05 June 2017.
THE SAGA OF NIRVANA ASIA AND FOUNDER TAN SRI DAVID
KONG HON KONG
Tan Sri Kong Hon Kong (Chinese name: 丹斯里鄺漢光; born in 1954), is a prominent Malaysian Chinese businessman, who founded Nirvana Asia Group, the largest
integrated bereavement
care service provider in Asia.
Tan Sri Kong Hon Kong has
been the Nirvana Asia Group Executive
Director since October 1990 and was appointed as the Nirvana Asia
Ltd Managing Director and Chief
Executive Officer in February 2009.
As the founder of the Group,
Tan Sri Kong has been the driving force behind Nirvana Asia Group’s
development, growth and expansion, and is primarily responsible for formulating
the overall development strategies and business
plans of the Group.
Today his Nirvana Asia is Southeast Asia's
largest full-service funeral company. It embalms, buries and cremates. It
designs caskets, builds tombs and provides niches for mortal remains. It organizes
bereavement services, most often with the rituals and prayers of ancient
Buddhist and Taoist cultures.
It's a strange business. The products and
services are part of the realm of culture, religion and tradition. The
custodians are monks and priests and the ancient spiritual texts of last rites.
Born to a rubber tapper family in Kuala Lipis, Pahang, Malaysia
in 1954, Kong was prompted to found Nirvana by the death of his father-in-law
in 1985. Organizing the funeral, he was dismayed by a visit to a cemetery run
by the relevant Chinese clan association. “The grass was taller than me and
they didn’t have a proper walkway. That’s when I realized I had to do
something.” There were no private cemeteries in Malaysia and those operated by
clan and religious associations were “not run well”.
It took him five years of navigating bureaucracy to get
the permits he needed to launch the enterprise. Betting the funeral business
would be more profitable than his family’s trading company, he branched out
alone. “Until today I’m proved right,” he laughs.
Tan Sri David Kong sure had visionary foresight when he
started this business – he hit upon this unusual, unique, marketing model of
selling burial plots, niches (cremation) and bereavement packages on a “pre-need” basis – that is, that
family/members would be prepared to buy in advance these plots/packages for
their loved ones (parents/siblings/relatives etc) long before their actual
demise, to take the hassle out of having the deal with the actual demise day –
and locking in, and saving the costs of such services, even if months/years
ahead.
These are the growing and changing trends we now see in mainly
Buddhist/Taoist thinking/planning, where the question of death is no longer
such a taboo subject.
Just look at the table below on the predominance of “pre-need”
sales in 2015 and 1H2016:
·
The
proportion of pre-need contract sales continued to rise from 83.8% in year 2014
to 86.6% in 2015 - a proof of the market’s receptiveness to pre-planning of
death care services.
·
The Table below shows that that “pre-need” sales
in 1H2015 of 85.9% was maintained in 1H2016 of 85.5%.
·
1H2016 is the latest published results of
Nirvana Asia that I can find.
There are also few other points worth noting about this
market overall:
- Supernormal profit generation: Nirvana generates adjusted returns on capital of #30%.
- Death care services satisfy an essential human
need. It is especially important to
the Chinese population whom Nirvana targets. It is an industry that is
extremely slow moving and difficult to disrupt.
- The Fragmented As-Need market:
- The market comprises predominantly small scale,
non-integrated undertakers and independent and public/not-for-profit
cemetery operators.
·
Nirvana’s overall market share in
its two key markets of Malaysia and Singapore is 31% and 35%.
·
Its pre-need market share in these
two markets is 56% and 79%.
·
In Indonesia Nirvana has just a 1%
overall market share, but a 36% share of pre-need services.
·
In Singapore, the National Environment
Agency provides public death-care services. Private sector provision is made by
not-for-profit Buddhist temples. Nirvana is the only commercial columbarium.
Scarcity of land has restricted burials to under 10% of all deaths. This has
also led to high prices for niches and ancestral tablets at columbaria in
Singapore ($500 for a public columbarium niche, $7,000 for a temple niche, and
$17,000 for a niche in Nirvana’s facilities). Due to space constraints in
temples, cremated remains have increasingly been stored in columbaria.
