PDZ, Protev ink MoU to penetrate EU rubber glove market
15 Nov 2021
PDZ Holdings Bhd has inked a memorandum of understanding (MoU) with Protev Asia Limited (Protev) to penetrate the hospital and military rubber glove segment in the European Union (EU).
PDZ executive director cum chief executive officer Datuk Christopher Tan Chor How said the company plans to install and commission up to eight double former glove-dipping lines in phases to focus on the manufacturing of medical-grade nitrile gloves.
“It is expected to yield a total production capacity of around 1.94 billion pieces per annum with full operation within 36 months, for an expected return on equity of at least 10 per cent.
“The total capital outlay to commence the gloves business is RM104.8 million, comprising RM25 million for the acquisition of factory building, RM56.7 million for capital expenditure, RM22.1 million for working capital, including purchasing of raw materials, staff salaries, and recruitment drive, while the balance of RM1 million is for professional fees,” he said in a statement today.
According to Tan, the diversification initiative will be partly funded from the reallocation of funds raised in the previous rights issue of RM19.9 million and RM56.0 million raised from the issuance of 400.25 million new shares and 133.4 million free warrants pursuant to the recent rights issue.
The balance of the capital outlay would be funded by bank borrowings, internally generated funds and future funds raising exercise as and when required, he added.
PDZ has identified a 140,000 square feet single-storey detached factory building in Kulai, Johor, which is erected on a 2.64-hectare land, which could cater for any future expansion of the gloves business that is currently being planned.
“The EU hospitals and military agencies are interested to stockpile rubber gloves in preparation for potential future biological threat application.
“With Protev being a reputable procurement and project management company, together with PDZ, we are going to tap into these niche premium markets in the EU,” the company said.
Meanwhile, PDZ intends to recruit up to 152 employees to undertake various roles for the gloves business.
In terms of target markets, PDZ said given its collaboration with Protev, the company intends to focus on the EU market, while also serving other countries with high COVID-19 infection rates such as the United States, Africa, South America, and India.
Protev is a company incorporated in the British Virgin Islands, based in Hong Kong.
It is a specialist in procurement and project management with established business networking across Europe, covering industries, namely glove, automotive, technology and telecommunications, network services, solar panel solutions and digital information display solutions.
The Malaysian Rubber Glove Manufacturers Association has forecast the global demand for rubber gloves to reach 420 billion pieces in 2021, an increase of 10.53 per cent from 2020.
At close, shares of PDZ fell 32 per cent to 8.5 per cent with 72.71 million shares transacted.