PETALING JAYA: AE Multi Holdings Bhd expects to see a turnaround in its performance from FY21 onwards, following the inking of a collaboration agreement with Ripcol Engineering Sdn Bhd to become a turnkey solutions provider to companies that intend to venture into glove manufacturing.
AE Multi executive director Choong Lee Aun said that since the start of the Covid-19 pandemic at the end of last year, there have been a number 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, which is to provide a turnkey solution for customers who are interested to venture into this business,” he said.
The collaboration would provide a one-stop solution in the setup of glove-making facilities, from design, fabrication, installation, testing and commissioning of the facility.
Given the strong demand for gloves, Choong believes 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 on 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 to 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,” he said.
While the collaboration 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 numbers of interested parties to branch into the glove manufacturing industry,” Choong said.
According to a Research and Markets report titled “The Disposable Gloves Market – Global Outlook and Forecast 2020-2025”, the disposable gloves market size is expected to grow at compound annual growth rate of over 14% during the period 2019-2025.
Despite the ramp up in production recently, most of the large glove manufactures in Malaysia have indicated that they are witnessing a structural step-up in demand for gloves, stemming from the increase in glove usage due to a change in user behaviour and increased hygiene awareness.
Concerns over whether glove makers could meet the additional demand of about 120 billion pieces of gloves in the next three years have also led to new players in the market.
Source: The Sun Daily
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