Permaju Industries Bhd (Permaju) and Anzo Holdings Bhd (Anzo) will jointly expand a glove manufacturing plant in Manjung Perak, which could cost about RM25 million.
The amount is also to refurbish the factory’s existing 9 production lines and to add 4 or 6 new lines to meet the increasing orders coming in from the United States and Europe.
People who are aware about this said that, Permaju and its consultants have done a feasibility study on the Manjung factory to determine the fastest way to get the factory to produce over 3 billion pieces of medical or nitrile gloves per annum.
Anzo is paying RM55 million to acquire a company called Wintrade World Sdn Bhd which owns the land, factory, machinery and equipment.
The assets are ready to be mobilised and commissioned to produce 1.2 billion pieces of medical and nitrile gloves a year but Anzo needs more than 3 billion pieces a year to meet the existing orders from the United States and Europe worth about US$200 million.
Looks like Permaju and Anzo have to speed up refurbishing and expanding the factory as the outbreak of the disease is getting worse and there is currently a shortage in the supply of medical or nitrile gloves worldwide.
It seems to me Anzo is moving ahead with its expansion, both in copper and glove manufacturing despite CSTME Resource Sdn Bhd’s exit from the company on July 8
CSTME emerged as Anzo’s largest shareholder on June 23 with an indirect 11.62% stake. The stock closed 13 sen on the day this was announced to Bursa Malaysia.
On July 8, CSTME disposed of its shares in Anzo via the open market. CSTME sold a total of about 115 million shares at 23 sen worth about RM25 million. It sold the shares at 81 per cent higher than its buying price.
Even though CSTME sold its shares in Anzo, the stock traded actively. It closed 20 sen on July 10 and the average daily volume exceeded more than 100 million for 8 days.
Despite CSTME’s exit from Anzo, their copper deal is still moving ahead and it is business as usual for both the companies.
Last month Anzo secured a RM1.3 billion contract to supply copper scrap over 40 months to a steelmaker in South Korea effective from July 1.
Anzo and its subsidiaries entered into a supply agreement with CSTME, 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 11, it has supplied up to 600 tonnes worth almost RM14 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.
This is quite possible given the high trading price for gloves, which is at US$75 per box of 1,000 pieces. It was also reported that copper prices will stabilize in the coming quarters despite a recent surge in the red metal’s value.
Three-month copper futures on the London Metal Exchange (LME) broke the $6,000-a-ton threshold by the end of June — a far cry from its low of around $4,626.50 at the height of Covid-19 fears in March.
On Monday (July 6), three-month copper on the LME gained 1.2% to trade at around $6,088 a ton, Reuters reported. The copper rally over the past month from $5,700 a ton to over $6,000 a ton has occurred against a backdrop of flat to falling equity prices and bond yields, leaving copper looking overvalued by $220 to $420 per ton based on these historical relationships.
Many believe that CSTME’s exit from Anzo is to pave the way for a global fund from China and Hong Kong to come in. This fund from China or Hong Kong has been slowing buying up shares in Anzo and could emerge as a new substantial shareholder soon.
A global investor from the United States is also believed to be eyeing Anzo and is said to have taken up some shares in the company.
We can’t wait to know who they are and we do believe their entry into Anzo is set to fly the stock to a new high. Some traders believe Anzo has the potential to hit RM1.00 and I believe it too.
Anzo is currently the cheapest trading stock on Bursa, which is involved in glove manufacturing and copper trading. Just take a look at how high Top Glove, Hartalega and Kossan are trading now!
