This article first appeared in The Edge Financial Daily, on April 13, 2016.

KUALA LUMPUR: Glove maker Kossan Rubber Industries Bhd, which saw its net profit jump 40% year-on-year to RM203.26 million in the financial year ended Dec 31, 2015 (FY15), expects to sustain its double-digit growth momentum in FY16, although the growth would be smaller.

Kossan general manager Edward Yip said net profit growth for FY16 will be supported by higher capacity utilisation with order overflow from FY15.

“This year, we’ll see double-digit [net profit] growth. But of course it won’t be as high as last year because we have no new [production] capacity except from last year’s overflow,” he told reporters on the sidelines of the 12th Invest Malaysia 2016 yesterday.

Yip sees significant growth in earnings for FY17 and FY18 when a new plant in Bestari Jaya, Selangor starts operating in September 2017.

Kossan’s five-year expansion plan includes the new plant on a 56-acre (22.66ha) tract, which will be developed over four phases. The following three phases will be completed in 2017, 2018 and 2019 respectively, with full completion by 2020.

Kossan managing director and chief executive officer Datuk Lim Kuang Sia said the group is in the process of acquiring two parcels of land in Jalan Meru, Klang, measuring 38 acres and 2.5 acres respectively, which are in the vicinity of its existing plant.

The group is eyeing to set up a research and development centre on the 2.5-acre tract, which will also include a training centre and an engineering centre.

“We have allocated over RM100 million for capital expenditure for our expansion plans for the year,” he said, adding that Kossan usually allocates between RM100 million and RM150 million per year for its expansion.