J.P. Morgan and Macquarie to raise RM500 million for Anzo’s glove factory?

J.P. Morgan and Macquarie Group will raise RM500 million through bonds for Anzo Holdings Bhd who wants to raise funds to expand its glove manufacturing plant in Manjung, Perak.

Anzo is set to be a big player in the glove manufacturing business in Malaysia after it acquires the land, factory, machinery and equipment owned by Wintrade World Sdn Bhd for RM55 million.

We heard Anzo will be signing this week the Sales and Purchase Agreement (SAP) with Wintrade World Sdn Bhd to purchase all the latter’s assets. The earliest the SAP will be signed is this Thursday (July 16).

When Anzo signs the SAP, it will officially become a glove manufacturer. It may not be as big as Top Glove, Kossan and Hartalega as a start but it will get there through expansion over the years.

Anzo may be buying just one glove factory but I am sure the company will have plans to build another factory in another suitable location to meet growing demand for medical or nitrile gloves caused by the global Covid-19 pandemic.

Anzo said 2 weeks ago that the assets in Manjung are ready to be mobilised and commissioned to produce 1.2 billion pieces of medical or nitrile gloves a year.

The 1.2 billion pieces of medical gloves will be produced using the current 9 production lines at the factory.

Anzo is required to produce more than 3 billion pieces of medical gloves as it has orders in hand worth US$200 million from the United States and Europe. To make 3 billion gloves, Anzo requires at least 15 production lines to operate at their full capacity.

Under the deal with the buyers from the United States and Europe, Anzo is expected to start supplying the gloves from October this year and go full swing early next year.

Anzo requires money to refurbish the factory as well as the production lines, machinery and equipment. It will then add 6-7 new production lines. Since the factory is located on 8 acres it will have more room to increase the production lines.

Permaju Industries Bhd will come in as a joint venture partner for the refurbishment and expansion.

Now there is talk that Permaju could also be eyeing the glove manufacturing business. We will try to source around for more information on this.

It seems Permaju and Anzo have completed a feasibility study on the Manjung factory to look at the fastest way possible to move the production of the gloves.

Anzo expects more orders from the United States and Europe as the number of Covid-19 cases worldwide keep increasing, and there is a shortage worldwide for medical or nitrile gloves.
It looks to me Anzo has ventured into glove manufacturing at just the right time.

Anzo’s share price has been moving steadily especially since it announced winning a RM1.3 billion contract to supply copper scrap over 40 months to a steelmaker in South Korea effective July 1.

Anzo and its subsidiaries entered into a supply agreement with CSTME Resources Sdn Bhd, which holds an AP licence to export the goods. CSTME agreed to buy birch/cliff copper scrap or berry/candy copper scrap from Anzo and export the products to the steelmaker in South Korea.

Anzo is expected to supply 60,000 tonnes of copper scrap to CSTME at RM23,000 per tonne over 40 months. CSTME has been supplying the copper to South Korea effective July 1. As of July 13, it has supplied up to 650 tonnes worth almost RM15 million to RM16 million.

With this copper deal and the orders it is getting for medical gloves, Anzo is set to post more than RM200 million in net profit in its next financial year ending July 31, 2021 and onward. Anzo may sell a box of 1,000 pieces at US$75.

Anzo’s entry into the copper business and glove manufacturing has attracted big global funds from the United States, China and Hong Kong who have been buying up shares in the company since early June this year.

The stock has moved from a low of 5 sen in June to touch 26 sen last week.

We think Anzo will hit a second wave of high trading this week. It could hit limit-up or surge beyond 30 sen.

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