- Pricing power: Pricing is set with reference to competitive
landscape, disposable income and cost of services. Pre-need services are
offered at discounts to as-need services. Nirvana targets the premium
segment in each of its locations. Nirvana’s quality, premium offering are
reflected in significant price differentials vs. competitors: Nirvana
charges 30x government providers, 3x not for profit and 2x private
competitors.
- Dominant pre-need pioneer. Nirvana’s pre-need revenue market share is 60% in
Malaysia and 80% in Singapore (no other operator has >7%).
There
are several benefits of pre-need to the operator:
·
The addressable market for pre-need
is much larger than as-need (40 years +).
·
Pre-need offers the potential to
develop longer lasting and deeper relationships with customers, enabling
Nirvana to introduce its brand to its customers at an earlier stage vs.
competitors.
The
benefits of pre-need for the consumer are as follows:
- · Ability to spread payments over up to four years.
- · Locking in pricing and avoiding inflation.
- · Time to plan bespoke funeral arrangements – in fact, with a Nirvana bereavement package, it’s as good as “hands-free” on the part of the deceased family’s next-of-kin, as Nirvana handles all aspects.
- · Avoidance of ‘burdening’ relatives with costs (as-need services are usually booked and paid for by a family member).
More than 3,000 Nirvana agents sell these
"pre-need" packages to customers as young as 40 who are planning
ahead. Some 85% of the company's revenue comes from selling services that may
not be used for years.
Nirvana agents range in age
from 30 to 45, defying the notion that death care is a gloomy industry that
would have trouble attracting young talent.
In December 2014, Nirvana Asia was listed on the Hong Kong Stock Exchange.
“We managed to raise RM1 billion without much
difficulty. That would not be so easy in Malaysia. Our Hong Kong platform is
definitely a key advantage for us to expand our wings overseas,” Tan Sri Kong
remarked.
In 2012, Nirvana Asia Group was named:
·
“Asia’s Outstanding
Brand in Funeral Service Industry” and
·
“Asia’s Outstanding
Award in Multi National Expansion” at the 2012 Asia Funeral Expo (AFE) Awards
Ceremony.
·
In 2013, the Group
became Malaysia’s torchbearer in the bereavement care industry once again,
having won the “Corporate Social Responsibility Award” and “Marketing Strategy
Award” at the 2013 Asian Funeral Exhibition (AFE Awards).
·
The Group was ranked
No. 1 in “Best Small-Cap Company in Hong Kong” in the 2015 Asia’s Best Managed
Companies Poll by FinanceAsia.
·
Another notable
accolade is the crowning of the Listed Enterprise Excellence Awards 2015 by
Capital Weekly.
Tan Sri David Kong’s
Achievement and Awards:
·
World’s Top 10 Chinese
Entrepreneurial Role Models at the 4th China’s Entrepreneurship Summit in 2009
·
Honorary Advisor of
The Federation of Chinese Association Malaysia
·
Honorary Advisor of
Young Entrepreneurs' Association of Malaysia
·
Honorary Advisor of
The Dramatic Art Society
·
Honorary Advisor of Malaysia
Xiamen University Faculty of Chinese Medical College
Some
Other Financial Data on Nirvana Asia:
- Nirvana is the largest integrated death care services provider in Asia. Founded in 1990 by the current CEO Dato Kong and a (passive) business partner. Each owned 50% and developed the initial memorial parks with their own capital.
- Since then Nirvana has, through subsidiaries, developed
or acquired 10 cemeteries, 12 columbaria and two funeral homes cross
Malaysia, Singapore and Indonesia. In 1999 Nirvana began offering funeral
services in addition to burial services.
As mentioned previously,
David Kong’s unique selling strategy of marketing “pre-need” requirements hit
the bulls’ eyes – as the above table on Revenue breakdown show that for 2015
and 2016, some 80% of Nirvana Asia revenue comes from such “pre-need” selling –
of burial plots, bereavement packages, offering niches (cremation services, and
housed in columbarium facilities) - all sales through its 3,000+ sales advisors earning
strictly their “sales commissions” derived from such sales, and with no basic
monthly pay!
Death is a certainty, and
inevitable! And Nirvana Asia is certainly in an inevitably profitable business!
Just look at the Gross Profit Margins shown in the above Table!
More details of Gross Profit
Margins by Product – as shown below:
By the same token, the EBITDA
Margins follow – and keep improving from 37.5% in 1H2015 to 38.3% in 1H2016!
