Supermax seeks dual listing on SGX as Covid-19 boosts earnings


SUPERMAX Corp Bhd is taking a page out of rival Top Glove Corp Bhd’s fundraising playbook by seeking a secondary listing on the Singapore Exchange Ltd (SGX).

The proposed dual listing on the SGX, the glovemaker stated, is to widen the company’s shareholder structure base, its exchange filing yesterday noted.

The proposed SGX listing plan is still at an initial stage and the structure has not been finalised, the company revealed, adding that more details will be provided in due course.

“The proposed SGX listing, if undertaken, will serve as a platform for Supermax to pursue growth opportunities by providing additional channels for Supermax to raise funds, if necessary.

“The proposed SGX listing will also be subject to approvals from all the relevant authorities in Malaysia, Singapore and other applicable jurisdictions, as well as approval from the company’s shareholders,” Supermax said in the announcement yesterday.

SGX has about 40% of listed companies and over 80% of listed bonds originating outside of Singapore and established trading linkages across the region and Europe, making it Asia’s most international and connected exchange.

IHH Healthcare Bhd is another Malaysian-based company that has cross-listed on the SGX.

Top Glove, which is also listed on SGX, is currently evaluating a dual primary listing on the Hong Kong Stock Exchange.

On a separate matter, Supermax posted a net profit of RM789.5 million in the first quarter ended Sept 30, 2020 for the financial year 2021 (1QFY21), nearly a 32-fold increment from RM24.7 million profit it made in the same period last year.

Revenue increased 265.6% year-on-year to RM1.35 billion in 1QFY21, with the group stating that the performance was mainly contributed to an exponential increase in demand globally for medical gloves and other personal protective equipment following the global outbreak of the Covid-19 pandemic.

The performance was backed by higher sales, additional production capacity of the newly commissioned lines at Plant 12 Block A lines and higher average selling prices (ASPs) each month since March for both its manufacturing and distribution divisions.

Supermax added that its financial position strengthened dramatically with a net cash position with cash and bank balances amounting to RM2.36 billion as of Sept 30, 2020, mainly due to high collections from increased sales with customers paying between 30% and 50% deposits in advance to secure supply.

“Our products are sold to over 165 countries, and we currently export 58% of production under our own brands via our own distribution centres and 40% through independent distributors. The remaining 2% is for original equipment manufacturer production.

“Due to current robust demand, we are taking the opportunity to build relationships with new customers and distributors with anticipation that they will continue with repeat orders post-pandemic,” the company said in a statement yesterday.

Out of the 165 countries, the company said the largest contributor was the Americas region which contributed 51% of revenue in FY20 ended June 30, 2020.

Asia/Oceania and Europe each contributed 23% to FY20 revenue. In terms of product segmentation, Supermax said 68% is from nitrile powder-free gloves, followed by 25% from latex powder-free, 5% from powdered latex and 2% from surgical gloves.

Going forward, Supermax said demand continues to increase and it is in an oversold position along with ASPs.

The firm is now building five glove manufacturing plants concurrently and they are scheduled for completion progressively between now and 2022. The new plants will add 22.25 billion to production capacity, bringing the group’s total capacity to 48.42 billion gloves by end-2022.

Supermax, one of the top four rubber glove manufacturers in Malaysia, is expected to invest a total capital expenditure (capex) of RM1.39 billion for the new plants.

It is also building glove manufacturing plants closer to customers in the US and the UK. The company said it is working with various government agencies in the US to identify a suitable manufacturing site.

In the UK, Supermax noted that it is studying the industrial land that Supermax UK acquired earlier to see if it is suitable for use in glove manufacturing.

The company said it will kickstart the US and the UK projects in the first half of 2021 (1H21) and targets to commission in stages starting 1H22.

The capex earmarked for the US facility is US$300 million (RM1.25 billion) for Phase 1 and US$250 million for Phase 2, while allocating £50 million (RM271.5 million) for the UK plant.

Supermax added that it has decided to enter into face mask manufacturing in Malaysia and Canada to complement its existing global supply chain built over the years.

The company said the delivery of millions of masks to the Canadian government started in early October 2020.