• Titijaya via its wholly owned subsidiary, Titijaya Resources Sdn. Bhd. (TRSB) inked a five-year agreement with a Chinese state-owned medical equipment manufacturer, Sinopharm Medical Equipment QuanZhou Co. Ltd (SMEQ) to develop a business that will be involved in the trading and distribution of medical and hospital equipment, as well as medical industry-related real estate.

• The main, immediate focus of the collaboration will be the supply of equipment such as personal protection equipment (PPE), real-time reverse transcription polymerase chain reaction (RT-PCR) Test Kit, Rapid Test Kit, Mobile Test Lab, and other necessity equipment needed to combat Covid-19.

• TRSB and SMEQ will collaborate to develop the business by leveraging on the supply and value chain of Sinopharm Group and SMEQ in China, as well as the networks of TRSB and Sinopharm Group.

• Meanwhile, TRSB will be responsible to provide infrastructure, land and facilities for medical industry operators recommended by Sinopharm Group or SMEQ.

• The Agreement shall remain in force for a period of five years and subject to a renewable period of five years. The terms of the renewable period shall be subject to further agreement between TRSB and SMEQ.

• The Agreement will not have a material effect on Titijaya’s FY20 net earnings. We believe the JV is still in early stage, therefore we make no changes to our earnings forecasts. Maintain HOLD with an unchanged fair value of RM0.28.

Source: AmInvest Research - 30 Apr 2020