Frankly Speaking: Jumping the gun?

This article first appeared in The Edge Malaysia Weekly, on October 26, 2020 - November 01, 2020.
Frankly Speaking: Jumping the gun?
-A +A

Mah Sing Group Bhd, Luster Industries Bhd and Hong Seng Consolidated Bhd are the latest companies to enter the rubber glove manufacturing sector.

As usual, the news provided a nice boost to the counters. Shares of Mah Sing, for instance, jumped last Tuesday to a near-three-year high of RM1.47, from merely 72.5 sen before the announcement.

In the following days, the shares gave up some gains and ended trading last Friday at RM1.04.

Mah Sing was quick to give further details of its plans, revealing that it has commenced additional piling works at its glove manufacturing factory in Kapar, Klang in Selangor to meet its targeted production date of April 2021. Machines will be installed immediately after it has completed the piling works by next month.

In its filing with the stock exchange, the property developer said it has to hold an extraordinary general meeting to seek shareholders’ approval for the new venture, which may contribute to more than 25% of the company’s net profit going forward.

Did Mah Sing jump the gun? Shouldn’t it wait for shareholders to give their assent before commencing with its plans?

Perhaps management is fully confident of shareholder support for the proposed business diversification given the bumper profits that glove makers have enjoyed since the outbreak of Covid-19. In any event, should a company get the market overly excited before it receives shareholder approval for its plans?

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.