PDZ ties up with German-based Protev Asia in new rubber glove venture to penetrate hospital, military market in EU

TheEdge Mon, Nov 15, 2021 09:56pm - 2 years View Original


KUALA LUMPUR (Nov 15): PDZ Holdings Bhd, which was the top fifth most actively traded stock on Monday, has inked a memorandum of understanding with Protev Asia Ltd to penetrate the hospital and military market for rubber gloves in the European Union (EU).

Protev director Herbert said EU hospitals and military agencies are interested to stockpile rubber gloves in preparation of potential future biological threat application.

"With Protev being a reputable procurement and project management company, together with PDZ, we are going to tap into these niche premium markets in the EU," he said in a statement on Monday.

Besides the EU, the partnership also intends to target other countries with high Covid-19 infection rates such as the US, Africa, South America and India.

According to PDZ, the demand for personal protective equipment to curb the pandemic has boosted the demand for medical gloves since the outbreak of the Covid-19 pandemic, and that while many countries globally have rolled out vaccines to control the Covid-19 pandemic, global demand for rubber gloves is expected to remain high.

This, it said, is premised on the continuous use of medical gloves among healthcare professionals worldwide during mass vaccination, supported by heightened awareness of the use of rubber gloves as a general protection against viruses and other diseases.

PDZ executive director cum chief executive officer Datuk Tan Chor How Christopher said under the company's diversification into the rubber glove industry, it plans to instal and commission up to eight double former glove-dipping lines in phases.

"[This is] to focus on manufacturing of medical-grade nitrile gloves which is expected to yield a total production capacity of around 1.94 billion pieces per annum with full operation within 36 months, for an expected return on equity of at least approximately 10%," he said.

PDZ said the total capital outlay to commence the glove business is RM104.8 million, comprising RM25 million for the acquisition of factory building, RM56.7 million for capital expenditure, and RM22.1 million for working capital, including the purchase of raw materials, with the remainder RM1 million for professional fees.

It plans to partly fund the new venture with RM19.9 million reallocation of funds raised in a previous rights issue, and RM56 million from the issuance of 400.25 million new shares and 133.4 million free warrants (PDZ-WC) under its recent rights issue. The balance will be financed by internal funds, bank borrowings, and future fundraising exercises if required.

PDZ has also identified a 140,000 sq ft single-storey detached factory in Kulai, Johor erected on a 6.53-acre land that could cater for the future expansion of the new glove business.

PDZ's share price settled 32% or four sen lower at 8.5 sen on Monday, valuing the company at RM42.62 million. It saw 72.71 million shares traded.

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