Permaju-Anzo Tie-Up To Boost Glove Production

Permaju-Anzo Tie-Up To Boost Glove Production | Permaju Industries Bhd, which ventured into bottling and distributing sanitiser products and selling air purification products amid the Covid-19 pandemic has partnered Anzo Holdings Bhd to jointly expand the latter's glove manufacturing plant in Manjung, Perak.

Anzo is paying about RM55 million to acquire Wintrade World Sdn Bhd which owns the land (about 8 acres), factory, machinery and equipment.

It told Bursa Malaysia recently that the assets are ready to be mobilised and commissioned to produce 1.2 billion pieces of medical or nitrile gloves a year.

But Anzo needs to produce more than 3 billion pieces of the gloves as it has received orders worth a total of US$200 million from the United States and Europe.

Permaju and Anzo will work together and refurbish the existing 9 production lines at the factory, and add 5-7 new lines as soon as possible to start supplying the medical gloves to the United States and Europe as early as September this year.

It has been said that the total investment by Permaju and Anzo to refurbish and to expand the factory is around RM25 million.

Both Permaju and Anzo have done a feasibility study on the Manjung factory to look at the fastest way to move the production of the gloves.

There is a high possibility that Anzo will be getting more orders from the United States and Europe as the number of Covid-19 cases worldwide keep increasing.

The current confirmed cases stand at 12.5 million and the death toll is 560,000 worldwide. In the United States alone the confirmed cases are 3.29 million and the death toll stands at 137,000.

Investors seem to be bullish on Anzo and the stock has been trading at high volume since last month prior to the company announcing its move to glove manufacturing.

Interestingly, when CSTME Resource Sdn Bhd ceased to be a substantial shareholder in Anzo on July 8, the market seemed unfazed about it.

CSTME emerged as Anzo's largest shareholder on June 23 with an indirect 11.62% stake. The stock closed 13 sen that day.

CSTME disposed of its shares in Anzo on July 8 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 continued to trade actively. It closed 20 sen on July 10 and the average daily volume exceeded more than 100 million shares for 8 days.

We think Anzo will hit a second wave of high trading this week. It could hit limit-up or surge beyond 30 sen as we feel that CSTME's exit as a substantial shareholder could pave the way for a new substantial shareholder to come in.

There are already talks that a global fund from China or Hong Kong, as well as a major investor from the United States have been buying up shares in large amounts in Anzo.

Anzo is the cheapest stock on Bursa that is involved in glove manufacturing. Once production starts and it churns out 3 billion pieces of medical gloves a year, the stock could hit RM1.00, surging as quickly as Top Glove, Kossan and Hartalega.

Permaju has also been trading actively this past one week. The stock, which was hovering around 25 sen to 29 sen for three weeks rose to 36 sen on July 7. 

We expect high trading volume this week for Permaju and for the share to exceed 40 sen with its partnership with Anzo and other new announcements the company might make.

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