Mlabs enters glove manufacturing/healthcare business for growth

Mlabs Systems Bhd is moving into glove manufacturing and healthcare in partnership with an existing player in the market.

We heard that Mlabs was approached by the said party to help build up the business given the current global shortage for medical or nitrile gloves due to the outbreak of the Covid-19 pandemic and the rise in healthcare facilities and services.

Malaysia is the world’s largest source of medical gloves, with a market share of about 65 per cent.

Local manufacturers are expected to churn out as many as 240 billion pieces of gloves this year because of Covid-19.

One glove maker reportedly said pandemics are good for business. Whether it is SARS, H1N1, bird flu, or swine flu, there is always a big surge in orders and demand.

There are currently 13.1 million confirmed Covid-19 cases worldwide, and the total death count is 572,000 with the majority of the cases in the United States, followed by Brazil, India and Russia.

Mlabs’ timing is just right to enter the glove and healthcare business.

The stock has been trading actively these past few weeks. It has been hovering around the 5 sen range and today at the closing, some 40 million shares were traded.

Mlabs is one of the cheapest stocks on Bursa to invest in and I believe there is great potential for the price to rise with its glove and healthcare venture.

The company has been active this year to generate new business. About 4 months ago Mlabs signed a collaboration agreement with Ipharmarecare (Malaysia) Sdn Bhd which provide an opportunity for the group to expand its solution into the pharmaceutical industry throughout Southeast Asia, including Malaysia.

Mlabs will provide its video-conferencing products to Ipharmacare to complement the latter’s online pharmaceutical platform.

Ipharmacare in turn will promote Mlab products, including video conferencing systems, messaging systems and network solutions, to its platform users and/or independent pharmacies.

The company has also announced a private placement of up to 267.4 million new ordinary shares, representing 30 per cent of the total number of issued shares in the company, to independent third-party investors to be identified later.

In a filing with Bursa, Mlabs said that based on an illustrative issue price of RM0.0243 per placement share, the gross proceeds to be raised from the proposed private placement will be utilised for working capital, among others.

What is rather satisfying about Mlabs is that there were no borrowings or debt securities in the group as at March 31, 2020.

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