Under the agreement, AE Multi would provide a one-stop solution in the setup of glove-making facility, from design, fabrication, installation, testing and commissioning of glove making facility, the company said in a statement today.
AE Multi group executive director Choong Lee Aun said the company is looking to tap into a new segment by providing a turnkey solution for customers who are interested to venture into the glove making business.
“Since the COVID-19 outbreak at the end of last year, we have seen a lot of new players entering the glove production industry. Instead of trying to compete with existing glove manufacturers, we are looking to tap into other opportunities from this bandwagon.
“Indeed, there have been emergence of new players into the glove production industry over the last few months, from the property industry, machinery industry, information and technology industry, and others,” he said in a statement.
Choong higlighted that nine listed companies on the Malaysian stock exchange have announced plans to branch into the glove manufacturing industry.
Citing the Disposable Gloves Market – Global Outlook and Forecast 2020- 2025 report, he said the disposable gloves market size is expected to grow at compound annual growth rate of over 14 per cent during the 2019-2025 period.
“Despite the ramp up in production recently, most of the large glove manufactures in Malaysia have indicated that we are witnessing a structural step-up in demand for gloves, stemming from the increase in glove usage due to a change in users’ behaviour and increased hygiene awareness,” he added.
Given the strong demand for gloves, Choong believed that more companies will jump on the glove industry bandwagon, which would provide an alternative source of income for the group, which has also been affected by the pandemic.
“We could leverage our vast network in Malaysia and Thailand, the two key markets for glove production, as well as Ripcol’s expertise. Not only that it would help us diversify our source of income, this collaboration would also accelerate the setup of glove manufacturing plant, which could boost the production of gloves to meet the rapidly increasing demand for gloves,” Choong said.
While the agreement is not expected to have any material effect on the earnings per share, net assets per share, gearing, share capital and substantial shareholders’ shareholding of the company, a successful collaboration with Ripcol Engineering would results in definitive agreements between the companies and their potential customers, which is expected to have a positive impact to the future earnings of AE Multi.
“From our conversations with our clients in Thailand and Malaysia, there are quite a few interested parties (who are ready) to branch into the glove manufacturing industry. We believe that this would help our company see a turnaround in FY2021 onwards,” Choong said.
AE Multi’s loss after tax widened to RM1.64 million in the second quarter ended June 30, 2020 from RM93 million in the same quarter a year ago.
The group's revenue decreased to RM13.75 million from RM15.66 million due to weak sales during the pandemic.