KUALA LUMPUR, April 22 — Sanichi Technology Bhd is diversifying into the rubber glove industry via issuance of over 1.42 billion renounceable Rights Issue at an issue price of RM0.08 with up to 712.21 million free warrants on April 23, 2021.

The free warrants will be on the basis of six rights shares together with three warrants for every one existing Sanichi share held by shareholders.

In a statement, group managing director Datuk Seri Dr Pang Chow Huat said Sanichi intends to utilise the proceeds from proposed Rights Issue with Warrants to acquire, instal and commission up to six double former glove-dipping lines.

He said Sanichi also planned to instal and commission up to 15 double former glove-dipping lines in phases within 36 months to manufacture medical grade nitrile gloves through the diversification of the lucrative rubber glove industry.

"The installation is expected to yield a production capacity of over 3.11 billion pieces per annum,” he said.

He said the estimated total capital and investment outlay required for the installation and commissioning of six double former glove-dipping lines was RM41.50 million and RM86.50 million for the 15 double former glove-dipping lines.

The group is optimistic that the six production lines would yield a production capacity of up to 1.24 billion pieces of gloves per annum.

"Maximum capital we can raise from our Rights Issue is RM113.95 million only, which means based on data from industry average, our payback on investment which include the factory building is only 12 months after our six production lines are fully operational,” Pang said.

At an average market selling price of RM328 per carton, he said the estimated production capacity in revenue is RM408.08 million with an expected contribution of RM122.43 million to the group’s profit before tax based on a conservative 30 per cent margin.

The ex-date of Sanichi rights issue is on April 22, 2021, while the rights would be traded from April 26th to May 3, 2021. — Bernama