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MSWG Weekly Newsletters 13 April 2018 (English)

13.04.2018

MSWG’S QUICK TAKE ON-ONGOING CORPORATE DEVELOPMENTS

COMFORT GLOVES BERHAD (“CGB”)

The Board of Directors of CGB clarified that on 15 March 2018, the group’s wholly owned subsidiary, Comfort Rubber Gloves Industries Sdn. Bhd. (“CRGISB”) was listed under Import Alert of the U.S Food and Drug Administration (FDA). This has resulted in CRGISB examination glove shipments to the United States (“U.S.”) requiring inspections upon arrival in the U.S and released after passing an inspection. The group is working towards removal from the Import Alert list through its U.S agents and is confident of securing the removal from the Import Alert list. The FDA Import Alert listing does not prevent the group from exporting to U.S. Upon removal from the Import Alert list, CRGISB examination glove shipments will no longer require inspection. Therefore, the operations of the group have not been disrupted by this incident and are continuing in normal operation.

[Source: CGB’s announcement on Bursa Malaysia’s website on 6 April 2018]

MSWG’S COMMENTS:

CGB share price plummeted by 37.5% within 10 days from RM1.12 on 27 March 2018 to as low as 70 sen on 5 April 2018. We believe the detention of CRGISB’s glove shipments by the U.S. regulator could be a notable contribution to the sharp drop in CGB’s share price.

We are of the opinion that the FDA Import Alert listing against the CGB group’s products would have significant impact on the Group’s financial performance, as the U.S. and Canada market contributed approximately 42.5% to the Group’s revenue. The impact on the financial performance will be from the lag time due to the need for pre-inspection and the risk that some customers may terminate/reduce their orders due to this pre-inspection lag time.