Kong Hon Kong is planning to turn this funeral service provider into a world leader.
The Hong Kong listing has
been a good experience for Kong. Compared to Bursa Malaysia, share liquidity is
much higher. Profit has soared and the company has cash of US$250mil
(RM1.06bil), arising mainly from its December 2014 initial public offering (IPO)
that raised US$246mil.
This is a far cry from
Nirvana’s old days on Bursa. Due to taboo, there were hardly 10,000 shares
traded daily. Fund raising was also tough. Hence, Kong privatised Nirvana in
2010.
“Hong Kong is a good
platform to expand into the international market, particularly China. It was a
right decision. With current PE of around 14, our market capitalisation of
HK$5.2bil is much bigger than we used to be on Bursa,” says Kong, 61, in an
interview with StarBizWeek.
“I am very ambitious. In
the long term I want to be No. 1 in the world in the funeral service sector. I
am planning and positioning my team. Organic growth is too slow. The quickest
way is to go through M&A (merger and acquisition),” adds Kong, chief
executive officer of Nirvana Asia.
Kong, who holds about 43%
stake in Nivarna Asia, is eyeing M&A possibility with New York-listed
Service Corporation International, Stewart Funeral Home, Invacare Corp and Hong
Kong-listed Fu Shou Yuan of China.
The billionaire is confident
that Nirvana Asia will scale higher in Asia, where the demand for bereavement
care services continues to rise. The region, with an aging population, is
underserved in this service sector.
Nirvana Asia posted a
sharply higher net profit of RM136.1mil for the first half ended June 30, 2015,
compared with RM44mil in the same period a year ago, due to better profit
margins for tomb design and construction, for niches and funeral services in
all its markets – Malaysia, Singapore, Indonesia and Thailand.
Revenue for the period
grew 23.5% to RM284.5mil against RM230.4mil last year.
In the near term, Kong has
plans to expand further in South-East Asia because investment cost is low now
due to the sharp depreciation of their currencies.
Early this month, Nirvana
Asia expanded its presence in Indonesia by acquiring 75.2ha of cemetery land in
Medan, a city with a mainly Chinese population of about 4.1 million. In the
first half of this year, it established its presence in Vietnam and China.
In the near term, the
company plans to provide “indepth” service in China rather than buying land.
“We must enter China. The
market potential there is huge. But we have to be cautious as land prices there
are very high. We have to utilise the IPO money with care,” says Kong.
Back in Malaysia, Kong
wants to start a college to train students keen in this field. This college
will provide the human resource needs of Nirvana.
Although Malaysia’s sales
account for about 70%-80% of Nirvana’s total revenue now, Kong has no intention
to re-list Nirvana on Bursa. The ringgit plunge, weak economic outlook,
financial scandals and political instability are deterrents.
“The image of Malaysia is
not good outside the country. This is a key reason for the low PE of 14 in my
company, compared to Fu Shou Yuan’s 35.”
Kong says Nirvana Asia
will stay focused and will not expand into other sectors.
Passionate about business
“I am passionate about my
business. I love my job. Every week, I must go to our memorial parks in
Semenyih and Shah Alam, look at the columbarium expansion in Singapore,
construction of a funeral parlour cum columbarium complex in Kuala Lumpur city.
I have to make sure we provide high standard professional service and quality
products to our clients.”
Kong says the idea to
start this “taboo” business was mooted after his unpleasant experience in
arranging for a funeral service cum buying a burial plot for his mother-in-law
in 1985.
“My mother-in-law loved me
deeply. When she died, I was determined to let her rest in peace and with
dignity. But when I went to a cemetery to view a burial plot, I had to pass
through many graveyards. There was no walkway and I had to utter ‘sorry’ to the
dead in all the graveyards I stepped on in that bushy unwelcoming environment.”
But setting out to start
this “novice” business was an uphill task. It took the entrepreneur five years
to convince the Selangor authorities to allow him to convert private land into
cemetery land. In the National Land Code then, there was no category for
“cemetary use”. During those days, the state allocated free land for burial
purpose to Chinese guilds and the issue of conversion did not arise.
In his various
submissions, Kong had highlighted the economic benefits and savings for the
government if they approved the conversion.
Recalling his five years
of agony and waiting, Kong says: “The day I heard my application was turned
down after 3.5 years of hard work, my tears came rolling down non-stop. But
after hearing the inspiring song My Future Is Not a Dream the same night, I was
determined to charge forth. After 18 months of persistence, I finally got the
conversion and operating licence.”
Starting with a single
cemetery in Semenyih, Nirvana has grown to become Asia’s largest integrated
funeral services provider by revenue and land for burial. It also manages
cemeteries, columbariums and crematoriums.
As the Form Five school
leaver from Kuala Lipis, Pahang, accumulates more wealth, he feels obliged to
give back some to society. He has donated millions to charities, Chinese
associations and education bodies. He spearheaded a RM2.5mil donation drive for
Nepal after it was devastated by a major earthquake.
ts the heart and soul of
many local and foreign experts in Chinese history, arts, literature and
culture. Their work highlights the beauty of China’s 5,000 years of culture.
This is the most meaningful work I have ever done. It is now a learning place
for students, Malaysians and tourists,” says Kong, beaming with pride.
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