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March 30, 2021

Rakuten Trade Remains ‘Buy’ Recommendation For This Company

 Flexidynamics Bhd was first listed on the ACE Market of Bursa Malaysia with a premium of 49 sen compared to the offer price of 20 sen and a total of 12.36 million shares traded in the opening session.

At 11.05 this morning, Flexidynamics jumped 28.5 sen to 48.5 sen with 88.87 million shares traded.

Rakuten Trade maintained a ‘buy’ recommendation for the counter following a convincing industry outlook and supported by continued demand and revenue growth which is expected to reach double digits over the next two years.

“Due to the specific nature of the glove industry chlorination industry, there are only seven major industry players in Malaysia with Flexi being the main driver, controlling 37.7% market share. Well -known customers such as Hartalega, Kossan, Sri Trang, Ever Global and Riverstone are proof of Flexi's expertise, "said the firm through its research notes as reported by Bernama.

Rakuten added that the growth of the glove chlorination industry is closely linked to the capital expenditure allocated for the glove manufacturing process, particularly for the glove dyeing line.

Clearly Rakuten further, Flexidynamics is in the right position to capitalize on the growth of the industry as global demand for rubber gloves is projected to expand at an annual growth rate of 10.0% from 2021 to 2025.

"The firm's revenue is also supported by the company's contract turnover worth RM84.6 million, both locally and abroad," said Rakuten.

Touching on the proceeds from the initial public offering (IPO), Flexidynamics plans to use RM6.38 million to repay bank loans taken to finance the acquisition of new plants.

Another RM420,000 will be utilized for the renovation of the factories while RM1.63 million will be used to purchase machinery and equipment, RM3.62 million for working capital and the remaining RM3 million for listing expenses.

Both factories will have new machinery and equipment to carry out manufacturing work and internal components for the online glove chlorination system.

According to Flexidynamics Managing Director, Tan Koh Leong, the company has grown by providing online and offline glove chlorination systems to local customers, Vietnam, Thailand, Indonesia and Sri Lanka.

According to Koh Leong, the increase in demand for rubber gloves has led to the utilization of production capacity almost entirely among glove manufacturers.

"We strongly believe that we can take advantage of the opportunities from this increase in activities that will benefit the company in the long run," said Koh Leong.