KUALA LUMPUR: Inix Technologies Holdings Bhd (ITH) today signed a share sale agreement (SSA) with L&S Gloves Sdn Bhd (LGSB) for the acquisition of 51 per cent stake in the glove manufacturer.
Completion of the acquisition would result in an immediate earnings recognition from LGSB existing two production lines, which are located in Beranang, Selangor.
Upon the completion of total additional 12 lines within 2021, it is expected to generate an annual turnover of RM200 million based on the glove production capacity of 1.4 billion glove pieces per annum.
"The signing of the share sale agreement is another step taken by ITH to venture into the glove manufacturing business.
"With this agreement, we have now officially completed our acquisition of 51 per cent stake in LGSB. We are excited with this development as this would help us penetrate into the glove industry instantaneously.
"This would also provide us with an immediate revenue recognition from the existing two production lines, to turnaround the company," ITH executive director Siva Kumar Kalugasalam said in a statement.
Siva said ITH is already in the midst of commissioning an additional two production lines by February this year in order to meet the growing gloves demand.
The existing daily production gloves of LGSB are sold out in advance, and delivery to customers are done on a daily basis, pointing to an adequate demand for gloves in the market.
"We are already moving ahead to add two production lines by February this year. Currently, it is already at a 70 per cent completed and we are confident that it would be commissioned next month," Siva said.
Inix chairman Tan Sri Syed Mohd Yusof Syed Nasir said the group will continue to invest into the expansion of its production capacity from now onwards.
"We are committed and determined to ensure that our new business in the glove manufacturing industry would grow. Given the strong demand that far surpassed the existing supply, we are looking to expand our glove production capacity.
"As LGSB has sufficient orders that could sustain for the next two years, we plan to expand our production capacity to 14 production lines within the next twelve months, with a total investment of not less than RM50 million," Syed Mohd Yusof said.
While the recent development of vaccines it has not dwindle the demand for gloves as compared to the initial stages of the Covid-19 pandemic, demands for gloves continue to outstrip supply amidst a structural shift in hygiene awareness.
This is despite the expansion in production capacity by existing glove manufacturers as well as the emergence of new glove manufacturers.
Siva pointed out that the average selling prices (ASP) for gloves has continued to be on an uptrend, albeit at a slower pace than the initial spike seen following the pandemic.
"We are confident that a permanent structural shift in hygiene awareness will support demand for gloves. This is especially the case for countries in the Asia region like China.
"As 97 per cent of LGSB's current production is exported to China and India, we are confident that ITH is in a good position to tap into the growing demand in this region and Europe going forward," Siva said.