Anzo to Raise a RM500 Million Bond via J.P.Morgan or Macquarie

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Anzo to Raise a RM500 Million Bond via J.P.Morgan or Macquarie

Anzo Holdings Bhd is targeting J.P. Morgan and Macquarie Group to help issue a RM500 million bond for the company to raise funds so it could expand its glove manufacturing plant in Manjung, Perak to the maximum capacity.

  

The Main Market-listed firm is paying about RM55 million to acquire Wintrade World Sdn Bhd which owns around 8 acres of land, 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.

The 1.2 billion pieces of medical gloves will be produced using the current 9 production lines at the factory. But we understand 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. To meet these orders, we estimate that Anzo will need around 15 production lines to operate at their full capacity.

  

We hear that Anzo has to start supplying the gloves to the United States and Europe from October this year, and to go full swing from the first quarter of 2021. Anzo is expected to use part of the money raised from the bond issuance to increase the production lines from 9 to 15, and to further expand the plant capacity.

  

We disclosed recently that Anzo is forming a joint venture with Permaju Industries Bhd to jointly expand the glove manufacturing plant. Both Permaju and Anzo will require an initial RM20 million to RM25 million to refurbish the existing production lines. 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, and there is a shortage worldwide for medical or nitrile gloves.  We do see Anzo's seriousness in getting the glove factory running soon. Eventually we think glove manufacturing will become Anzo's core business and it would earn a substantial amount or over RM100 million in net profit from this business.

  

Anzo makes quality timber doors and it is also involved in property development, and more recently, supplying copper scrap to South Korea via CSTME Resource Sdn Bhd. 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 recent exit as a substantial shareholder of Anzo 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.

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