Aspen's glovemaking unit secures US$100m in sales for 2021

ASPEN Holdings on Wednesday said its newly-established glovemaking venture has agreed to produce US$100 million worth of medical grade examination gloves for an unnamed third-party distributor.

The sales and distribution agreement is for the offtake of the entire 2021 production of Aspen's subsidiary, Aspen Glove. This amounts to an estimated one billion pieces of nitrile or natural rubber medical grade examination gloves to be produced from May 1 to Dec 31, 2021, said Aspen in its filing with the Singapore Exchange.

The US$100 million sales value is based on the assumption of a provisional average selling price of US$100 per one thousand pieces of gloves. Aspen added that the distributor has paid a cash deposit amounting to US$2 million, which represents 2 per cent of the value of the secured sales.

Pursuant to the agreement, the gloves will be distributed on an original equipment manufacturing basis to the Europe and US markets with the required licences being in place for sale and distribution.

According to Aspen, the said distributor is a speciality and medical glove distributor and an established player in the glove distribution business, with over 20 years in the industry. Its products are available globally including in the US and Europe.

Aside from distributing gloves, it provides technical and advisory services for setting up glove manufacturing plants within the US, Africa and Malaysia, as well as other parts of Asia.

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Murly Manokharan, Aspen's president and group chief executive, said the new agreement will allow Aspen Glove to penetrate Europe and US markets to capture existing market demand for medical grade examination gloves. In his view, it also relieves the group of the need to manage sales and to negotiate with various parties.

"We can now focus our efforts on accelerating our expansion plans under Phase 1b to include an additional 6 lines, which production is now expected to commence progressively from Q3 2021 onwards and to also bring forward Phase 2 for another 12 lines, to commence progressively from Q2 2022 onwards. With this sales of US$100 million and acceleration of the additional 18 lines in 2021 and 2022, Aspen Glove is expected to contribute significantly to the growth in revenue and profit of the group for the financial year ending Dec 31, 2021," he opined.

Aspen had earlier called for a trading halt before market opened on Wednesday, pending the announcement. The counter rose S$0.03 or 12.5 per cent to S$0.27 as at the midday break, after the halt was lifted.