KUALA LUMPUR (March 10): Hartalega Holdings Bhd is acquiring RM288.69 million worth of land in Kubang Pasu, Kedah to house a new glove manufacturing facility.
In a bourse filing, the glove giant announced that its wholly-owned subsidiary Hartalega NSM Sdn Bhd (HNSM) had entered into a sale and purchase agreement (SPA) with Northern Gateway Free Zone Sdn Bhd (NGFZ).
NGFZ is a subsidiary of Northern Gateway Sdn Bhd (NGSB), which in turn is wholly owned by Ministry of Finance Inc (MoF Inc), and is the master developer of the Kota Perdana Special Border Economic Zone (Kota Perdana SBEZ).
The land in question is freehold and spans 101.17 ha (250 acres). Hartalega’s purchase of the land will be funded through internally generated funds and or existing credit facilities.
Hartalega noted that the acquisition marks its latest phase of growth, where an investment of RM7 billion to build 16 new manufacturing facilities over the next 20 years in the Northern Corder Economic region is planned.
“This will be part of our Company’s growth plans towards 95 billion pcs (pieces of gloves) by 2027. The Acquisition will enable to Company to benefit from the attractive incentive scheme offered by authority. In line with the Government’s aspiration to drive the economic growth in the northern corridor regions, the investment in Kota Perdana SBEZ is a fine example of public-private partnership project to spur the economic development and create multiplier effects to the surrounding communities and provide job opportunities,” it said.
At the same time, the acquisition comes at a time where demand for medical gloves has surged due to the Covid-19 pandemic. It said that the acquisition will allow the group create greater value and earnings potentials for stakeholders.
The acquisition is scheduled to be completed by March 2022, and is not expected to yield any impacts on its share capital, substantial shareholders’ holdings, net assets, earnings per share (EPS) or gearing for its financial year ended March 31, 2021 (FY21).
In a separate statement, Hartalega Chief Executive Officer (CEO) Kuan Mun Leong said that the group’s investment will further spur development in the northern region.
“Our aim is to cultivate a robust supply chain as well as upskilling local talents and vendors, to transform the region into an integrated industrial park for medical devices in the future, establishing the region as an attractive destination for both foreign and domestic direct investment. Upon completion, Hartalega estimates to contribute more than 5% of Kedah’s total GDP,” Kuan said.
Meanwhile, finance minister Tengku Datuk Seri Zafrul Abdul Aziz said Hartalega’s choice to invest in Kota Perdana SBEZ is an endorsement of the zone’s rising status as a new and preferred investment destination.
“Kota Perdana SBEZ is now poised to further enhance its position and reputation in attracting other high-end and export-oriented industries, leveraging on its competitive advantage such as proximity to the Malaysia-Thailand border as well as the Penang Port. This will also drive economic development in Kedah, with a huge, positive impact for the northern region. Most significantly, the project is expected to generate more than 12,000 jobs and help upskill local talent and vendors, while supporting infrastructure development,” Zafrul said.
The first plant in Kedah is set to be completed in 2024, the statement added.
At Bursa Malaysia’s afternoon break, Hartalega shares were 2.06% or 20 sen higher at RM9.92, valuing it at RM34 billion. It saw 1.78 million shares transacted.
Source: EdgeProp – 10 March 2021 (Wednesday)