UNDETERRED by the enormous uncertainties affecting glove-related stocks, PNE PCB Bhd is taking a plunge into the rubber glove manufacturing and distribution industry.
The company’s wholly owned subsidiary, PNE Glove Sdn Bhd intends to set up five glove production lines with each yielding approximately 300 million pieces per year.
On an annual basis, PNE PCB expects to churn out around 1.5 billion pieces of gloves to narrow the global gloves demand supply gap.
To that end, PNE Glove has entered into a lease agreement with GP Autobat Sdn Bhd, a wholly owned subsidiary of GPA Holdings Bhd, to lease certain industrial buildings located in Klang, Selangor to house its future glove production operations.
“The group’s decision to diversify its business into the production of gloves comes amid the swell in demand as a consequence of the COVID-19 pandemic,” justified PNE PCB.
Based on bullish projection by the Malaysian Rubber Glove Manufacturers Association (MARGMA), exports of rubber gloves from Malaysia is expected to reach between 250 billion and 270 billion pieces in 2020, an increase of between 33.69% and 44.39% from 2019.
Against the backdrop of raging COVID-19 cases, MARGMA projects an annual demand growth rate of around 15% to 20% with global demand set to hit 420 billion pieces of glove and Malaysia’s projected export revenue of RM34 bil in 2021.
The current global shortage of rubber gloves is anticipated to last beyond the first quarter of 2022.
“The capital expenditure to commission and install all five glove-dipping lines and related facilities is expected to total approximately RM60 mil which includes the set-up of the automated glove dipping lines, purchase of equipment and components such as formers and moulds, and other necessary systems and certifications,” noted PNE PCB.
“The estimated costs to set up each glove-dipping line are subject to the prevailing market price of the machines at the time of order and payment as well as any further negotiations with the machine suppliers/vendors from time to time.”
Subject to the lead time for site preparation, installation of the new glove-dipping lines and availability of raw materials, the production of the rubber gloves is expected to commence in stages by 4Q 2021.
At the close of today’s trading PNE PCB was down 3.5 sen or 5.98% to 55 sen with 346,700 shares, thus valuing the company at RM195 mil. – Jan 7, 2021