With average selling prices of gloves falling, CSH Alliance Bhd’s announcement that it has decided not to proceed with its plan to construct a glove manufacturing plant is not surprising.
The group, previously known as KTG Bhd (and, before that, DWL Resources Bhd, which was Springhill Gallery Bhd), is involved in the making and trading of ceramics products, moneylending, construction, property development and logistics.
It said it would be able to recover a RM4 million deposit paid to the turnkey contractor for the planned production lines.
On the day of the announcement, CSH Alliance said it had signed a memorandum of understanding (MOU) with BYD Malaysia Sdn Bhd to explore a partnership to distribute fully electric commercial vehicles and provide related after-sales services in Malaysia.
Both parties will also explore the possibility of local assembly of the BYD T3 models.
BYD Malaysia is part of Hong Kong and Shenzhen-listed BYD Co Ltd, which makes both electric and hybrid cars, solar panels and batteries.
Not surprisingly, given BYD’s size — with a market capitalisation of over RMB600 billion (RM397 billion) — and market position in the electric vehicle sector, investors reacted positively to the announcement.
Since March 17, CSH Alliance’s shares had risen 58% from 12 sen to an intra-day high of 19 sen on March 22. They closed on Friday at 14 sen, valuing the group at RM193.4 million.
The question is: Will the company be able to execute the plan with partner BYD? Why did BYD choose to tie up with CSH Alliance, which has no known experience in the auto sector? In fact, will the MOU even come to fruition, given CSH Alliance’s track record?
It has not been profitable in the past 15 years and the constant name change does not augur well for the group.
Investors who have taken a bet on CSH Alliance must realise that this potential venture could head the way of the glove venture too.