Thai rubber gloves maker set to raise $484m to speed expansion

Thailand’s Sri Trang Gloves, which describes itself as the world’s third-largest rubber gloves manufacturer, has priced an initial public offering to raise nearly $500m, capitalising on surging demand for its product because of Covid-19. 

The company — owned by Bangkok and Singapore-listed Sri Trang Group, one of the world’s largest integrated natural rubber companies — is floating a 31 per cent stake in a bid to triple its production capacity to 100bn pieces a year by 2032. 

Faced with a shortage of personal protective equipment, countries around the world have turned to south-east Asia, the world’s largest source of natural rubber, for gloves in a rush to secure critical medical supplies. 

That has proved a windfall for rubber glove manufacturers and their founding family shareholders, whose order books have filled as they have rushed to meet a flood of orders from companies and governments around the globe.

Sri Trang said on Monday that it had priced the shares at Bt34 each, valuing a 31 per cent stake at about Bt15bn ($484m). The IPO is set to be Thailand’s biggest since early February, when conglomerate Central Group’s retail unit raised $2.5bn on the eve of the pandemic. 

Shares in Sri Trang Gloves are set to begin trading on the Stock Exchange of Thailand on July 2. 

Glove demand expands worldwide

The company, whose parent was founded in Hat Yai, southern Thailand in 1987 and is controlled by its founding Sincharoenkul family, declined an interview request. 

The Thai rubber gloves maker has time and economies of scale on its side, analysts said. 

“The barrier to entry in this industry is quite high,” said Thunya Sutavepramochanon, equity analyst with UOB Kay Hian Research in Bangkok. “You need three years to set up a business — one year to build the plant, another one to two years to certify glove products — so I don’t think new companies can compete with existing products for the next three years.” 

Malaysia accounts for about 60 per cent of the global rubber glove supply, and has produced a crop of rubber-sector billionaires. Lim Wee Chai, founder and chairman of the world’s largest producer, Top Glove, has a net worth of $3.2bn while Kuan Kam Hon, founder of rival Hartalega, and his family have a fortune of $5.2bn, according to Forbes.

Top Glove reported its strongest quarterly earnings in the three months through May, with profit after tax jumping 365 per cent year on year to RM350m ($82m). The company said the surge in demand had given it a healthy order pipeline, extending delivery times tenfold since the beginning of the pandemic to about 400 days now. 

Malaysia dominates global production

“The business has improved a lot because of the demand,” Mr Lim told the Financial Times, adding that during Malaysia’s own lockdown, which the government began easing this month, “we have to work extra hard to deliver medical gloves to our customers in 195 countries” — effectively every nation worldwide.

“Covid-19 is going to push consumption to yet another level,” said Denis Low, president of the Malaysian Rubber Glove Manufacturers Association. The industry experienced a similar jump in demand during the HIV/Aids pandemic of the 1980s.

Annual medical glove supply has soared from 2.5bn pieces in the 1980s to an estimated 330bn pieces annually now.

“The industry will see exponential demand right up to [the next] 18 to 24 months until new production capacity is being built,” Mr Low said. 

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