The pandemic disrupted the economic life cycle of domestic and foreign trades. Many businesses fell prey to this unexpected crisis and failed to recover from the losses. But the companies who were quick to see the opportunities posed by the pandemic managed not only to survive but even profit from it.

Many listed companies in Malaysia diversified into healthcare products such as face masks, shields, sanitisers among others. They proved the importance of diversification and how a timely leap to a new venture can keep companies afloat even in the worst of crisis.

Here is a list of 8 such companies who profited from diversifying during the pandemic.

1. Caely Holdings Bhd diversified into Personal Protective Equipment (PPE) production

   Caely Holdings Bhd is a lingerie manufacturer. Amid the pandemic, Malaysia and many other countries were falling short of Personal Protective Equipment (PPE) as Covid-19 spread like wildfire over the world. So, Caely decided to export PPE to countries such as Germany, the US, Australia, Saudi Arabia and India.

   They aimed to produce PPE to help the countries prevent transmission against the virus. As such, their products were created in a way that they could be washed 30 times after each use before being discarded. They were produced for Ni Hsin Resources Bhad’s Masketeer – Coolmax Fibre Protective Mask and PPE.

   Within 3 weeks of their announcement of the new venture on 27th April 2020, Caely’s share price jumped from 24 to 49 sen while Ni Hsin’s share price rose from 11 to 18 sen in just 4 days.

   Since then, their demand has fallen as more companies joined in the competition to produce healthcare products. Still, their diversified venture served them well as they could earn a wide profit margin catering to mass demand when supply was less.

   Presently, on 2nd Jan 2021, Caely’s YTD share price is 36 sen and Ni Hsin is 12 sen. The companies remain steady, thanks to their diversification to meet the needs of the new normal.

2. LYC Healthcare Bhd diversified into hygiene and sanitation service

   LYC Healthcare Bhd is known for its healthcare services in Malaysia. They cater well in recovery and wellness therapy, postnatal yoga, customised confinement meals and nursery care. Amid the pandemic, they saw a surging demand for cleaning services as hygiene is essential to curb coronavirus.

   Hence, LYC’s wholly-owned subsidiary, LYC Medicare Sdn Bhd made a 3 year partnership with Biofresh Hygiene Services Sdn Bhd to market cleanliness, hygiene and sanitation services in Malaysia. They were granted all the rights to promote materials developed by Biofresh to garner sales for Biofresh hygiene service.

   One of the notable services they offer is disinfecting targeted areas using ultra low volume misting. They claim the service can rapidly prevent antimicrobials by killing them at a rate of 99.99% in just 3 minutes.

   After their partnership announcement with Biofresh in late March 2020, their share prices tripled within 2 months. Presently, on 2nd January 2021, their YTD share price stands at 27.5 sen.

3. MyEG Services Bhd (MyEG) diversified into Covid-19 rapid test kit production

   MyEG Services Bhd is a concessionarie for Malaysian Electronic Government Flagship Application. They own and operate the electrical channels to deliver services from various Government agencies to Malaysian businesses and citizens.

   In March 2020, they started taking pre-orders for Covid-19 rapid test kits even before they got approval from the Ministry of Health (MOH). They collaborated with BP Healthcare to produce the test kits, which are now available for sale in the market.

   Since their initial announcement to test kits diversification, MyEG’s share price increased by more than 60%. Presently, on 2nd january, 2021, their YTD share price stands at RM 1.07.

4. Ho Wah Genting Bhd ventured into Covid-19 test kit

   Ho Wah Genting Bhd is an investment holding company involved in management provision. They have been incurring loss and looking for a core income generative business when pandemic showed the way to them.

   In May 2020, they announced that their subsidiary, HWG Consortium Sdn Bhd was appointed as a distributor by Shanghai Liangrun Biomedicine Technology Co Ltd. Later that month, they received approval from the Ministry of Health (MOH) to distribute the Chinese made Covid-19 diagnostic kits in Malaysia.

   Since their announcement about the new venture on 15 May 2020, Ho Wah Genting experienced 14% gain in their share price, rising to its peak at RM1.32 on 10 August 2020. However, its glory days have since been over as presently, on 2 January 2021, their YTD share price has declined to 20.5 sen.

5. Notion VTec Bhd diversified into the production of face shield and medical ventilator components
   

   Notion VTec Bhd is another company that jumped at the opportunity to cater to the shortage of supply of Covid-19 related products in the nation. Primarily specialising in precision machined components, it ventured into making protective face shields and medical ventilator components.

   They seek approval from relevant authorities to start operation from May 2020 and also ordered machinery to produce Personal Protective Equipments (PPEs). They intended to sell the items in Malaysia and the funding for the new business was financed by their internal funds.

   After the approval of their new venture was announced on 9 April 2020, Notion VTec’s shares rose by 5.67% to 74.5 sen. Settling down from the high of this new venture, presently, on 2 January 2020, their YTD share price stands at 35 sen.

6. SCGM Bhd ventured into protective face shield production

   SCGM Bhd primarily specialises in thermoform food packaging products. They also tread into a new venture of making protective face shields to cater to the rising demand of such equipment in the thick of the pandemic.

   The company received massive orders from hospitals in Malaysia and Singapore for their products. They even got enquiries from other parts of the world. As such they were quick to gain approval from relevant authorities to operate the business.
   Initially, the constraints from the Movement Control Order (MCO) did not allow them to cater to overseas customers, but around mid-May 2020, they got approval from the Ministry of International Trade and Industry (MITI) to resume normal operations during the MCO.

   Since then, the company reported impressive growth in their PPE department. They achieved a 61.8% increase in segmental revenue, rising from RM1 million to RM1.6 million from 3 July 2020 to the second quarter of 2021. Presently, on 2 January 2021, they are still doing well with their YTD share price at RM2.41.

7. Top Glove Corp Bhd ventured into face masks production

   Top Glove Corp Bhd is one of the largest medical gloves makers in the world. Amid the pandemic, they also stepped up, diversifying into making face masks. They made the decision as Covid-19 cases were rapidly escalating in Southeast Asia, closing to 4,228 cases.

   Since their initial announcement, the company experienced a 417% increase in their share price. Presently, on 2 January 2021, they are still doing well with their YTD share price at RM2.59.

8. Karex Bhd ventured into producing hand sanitisers

   Karex Bhd is the largest condom manufacturer in the world but even they could not miss on the opportunity posed in the pandemic. They started producing hand sanitisers under the brand name, HANS in March 2020. In just three months in June, they reported to have sold about 100,000 bottles of sanitisers, which are available for online purchase.

   Miah Kiat, Karex’s Group CEO, said that they did not have to make any massive adjustments to branch out to this new venture. In spite of that, the new business widened their profit margin significantly, rising at an all time high of RM1.23 on 5 August 2020. Since then, the surging demand for their products have settled down, and presently, on 2 January 2021, their YTD share price stands at 40.50 sen.

All these ventures piqued a common question in mind. How much profit can diversification bring and how long will it last? Chan Siew Mei, Head of Advisory of KPMG in Malaysia explained how such ventures should not be treated as ‘ride the tide’ or ‘hot business’. Rather, business owners must have a long term plan before venturing into a new business if they want the effect to last. Or else, if a business is overly diversified, it can lose its core business focus, ending up in more loss than gain.