VIP Gloves Ltd (ASX:VIP) non-executive director David Chee Cheong Low has demonstrated his confidence in the company’s growth potential as four new production lines come on-stream progressively and demand for gloves continue in a post-COVID 19 setting.
Between September 9 and 11, Low purchased 180,000 shares for a total consideration of $14,300.
VIP has cleared all of its old orders and financial year 2021 will reflect higher average selling price, boosting margins.
Production lines three and four were fully commissioned in July 2020 and additional production lines will be commissioned in stages over the next 18 months, ensuring a continuous growth trend in financial years 2021 and 2022.
Lines five and six are targeted to be commissioned in the first quarter of 2021.
Global inventory levels have fallen drastically
There are unprecedented capacity roll-outs by global glovemakers as well as non-traditional glovemakers to meet demand.
Glove makers are now looking at more than 12 months lead time for forward orders, given the current sales backlog as against one to two months during pre-COVID levels
Global inventory levels have also fallen drastically to less than 10 billion pieces (equivalent to 10 days of stockpile) from 60 days previously.
VIP sees minimal risk of an over-supply situation as new capacities will only come onstream progressively and should be able to meet the rising global demand.