This is a solid cash-flow
business – and how many companies in whatever businesses they are in, can boast
that they have “Zero Gearing” – as we have in Nirvana Asia for years 2014, 2015
and 2016 – as shown in the above Table?
In October 2016, Kong took the Hong Kong-listed company
private in a deal with London's CVC Capital Partners that valued the company at
$1.1 billion. The firm bought a 43% stake while Kong collected a cool $200
million - he still owns 38%, down from 42.7%. He'll continue to run the
company. An earlier investor, Orchid Asia, holds the other 19%.
In March Kong debuted on
FORBES ASIA's list of people at No. 34, with a net worth of $550 million. But his
fortune is now estimated at $720 million.
CVC is investing in a big operation. Nirvana runs 13
cemeteries, 14 columbaria, 2 funeral homes and 6 crematoriums in Malaysia,
Singapore, Indonesia, Thailand and China. It controls 31% of the death-services
market in Malaysia and 35% in Singapore, according
to research firm Frost & Sullivan. Those shares are at least five times
larger than its nearest rival in each country. It's expected to generate $52
million in net profit for Year 2016 on revenue of $171 million, according to
Bloomberg.
So what is in store for us “ma-chais”?
I have just been recruited (my final appointment to be
confirmed with my first sale!) as Nirvana Sales Advisor Agent 1012 on His
Majesty Nirvana Service! I am learning the ropes of “pre-need” selling via my Sifu Eugene Leow, Nirvana District Service Director, an old friend of 20-years’
standing, and who first introduced me to Nirvana some 10 years ago – my then-achievement:
Nil!
For
My Christians Friends Only:
The Bible teaches us that Jesus will return to earth
for a final judgment of both the living and the dead. At that time He will bring with Him all the souls of
those who have died, and on that day (and not before), the bodies of the dead
will be raised from the earth, transformed for immortality and reunited with
their spirits for eternity – [my emphasis].
Just as Jesus commended His spirit to His Father in
heaven at the moment of His death, so too our
bodies are laid to rest in the grave [my emphasis], but our spirit lives on,
and is immediately transferred to heaven or hell on the basis of faith or lack
of faith in Jesus’ death and resurrection. The first fruits; then, when He
comes, those who belong to Him” (1
Corinthians 15:20-23).
When people die they do not become angels nor assume
the divine attributes of God.
Human beings are mortal and will eventually die. The
Bible is clear that God “alone has
immortality” (1 Timothy 6:16),
while humans are “mortal” (Romans 6:12).
Neither should Christians expect to share God’s
miraculous powers in the afterlife. Those who die do not become omnipresent (able to exist in more than
one place at a time) or omniscient
(all-knowing).
Few
grasp the significance of what Christ said. Only He was ascending into heaven—no one else! [my
emphasis]. He clearly said that we
cannot come to where He was going, and the Bible is clear that heaven is where
He went.
He later explained this further: “I go to prepare a
place for you. And if I go and prepare a place for you, I will come again and
receive you to myself” (John 14:2-3).
This scripture gives us a clue that the answer to life
after death involves the return of Jesus Christ and is in the future. These
scriptures show us clearly that Jesus
Christ did not teach that good people ascend to heaven at death. The
apostles continued that teaching to the New Testament Church.
We have seen that Jesus
Christ directly stated that the dead do not go to heaven, but He also revealed that the dead would
live again at a future time:
“Do not
marvel at this; for the hour is coming in which all who are in the graves will
hear His voice and come forth—those who have done good, to the resurrection of
life, and those who have done evil, to the resurrection of condemnation” (John
5:28-29). In verse 26, Christ
revealed that He and the Father are the only beings with the ability to raise
the dead.
At
the Second Coming of Jesus, our bodies
will be raised from the grave, joined to our soul, and we will stand with
the whole world before the judgment throne of God. Those who believed in Jesus as the
long-promised Messiah will then enter—soul and body—into heaven. Those who
reject the grace of God in Jesus will then be consigned—soul and body—into
hell. There are no exceptions. [my emphasis].
So, when you feel you have this “pre-need”
requirement, and you need my services, priss calling I – and I’ll be there – at
His Majesty Nirvana Service!
Yeow Eu Ming
05 June 2017.
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