LUSTER Industries Bhd is set to be among the first Malaysian company to provide engineering, procurement, construction and commissioning (EPCC) services for glove manufacturing plants in the US after the group received an upfront US$12.1 mil (RM50 mil) for the job.
This represents 50% deposit payment from American Nitrile LLC for its initial six Double Former Glove Dipping Lines.
This is after a month since Glovconcept Sdn Bhd, a 60%-owned subsidiary of Glovmaster Sdn Bhd which is a 56%-owned subsidiary of Luster, entered into an agreement with American Nitrile to provide EPCC services as well as glove technology solutions for up to 12 glove production lines.
“The US$12.1 mil deposit payment is a positive development to kickstart our US contract,” commented Luster’s deputy managing director Liang Wooi Gee. “It reflects our client’s interest in escalating the commencement of the EPCC project.”
As indicated in our agreement, Liang said Luster shall move forward with the orders for machinery once it has received the first deposit payment.
“We also expect to see works for the initial six production lines to start and shipment to commence next year,” he pointed out, noting that the deposit payment will help the group to mitigate the risk of its venture into North America.
“As this is our maiden foray into North America, the deposit payment is vital to safeguard some of the risks of our exposure,” he justified.
Luster which is more renowned for its plastic injection moulding and OEM (original equipment manufacturing) business has taken the opportunity to tap into the US market following rising interest in the country to reduce its reliance on Asia’s personal protective equipment (PPE), including masks, gloves and ventilators.
Being among the first Malaysian companies to provide the EPCC services for glove manufacturing set-ups in the US will give Luster an advantage over its competition while aligning itself with US President Joe Biden’s administration’s direction to reduce the dependency and reliance on PPE imports.
Recall that Luster had on October last year ventured into the glove manufacturing business by constructing a new 4,013 sq meter manufacturing plant in Banting (Selangor) alongside a one-and-a-half storey detached factory.
This joint venture with Fortune Tac Sdn Bhd – a specialist in setting up to operating glove production lines – provides an aggregate profit guarantee of not less than RM200 mil for the first two years of operations.
At the close of today’s trading, Luster was up 0.5 sen or 2.22% to 23 sen with 25.57 million shares traded, thus valuing the company at RM665 mil. – June 8, 2021
