Another newcomer in the glove manufacturing business?
We just heard that Mlabs Systems Bhd will soon be involved in glove manufacturing and healthcare in partnership with an existing manufacturer in the market who has been looking to expand.
It seems Mlabs was approached by the said manufacturer who wants to tap on its expertise in providing solutions to the pharmaceutical industry.
Malaysia is the world’s largest source of medical gloves, with a market share of about 65 per cent. This year alone local manufacturers are expected to churn out as many as 240 billion pieces of gloves because of Covid-19.
According to the Malaysian Rubber Glove Manufacturers Association, it guarantees that every glove manufacturer in Malaysia today will expand.
There is a global shortage for medical or nitrile gloves due to the outbreak of the Covid-19 pandemic.
There are currently 13.1 million confirmed Covid-19 cases worldwide, and the total death count is 572,000 with the majority of the cases in the United States, followed by Brazil, India and Russia.
This makes Mlabs entry into the glove business just right as there are a lot of orders coming in now from the United States and Europe and Malaysian glove manufacturers are struggling to meet the orders.
Even if another 4 or 5 companies enter the glove business in Malaysia, the global shortage will continue.
I have been following Mlabs closely. The stock has traded actively in recent times. It had jumped from 2 sen in the past few weeks and is currently hovering around 5 sen. Today the stock saw some 40 million shares traded.
A lot of experts are saying that Mlabs is one of the cheapest stocks on Bursa and there is a huge potential for the stock to surpass 10 sen. I think the stock will exceed 10 sen soon enough after word goes around that the company has ventured into glove manufacturing and healthcare.
The company has also made a few positive announcements this year. In April, Mlabs signed a collaboration agreement with Ipharmarecare (Malaysia) Sdn Bhd which provided an opportunity for the group to expand its solution into the pharmaceutical industry throughout Southeast Asia, including Malaysia.
Mlabs will provide its video-conferencing products to Ipharmacare to complement the latter’s online pharmaceutical platform. Ipharmacare in turn will promote Mlab products, including video conferencing systems, messaging systems and network solutions, to its platform users and/or independent pharmacies.
The company has also announced a private placement of up to 267.4 million new ordinary shares, representing 30 per cent of the total number of issued shares in the company, to independent third-party investors to be identified later.
In a filing with Bursa, Mlabs said that based on an illustrative issue price of RM0.0243 per placement share, the gross proceeds to be raised from the proposed private placement will be utilised for working capital, among others.
As at March 31, 2020, Mlabs has no borrowings or debt securities in the company.
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