Caely said its wholly-owned subsidiary, Marywah Industries (M) Sdn Bhd, signed the deal with Ni Hsin’s unit, Ni Hsin Marketing Sdn Bhd (NSM).
“The rationale for the agreement is to enable Marywah to increase its revenue from other types of products with its existing production facilities,” the Teluk Intan-based lingerie manufacturer said in a filing with Bursa Malaysia.
In a separate filing, Ni Hsin said the deal enables the group to diversify its business activities and revenue stream.
Under the agreement, Marywah will serve as the original equipment manufacturer to make NHM’s Masketeer Coolmax fabric protective mask and PPE.
The agreement is valid until Dec 31, 2022 and can be further extended should both parties agree to do so.
Caely said the deal is expected to positively contribute to its earnings in the financial year ending March 31, 2021.
Similarly, Ni Hsin said the agreement will benefit the group in terms of earnings during its financial year ending Dec 31, 2020.
“The board of Ni Hsin believes that the demand for the products will be uptrending and wearing a face mask will become the new normal healthy social habit even when the [Covid-19] pandemic is over.
“This transaction is exposed to business risks inherent in the industry, which include changes in political, economic and social conditions, government regulations and inflation,” Ni Hsin added.
In a separate statement, Caley executive chairperson Datin Fong Nyok Yoon said the group has received great interest for its face masks and PPE.
“We have been receiving orders from five companies, four of which are local and one from overseas since March 2020. The sole overseas order came from Germany, and we are working on further inquiries from the US, Australia, Saudi Arabia and India. We foresee there will be more inquiries in the future, as social habits are changing and wearing face masks are becoming a norm in our lives,” she said.
Fong said that as a company involved in the textile and apparel industry, Caely made a timely decision to modify its existing production to diversify into manufacturing face masks and PPE.
“Under Marywah, we have actually been producing various types of face masks for other companies both locally and overseas since the virus outbreak but in a relatively small scale. Henceforth, we are ready to produce these items on a larger scale based on our existing capabilities in terms of skills and plant facilities,” she said.
Shares in Caely closed 2.5 sen or 6.41% higher at 41.5 sen, valuing the group at some RM68.25 million.
Ni Hsin finished 1.5 sen or 14.29% higher at 12 sen, giving it a market capitalisation of RM38.58 million.
Source: The Edge Markets