TOPGLOV (7113): TOP GLOVE CORP BHD ramps up production at plants outside Klang
KUALA LUMPUR: Top Glove Corporation Bhd, whose Klang factories have impacted by the Covid-19 pandemic, has been ramping up production outside Klang to meet customers' demand.
According to AmInvestment Research, the world's largest glove maker, held an analyst briefing on Tuesday about the shutting down of its 28 factories in Meru, Klang for Covid-19 screening.
So far, 5,767 workers have been tested and 2,534 are positive cases. The Covid-19 positive workers have been sent to hospitals while the rest are under quarantine.
AmInvest Research said according to Top Glove, of the 28 factories, 20 are glove production facilities with an estimated capacity of about 45 billion pieces per annum.
“Management noted that of all glove production facilities in Klang, only 10% of them are operational due to the shortage of manpower, ” it said, hence the focus on stepping up its production in factories outside Klang.
Top Glove had also reduced its reliance on foreign workers and it has been employing local workers as early as March 2020.
Out of the 13,700 workers in Malaysia now, about 2,000 are local workers. The company is planning to increase the intake of local workers to overcome labour shortages.
“Top Glove has not revealed the monetary loss resulting from this closure. However, based on our rough estimates, assuming 20 of the 36 glove production factories operating in Meru, Klang are closed for two weeks, the total impact to Top Glove’s revenue will be around 2% which is not significant.
“We are not making any changes to our earnings forecasts at this juncture. However, we will monitor closely to assess the total loss and will adjust our numbers accordingly once the official numbers are announced.
“Maintain Hold with an unchanged fair value of RM7.88 per share based on a five-year average price-to-earnings ratio of 28 times, ” AmInvest Research said.
At 3.16pm, its share price was down 50 sen to RM6.85 with 62.13 million shares done.