KUALA LUMPUR (Oct 5): Kossan Holdings (M) Sdn Bhd (KHSB), the largest shareholder of Kossan Rubber Industries Bhd, distributed its 14.35% stake in the public-listed glove manufacturing company to founding family members.

Kossan Rubber’s bourse filings showed KHSB as having distributed Kossan Rubber shares as dividend in specie to founder Tan Sri Lim Kuang Sia and three of his siblings — Lim Leng Bung, Lim Kuang Wang and Lim Kuang Yong. Each of them received 73.22 million shares.

KHSB, the Lim family’s private vehicle, has distributed a total of 366.1 million shares. The bourse filing, however, did not reveal the recipient of the fifth block of 73.22 million Kossan Rubber shares.

The glove manufacturer was founded by Kuang Sia and his four brothers, including the late Lim Kwan Hwa, who passed away during the Covid-19 pandemic in 2021.

After the share distribution, KHSB, the Lim family’s private vehicle, is left with a 35% stake or 893.07 million shares. It is still the single largest shareholder in the listed company.

Kossan Holdings’ shareholders are Kuang Sia and his three brothers Leng Bung, Kuang Wang and Kuang Yong, with each holding a 20% stake.

The remaining 20% stake is held by Lim Seow Kiang, Lim Woi Kok and Lim Siew Bing at 5% each, with the remaining 5% stake owned equally by Lim Lee Theng, Lim Lee Sia, Lim Lee Chin, Lim Lee San and Lim Lee Yen.

The distribution of shares from Kossan Holdings raised Kuang Sia’s direct shareholdings in the listed entity to 3.15% (80.23 million), Kuang Wang’s to 2.94% (75.22 million), Leng Bung’s to 2.96% (75.53 million) and Kuang Yong’s to 2.9% (74.14 million).

Like other major glove makers, Kossan Rubber’s share price has been in the doldrums over the past two years following the pandemic-driven rally in 2020.

The stock closed at RM1.36 on Wednesday, a far cry from a record high of RM7.59 in August 2020.

Kossan Rubber fetched a market capitalisation of RM3.4 billion at its closing of RM1.36.

The group’s profitability has dwindled post-pandemic, as over-expansion in industry capacity led to a glove supply glut.

Kossan Rubber recorded a net loss of RM27.53M million for the six-month period ended June 30, 2023 (1H2023), compared to a net profit of RM136.09 million a year earlier, as revenue shrank to RM782.25 million from RM1.274 billion a year earlier due to market competition, higher energy and labour costs and lower plant utilisation.

On prospects, the glove maker said although there are signs of stabilisation, the glove sector continues to be impacted by a supply-demand imbalance and this is expected to continue in the second half of FY2023.

Kossan Rubber had embarked on a capacity rationalisation exercise in 2022 to boost efficiency and lower operating costs, as it decommissioned two older plants with a total capacity of three billion pieces.