Aspen and CMY Capital in joint venture to make, distribute rubber gloves

14 Aug 2020 / 00:33 H.

PETALING JAYA: Singapore-listed Aspen (Group) Holdings Ltd, the co-developer of Aspen Vision City at Batu Kawan, Penang, intends to diversify its business to include the manufacturing and distribution of rubber gloves.

Its wholly owned subsidiary, Aspen Vision All Sdn Bhd, has agreed to participate in a joint venture arrangement with CMY Capital Sdn Bhd in which Aspen Glove Sdn Bhd (AGSB) will act as the special purpose vehicle for the operation of the proposed new business.

The initial investment of RM105 million for phase 1A is targeted to produce a total capacity of 1.1 billion pieces of gloves per annum from Q3’21.

CMY is founded by prominent Malaysian businessman Tan Sri Chua Ma Yu.

“Despite most existing glove makers in Malaysia running at full capacity, there are still production backlogs of four to six months in fulfilling orders. Hence, the group believes that the demand for gloves is likely to remain firm until end 2021, especially from the healthcare, F&B establishments, as well as the hospitality and travel sectors,“ Aspen said in a statement.

The group has been in discussions with various global market supply chain buyers from diverse geographical locations who have shown strong interest to buy and commit to forward purchase up to the capacity of AGSB productions.

To this end, AGSB will continue to engage buyers from various countries from the private sector to the public sector to secure sales on a forward booking basis as we finalise the project milestone in the months to come.

Aspen group president and group CEO Datuk M. Murly said although being a new entrant during a period of strong market demand, it believe that global demand for rubber gloves will steadily increase in the long run and with strategic planning around pricing, competitors, marketing strategies and distinctive positioning, the group will be able to penetrate the market and gain a reasonable market share.

AGSB will focus on the manufacturing of high-quality latex and nitrile gloves for the medical industry and industrial use. The focus for phase 1 of the business will be on examination gloves which will cater solely for the export market.

For Phase 1B, AGSB intends to ramp-up the capacity to 3.5 billion pieces of gloves a year by Q2’22. AGSB anticipates a further investment of RM40 million to complete Phase 1B.

Subsequently, depending on market demand, AGSB may complete another three phases within the next three years whereby upon completion of Phases 1, 2, 3 and 4, AGSB can expect to produce a total of 14 billion pieces of gloves annually.

The initial investment of RM105 million required to complete Phase A is expected to be funded through capital injection by shareholders of AGSB.

For the funding requirement of Phase 1B, AGSB may consider the option of bringing in new investors, at higher valuation. As and when necessary and deemed appropriate, the group may explore secondary fundraising exercises by tapping into the capital markets including but not limited to share placements and/or issuance of debt instruments.

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