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AT (0072) AT Systematization weekly trading volume breaches 10 billion shares

KUALA LUMPUR (Nov 14): AT Systematization Bhd (ATS) continued to see a surge in trading activity in the past trading week with its total weekly trading volume exceeding the 10 billion mark, likely driven by the craze for rubber glove stocks.

Over the week, the counter almost doubled in share price, ending the week at 25.5 sen, up 96% from its closing of 13 sen on the previous Friday (Nov 6).

On Thursday, ATS closed at a four-year high of 27 sen, before it pared gains to close at 25.5 sen on Friday, for a market capitalisation of RM829.55 million. In a nutshell, some RM309 million has been added to the company’s market cap.

ATS consistently topped the list of active stocks on Bursa Malaysia everyday throughout the week.

According to Bloomberg data, there was a total of 10.85 billion shares that changed hands during the week, accounting for slightly over 16% of the local bourse’s total weekly volume of 67.64 billion shares. Such high trading volume is considerably rare on the local bourse over the past 10 years.

To put things in perspective, the number of ATS shares traded during the week was more than three times the company’s total outstanding shares of 3.25 billion.

The company had first caught the eye of investors after proposing the acquisition of industrial glove maker Pearl Glove (Malaysia) Sdn Bhd on June 10.

Although Pearl Glove is involved in the manufacturing of industrial gloves and not rubber gloves, the company’s share price was able to join the rally on rubber glove counters.

Two months after announcing the proposed Pearl Glove acquisition, ATS unveiled a separate glove venture in August.

Its wholly-owned subsidiary AT Glove Engineering Sdn Bhd (AGESB) had entered into a supply contract with Ripcol Engineering Sdn Bhd (RESB), which would see RESB act as AGESB’s contractor to design, fabricate, install, test and commission six rubber glove production lines.

Setting up the six lines would cost ATS some RM36.15 million. In total, AGESB would produce 928 million pieces of rubber gloves a year with the six lines — 103 million pieces from the single former dipping line and 825 million pieces from the double former dipping lines.

The fifth double dipping former line is expected to be installed and commissioned by April next year. The company released an update on the rubber glove venture in late October and it had given earnings guidance on the new venture, expecting the rubber glove business to contribute annual revenue of RM860 million, which is over 40 times the RM20 million achieved in its financial year ended March 31, 2020 (FY20).

The update and earnings guidance sparked frenzied buying interest in its shares.

Regarding the Pearl Glove acquisition, the deal fell through. On Wednesday (Nov 11), ATS said it had terminated the share sale agreement that was signed in June with vendors Hai Hong Capital Sdn Bhd, P’ng Sim Guan, P’ng Lai Heng, Hai Hong Holdings Sdn Bhd and Aaron Khoo Teng Soon.

ATS cited the “non-fulfilment of certain conditions” for the termination of the agreement but did not elaborate.

After the termination, ATS said it will be focusing on building up its own glove production capacity via the establishment of a new plant in Perak, which is currently under construction.

ATS has made known that it targets to install an annual production capacity of up to 2.6 billion pieces of medical-grade nitrile gloves by June 2021, based on the assumption that its production lines run 24 hours per day and 30 days per month.

It said the six lines would be installed in stages, with the single former dipping line to be commissioned by the end of this month. Nonetheless, ATS has not disclosed if it has already secured orders for its nitrile gloves.

To raise fresh funds, the company has placed out three tranches of shares. Some 200 million shares were priced at 7.16 sen per share on Sept 28, another 230 million shares at eight sen on Oct 6 and 249.97 million shares at 6.3 sen on Oct 16.

The company’s largest shareholder is Asiabio Capital Sdn Bhd, which owns a 12.96% stake, followed by Mak Siew Wei with a 10.72% equity stake.

Asiabio also holds shares in DGB Asia Bhd and Vsolar Group Bhd, with both seeing high trading volume of 769.18 million shares and 348 million shares this week too.

http://www.theedgemarkets.com/article/systematization-weekly-trading-volume-breaches-10-billion-shares

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