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Four more companies plan to join the rubber glove makers club

Four more companies plan to join the rubber glove makers club

12 Aug 2020

The rubber glove industry seems like a desirable exclusive club that others want to be associated with, judging by the slew of companies that have announced plans to enter the industry, which is currently flooded with new orders at higher average selling prices.

Yesterday, four more companies announced plans to set up plants to produce rubber gloves. There were three that announced similar plans the day before.

Titijaya Land Bhd announced that it was in the midst of diversifying into the healthcare products, inclusive of supply of rubber gloves after it was queried by the stock exchange about an unusual market activity. Titijaya’s share price more than doubled in three trading days since last Thursday, reaching a high of 76 sen per share then. It closed at 68.5 sen yesterday, valuing it at RM930 million.

As it stood, the property developer already had an agreement with China’s Sinopharm to collaborate on the sale of medical industry-related equipment and real estate. Furthermore, it had also signed an agreement with Sinomach Heavy Industry Corp to develop a facility to produce personal protective equipment (PPE)-related fabric.

Over at Taiping-based cleanroom glove manufacturer CE Technology Bhd, the company said it would embark on a RM50 million capacity expansion. It is adding three additional double-former glove-dipping lines to boost its raw nitrile glove capacity to 70.5 million pieces a month. The LEAP Market-listed firm added that it would increase its cleanroom post-processing capacity to 83 million pieces a month via the addition of two new facilities. Both additions are expected to be fully functional in one-and-a-half years.

IT solution provider Inix Technologies Holdings Bhd is joining the rush to start a rubber glove business. It is investing RM22.75 million to form a joint venture (JV) that will acquire a factory in Negeri Sembilan for medical rubber gloves’ production.

The announcement came after Macau tycoon Wan Kuok Koi was made its independent and non-executive chairman, while his local representatives Datuk Tan Choon Hwa and Lee Han Keat were made non-independent and non-executive vice-chairman and executive director, respectively. Wan has plans to deploy his rubber glove business in Malaysia.

Kanger International Bhd also unveiled that it had received a formal expression of interest from Dubai-based Constellation Holdings Ltd (a procurement agent for PPE and medical equipment to the United Arab Emirates’ Ministry of Health and Prevention). Kanger said Constellation was willing to collaborate either through: direct equity participation, such as a JV; or indirect equity holdings via an investment in Kanger, whereby the Emirati company becomes a substantial shareholder through a private placement.

The other new kids on the block include AT Systematization Bhd and HLT Global Bhd, which are also keen to get their respective slices of the pie. HLT intends to raise up to RM325 million via private placement to expand its rubber glove facilities.

It is worth noting that the existing players are ramping up their capacities to cater to the soaring demand as new players enter the industry.

The big four, namely Top Glove Corp Bhd, Hartalega Holdings Bhd, Kossan Rubber Industries Bhd and Supermax Corp Bhd, have announced plans to increase more production lines, including buying land to build new factories.

Likewise, smaller players such as Careplus Group Bhd and Comfort Gloves Bhd have made similar moves.

Currently, the glove makers are working round the clock to cope with new orders as demand spikes due to the Covid-19 pandemic. Will the demand continue to outstrip supply or will the reverse happen in a year’s time as more money is being poured into building new glove factories?

Source: The Edge Markets