KUALA LUMPUR (Aug 10): Hartalega Holdings Bhd is buying a 60.57-acre piece of land in Labu, Sepang, Selangor for RM158.3 million to build additional glove manufacturing facilities (NGC 1.5), which will see its installed capacity increase by 19 billion pieces per year.
In a bourse filing today, the group said its wholly-owned subsidiary Hartalega NGC Sdn Bhd has accepted the offer for sale from Kumpulan Tanjung Balai Sdn Bhd for the land. TThe proposed acquisition will be funded by internal funds and/or existing credit facilities.
On the rationale for the acquisition, Hartalega said it is in line with the upsurge in demand of medical gloves across the globe due to the unprecedented global pandemic event. Covid-19 has created higher safety and hygiene awareness across all industries.
"As a result, the medical glove industry is expected to undergo a structural step-up in demand with rising awareness on the importance of hand protection,” it added.
It said the proposed acquisition will also enable the group to create greater value and earning potentials for its stakeholders as the land is located strategically adjacent to its existing NGC Sepang, where all necessary infrastructure is readily available.
“The existing expansion in NGC Sepang is scheduled to be completed by 2021. Upon completion, the annual installed capacity will increase to 44 billion pieces.
“Coupled with the previous acquisition of 95 acres of land in Banting to build NGC 2.0, total annual installed capacity will increase to 95 billion pieces upon completion by 2027,” it noted.
The proposed acquisition is not expected to have any material impact on the net assets and the earnings per share of the group for the financial year ending March 31, 2021.
At noon break, shares in Hartalega were 54 sen or 2.82% lower at RM18.60, valuing the group at RM61.9 billion. It saw 6.77 million shares traded.