Friday 01 Mar 2024
main news image

KUALA LUMPUR (Sept 2): Iconic Worldwide Bhd said its plan to diversify into the manufacturing of personal protective equipment (PPE), including gloves and disposable face masks, involves an estimated investment cost of about RM155.5 million.

This covers the cost of land, construction of a new facility, installation and commission of production lines, other equipment, and working capital, the group said in a filing with Bursa Malaysia.

These financial commitments, it said, will be funded through a combination of internally generated funds, bank borrowings and fundraising exercises, which will be ascertained at a later stage.

Iconic said the diversification provides the group an opportunity to venture into the PPE business, which is a growing industry with foreseeable sustainable demand given the current healthcare and environmental conditions that enforce the usage of PPE in a global context.

Presently, Iconic and its subsidiaries are principally involved in the development and sale of commercial and residential properties, and the provision of tourism and other related services such as hospitality management.

The group's revenue is mainly derived from the tourism services segment, which contributes to more than 95% of the group's top line while the remainder is derived from the investment holding and other services.

"The group has been actively identifying other alternatives to diversify its revenue streams to mitigate the risk of overdependence on its existing core business," said Iconic.

On June 10, the group announced that its wholly-owned subsidiary Iconic Medicare Sdn Bhd was venturing into the manufacture and sale of face masks to undertake the PPE business.

Following this, the group acquired and installed a mask production machine, which is currently producing a minimum of 30 million pieces of face masks per annum, in a rented manufacturing facility located in Juru, Penang.

Moving forward, Iconic said it intends to ramp up the production capacity in a new manufacturing facility with larger built-up area to cater for more production lines.

The firm has identified and is planning to acquire a land measuring approximately six acres in Batu Kawan, Penang for the construction of the new facility, which is expected to be completed within 12 months and start operations by the second half of next year.

The plan, the group said, is to instal 22 production lines, comprising 12 glove dipping lines and 10 mask production lines, over the course of 12 months, for a total cost of RM78.2 million.

"Within 12 months from the commencement of operations, the board expects the PPE business to record profit and contribute positively to the group's financial position," it said, adding that it is currently preparing the necessary applications and liaising with local authorities to obtain the relevant regulatory approval for the PPE business in Malaysia.

"Further, the company aims to export its PPE overseas specifically to the US and Europe due to the high Covid-19 infection rates in these places. The group will apply for the necessary certifications to facilitate the export of the PPE to such countries," it added.

Iconic said it will convene an extraordinary general meeting to get shareholders' approval for the proposed diversification.

Iconic's share price stood at 6.5 sen or 8.9% lower at 67.5 sen as at 4.05pm, with a market capitalisation of RM206.82 million.

Edited by S Kanagaraju

      Text Size