GIIB sees fortune in gloves despite being such a later comer to the industry

THAT it is better to be late than never is aptly true in the case of GIIB Holdings Bhd which decided to venture into the glove industry at this late stage of the glove boom cycle.

Moreover, its ‘lateness’ raises eyebrows because the company which was formerly known as Goodway Integrated Industries Bhd is itself a rubber product manufacturer company where its core business encompasses the manufacturing of technical rubber compounds, tyre-related business and property development.

After all, with the global roll-out of mass vaccination to achieve herd immunity reaching high gear, prospect of the glove industry is in doubt although the Big Four glove makers remain  adamant that the industry is sustainable on the back of attractive demand and average selling prices (ASP).

Yesterday, the company announced that the group through its 51% owned subsidiary GIIB Healthcare Products Sdn Bhd has proposed to include the manufacturing, sales and marketing of gloves as its principal business.

To recap, GIIB set up GIIB Healthcare in November last year with entrepreneur Yee Voon Hon who has over the years accumulated the required skillset, technical know-how and vast knowledge with regard to gloves’ dipping lines and establishing production lines to undertake the sales and distribution of gloves.

With the experience garnered, GIIB has proposed to venture downstream into the manufacturing of gloves. The gloves business has been thriving in the past year and is expected to grow with back-log orders until 2023.

To fund its diversification, GIIB has proposed to undertake a rights issue of up to 362.94 million shares on the basis of one rights share for every one existing GIIB share held together with up to 362.94 million free warrants on the basis of one warrant for every one rights share subscribed.

This proposed rights issue with warrants is expected to raise gross proceeds of up to RM65.33 mil based on the indicative issue price of 18 sen per rights share excluding proceeds from the exercise of the warrants.

The entitlement to the rights issue and free warrants will be determined on a book closure date to be announced later.

As a sign of confidence towards this proposed rights issue exercise, the substantial shareholders of the GIIB, namely Tai Boon Wee, Tai Qisheng, Wong Huo Siing and Wong Ping Kiong, had provided their respective irrevocable undertakings to subscribe for the rights issue with warrants to meet the minimum level of funds required.

GIIB’s CEO-cum-executive chairman Tai Boon Wee said the group’s venture into glove production is intended to turnaround the financial performance of GIIB and to identify additional streams of income.

“The management has taken into consideration the growing market demand and sustainability potential of personal protective equipment such as gloves and had decided to diversify into the gloves business,” he justified.

“Given the positive outlook of the glove industry where global demand is expected to reach 500 billion pieces in 2021, we are optimistic that the gloves business will contribute positively to the earnings of GIIB moving forward.”

With GIIB having conducted its feasibility study on its new venture, it’s up to be seen if the glove market will fare favourably to the company and other glove makers especially with recent reported surge of COVID-19 cases in Europe. – March 19, 2021

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