Are Retail and Institutional Funds Also Eyeing Anzo?

Assalamualaikum dan salam sejahtera

Are retail and institutional funds also eyeing Anzo ?

Are retail and institutional funds now looking at Anzo Holdings Bhd, which recently got involved in glove manufacturing and has started to supply copper scrap to South Korea? There is speculation that some local and foreign retail and institutional funds, as well as bankers are interested in Anzo, which has been quite active in the market lately.

Anzo closed 4.5 sen or 25 per cent higher to 22.5 sen today at the closing at 12.30 pm. Interestingly again the stock traded in high volume. Some 217 million shares were traded.

Foreign funds are returning to Malaysia despite headwinds, indicating that investors have shaken off the panic triggered by the historic change of government in 2018, and the outbreak of Covid-19 since early this year.

While they are back in Malaysia, albeit at a slow pace, they are looking for active counters with a good business background to buy into.

  So why are they looking at Anzo?

Last week the company said it is buying a medical glove manufacturing plant in Manjung, Perak and will pay a total of RM55 million. It is buying the assets of Wintrade World Sdn Bhd including land, factory and machinery. The plant is said to have the capacity to produce up to 1.2 billion pieces of medical and nitrile gloves a year. Based on estimates, the revenue is expected to be in the region of about RM400 million.

Prior to this announcement Anzo said it has won a RM1.3 billion contract to supply copper scrap to a large steel maker in South Korea.  If you look at it, Anzo is definitely one of the better companies for retail and institutional funds to look at because there is good growth potential in the listed-firm.

Now let us look at the company's latest financial results.

Anzo posted a revenue of RM8.37 million in the third quarter ended April 30 2020, which is five to six times more than what it recorded in the preceding year corresponding quarter. The company told Bursa that this was mainly due to the contribution made from the trading section of the construction division, which provided RM7.5 million (2019: nil) turnover during the quarter.

Anzo's timber division, which makes quality wooden doors, among other things was badly affected by the movement control order which was implemented in March 2020. The division contributed only RM900,000 (2019: RM1.5 million) turnover during the period.

The company said that because there were better operating results, it recorded a minor loss of only RM2,000 compared to a loss of RM1.03 million in the previous year's corresponding quarter. For the nine months to date, the company's revenue and gross profit increased to RM15.51 million and RM1.38 million  respectively.

As a result, its pre-tax loss reduced by almost half, from RM2.7 million in 2019 to RM1.39 million in 2020. If you study the above, this shows that Anzo is moving in the right direction and will soon be out of losses and making profits in years to come, thanks to its venture into glove manufacturing.

THE END