ANZO GETS J.P. MORGAN AND MACQUARIE TO RAISE RM500 MILLION TO EXPAND GLOVE BUSINESS
Anzo Holdings Bhd is sailing high after winning a RM1.3 billion contract to supply copper scrap over 40 months to a steelmaker in South Korea, and then buying a glove factory, which could result in the company making more than RM100 million in net profit a year.
The company is acquiring the land, factory, machinery and equipment owned by Wintrade World Sdn Bhd for RM55 million.
Anzo may be signing the Sales and Purchase Agreement (SAP) with Wintrade World Sdn Bhd to purchase the assets as early as this Thursday (July 16).
This would mark Anzo's entry into the glove manufacturing business which is booming now due to the Covid-19 pandemic.
Anzo is believed to be getting J.P. Morgan and Macquarie Group to issue RM500 million worth of bonds to raise money for the plant expansion.
The company said 2 weeks ago that the assets are ready to be mobilised and commissioned to produce 1.2 billion pieces of medical or nitrile gloves a year, from running 9 production lines in the factory.
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. For this orders, Anzo may need 15 production lines to operate at their full capacity.
Anzo is expected to supply the gloves to the United States and Europe starting from this year October and onward.
But in order to get the whole factory and have a total of 15 production lines, Anzo requires strong capital to work things out.
It requires a substantial amount of money to firstly refurbish the existing 9 production lines, and then add another 6-7 new production lines to fully utilise the 8 acres of land the factory is situated on.
Anzo has formed a joint venture with Permaju Industries Bhd where both parties will refurbish and expand the factory together.
The initial investment required is RM25 million to just get the whole thing started.
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 may want to speed up things as it could get more orders from the United States and Europe as the number of Covid-19 cases worldwide keep rising, and there is a shortage for medical or nitrile gloves.
Anzo is the most active counter on Bursa lately.
The shares started to rise just before Anzo announced its RM1.3 billion copper win. 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.
Word is that 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 could be possible given the high trading price for gloves, which is at US$75 per box of 1,000 pieces.
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.