AT a time when even the Big-Four glove makers are grappling with declining average selling prices (ASP), GIIB Holdings Bhd (formerly Goodway Integrated Industries Bhd) announced today that that it is rolling out its latex glove production.
The internationally recognised technical rubber compound specialist said its 51% owned subsidiary GIIB Healthcare Products Sdn Bhd has started its latex glove manufacturing facility in Nilai, Negeri Sembilan.
The glove manufacturing outfit has five double former glove-dipping production lines with a production capacity of 1.05 billion pieces of glove per annum. The production lines are interchangeable to produce latex or nitrile gloves.
GIIB said it will manufacture the latex gloves under its own brand “GIIB Healthcare” and serve as an original equipment manufacturer for local and international clients.
Under a ‘maximum scenario’ with production at full capacity and given the current average selling price of circa RM90 per 1,000 latex gloves, revenue contribution from this plant can reach about RM94 mil per annum.
For comparison, the group reported a revenue of RM36.6 mil for the 12-month period ended Dec 31, 2021.
“The launch of our first glove manufacturing plant today marks the group’s successful foray into the glove making scene,” GIIB’s CEO/executive chairman Tai Boon Wee pointed out in a media statement.
“In fact, we have already secured strong sales order for the year, showcasing the quality of our products and we expect the glove business to start contributing to our financial year ending June 30, 2023.”
For the record, GIIB had on April 27 announced the change of its financial year end from Dec 31 to June 30 to facilitate the recent investigation into the management and handling of its glove business and the accounts of the company and its subsidiaries.
On May 10, the company announced that its board has further extended the suspension of its executive director Wong Weng Yew for a period of 14 days (from May 10) pending it’s the finalisation of an investigation report by its external independent auditor to its investigative committee for review.
Delving on prospects, Tai expressed optimism that even in the post-COVID era, demand for gloves will remain strong in light of the heightened health awareness brought about by the pandemic.
“We expect the exports for rubber gloves to remain robust with growth in the double digit region,” he projected. “We are optimistic that this foray will provide the group with a sustainable recurring income stream and enhance the group’s bottom line going forward.”
In addition to a decline in ASP, the glove market is also facing an oversupply situation on the back of aggressive expansion by nitrile glove manufacturers from China which have doubled their capacity in a short period of time.
At the close of Friday’s (May 13) trading, GIIB was unchanged at 8.5 sen with 56,500 shares traded which gave the company a market capitalisation of RM50 mil. – May 16, 2022
