KUALA LUMPUR: TG Medical Sdn Bhd, the wholly-owned glove making unit of Top Glove Corp Bhd, is buying a 3.44 plot of freehold land in Klang for RM51.5 million ($12.6 million) from YKGI Holdings Bhd to expand its production.
Star Shine Marketing Sdn Bhd, YKGI’s wholly-owned unit, signed the sale agreement for the land located in the Sungai Puloh industrial area. In a filing with Bursa Malaysia, the world’s largest rubber glove makers said, the property consists of a single-storey detached factory and annexed double-storey production office and five-storey integral office building, a guardhouse, a refuse chamber and a pump house.
YKGI said that the property which was previously used for the manufacture of steel pipe for Peninsular Malaysia, ceased its operations due to the highly competitive nature of the business. “The proposed disposal is an opportunity for the company to monetise its investment to raise funds for the working capital of the group,” YKGI revealed. Funds from the acquisition will also go to repaying its bank borrowings and defray estimated expenses in relation to the proposed disposal.
YKGI which owns manufacturing plants in both Kuching and Selangor, was affected by the depressed selling prices of steel products in recent years due to the influx of cheap imported Chinese steel products. Back in March, the flat steel products manufacturer announced plans to undertake asset right-sizing to raise money to finance its growth which includes the disposing off unutilised and unproductive assets.
Then in financial year ended Dec 31, 2015, YKGI incurred a group pre-tax loss of RM19.8 million which was an improvement from the RM32.1 million loss incurred in the financial year of 2014. YKGI Group managing director Datuk Soh Thian Lai said earlier this year, “Under these challenging and sluggish market conditions, performance of domestic steel companies generally had declined. Most companies saw reduced sales volume, experienced margin erosion which led to net losses.”
Top Glove currently has a secondary listing in Singapore with hopes of enhancing and diversifying its investor base to better facilitate a global brand expansion. With a market capitalisation of S$2 billion, the listing of Top Glove brings the total number of SGX-listed healthcare companies to 33, with a combined market capitalisation estimated at S$38 billion. The acquisition is expected to be completed by the first quarter of 2017.
