(Oct 23): Top Glove Corp, the world’s largest rubber glove manufacturer, is likely to announce a new acquisition within the next month to boost the company’s growth momentum.

“We are very active now, [and] we are very hungry for M&As. But we must look for the right food [right company] to eat, we cannot simply eat,” Top Glove chairman Lim Wee Chai tells reporters at a briefing to discuss the group’s 4QFY2017 ended August. “We are very close to closing a deal, we will announce it [the acquisition] within one month. We’re almost at the end. Wait for our good news.”

In addition, Lim says the group is aiming to grow its market share to 30% by 2020 from 25% currently. “As we announced earlier, [securing] 30% of the market share through organic growth is too slow, so we need to go through M&A. We’re always looking for areas to improve in terms of sales, capacity and profit,” he says. Declining to divulge more, Lim adds that the acquisition target is “interesting and good” for Top Glove.

In May, Top Glove’s wholly-owned subsidiary GMP Medicare agreed to buy two rubber glove-making facilities. One facility is on freehold land in Seremban, Negri Sembilan. The other is on leasehold land in Muar, Johor. GMP Medicare will pay RM39 million ($12.5 million) for the two assets, which are expected to give the group greater access to China.

The group is also in the midst of constructing two new manufacturing facilities. Factory is targeted to be operational by March 2018, and Factory 32 is set to commence production by December 2018.

Lim says the two facilities will increase Top Glove’s total number of production lines by 78 lines to 628. Production capacity will increase by 7.8 billion gloves a year to 59.7 billion.

Separately, Top Glove has invested about RM75 million in a new condom business as it seeks to maintain its growth momentum via diversification. Lim says the group has already started the preparations for its condom manufacturing facility. “We have already identified the factory, [and are] now renovating and restoring the machines,” he says. The facility is expected to be operational in 2018. “For the ini tial stage, we will have two production lines, which we will increase to 10. Hopefully, within two years, we will have 20 production lines.”

On Oct 13, the group announced a 51% increase in its earnings for 4QFY2017 to RM98.62 million from RM65.32 million a year ago. Revenue climbed 25% to RM902.42 million from RM722.11 million. It declared a final dividend of 8.5 sen a share.

Its full-year earnings fell, however, to RM332.7 million from RM360.73 million. This was despite revenue rising 18% to RM3.41 billion, boosted by a 7% increase in sales volume. Bursa Malaysia-listed shares in Top Glove closed Oct 17 at RM6.33, down 0.9%. The Singapore-listed shares closed at $2.03.

<i>Neily Syafiqah Eusoff is a writer with</i> The Edge Malaysia

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