KUALA LUMPUR (Dec 21): CGS-CIMB Research said its initial assessment revealed that port operators, manufacturers, plantations and the tourism industry are likely to be impacted by the recent floods. 

As such, the research firm’s analysts Ivy Ng Lee Fang and Nagulan Ravi expect the severe flooding to lead to a slight dent in corporate earnings in the fourth quarter of 2021 (4Q21) due to lower production at the manufacturing facilities/estates as a result of damage caused by the floods or workers unable to get to work because of the floods.

They noted that other issues faced could include logistical challenges and shortage of materials, as port operations were affected by yard congestion made worse by the flood situation.

“Following a recent Westports [Holdings Bhd] briefing, we have cut our net profit forecasts for financial year 2021 (FY21F) by 4% to reflect lower container volume due to the impact of yard congestion and the recent floods, which is likely to hurt throughput in the last two weeks of December this year.

“Also some companies could incur one-off costs to repair damages caused by the flood or to assist employees affected by the floods. We reiterate our KLCI target of 1,495 for 2021F and 1,612 for 2022F,” they said in a note on Tuesday (Dec 21).

Both Ng and Nagulan further gathered that Port Klang and West Port have not sustained any infrastructure damage, but according to them, some of the staff have yet to return to work due to the floods.

“Our checks with the plantation companies under our coverage revealed that some estates were affected by the flooding, which disrupted harvesting activities for the past few days. 

“Oil palm estates in Pahang and Selangor, which appeared to be worst-affected states by the flood, contributed around 18.5% of total crude palm oil (CPO) production for Malaysia in the first eleven months of the year (11M21). 

“The tourism industry could also be affected as some sections of several major highways were impassable due to flooding and landslides,” they said. 

Over the weekend, Malaysia experienced widespread flooding in many states in Peninsular Malaysia since Friday (Dec 17), due to a 1-in-a-100-year heavy rainfall, according to a senior official in the Environment and Water Ministry.

Although Malaysia gets hit by floods annually during the monsoon season, the latest flooding was one of the worst in years, covering the entire Peninsular Malaysia — with the Klang and Shah Alam districts being worst hit by the floods after two days of heavy rain.

Following this, the country’s manufacturers association quoted in a Reuters report on Monday, said the floods, which cut off roads and led to mass evacuations over the weekend, have resulted in heavy losses for firms in the Shah Alam and Klang districts.

The losses include damage to property, other assets and inventories, as well as production disruptions, as many workers have not been able to get to work or return home, added Federation of Malaysian Manufacturers president Tan Sri Soh Thian Lai in the report.

The report also quoted Shipping Association Malaysia chairman Ooi Lean Hin having said that shipping was brought to a standstill over the weekend, but recovery work is underway as the floodwaters receded. 

Similarly, Panasonic Manufacturing Malaysia Bhd in a Bursa Malaysia filing on Monday announced that its plant in Seksyen 23, Shah Alam (SA2) was affected by the flood over the weekend.

The group said production of fan and vacuum cleaners is disrupted for the time being and the company will need a week to assess the conditions of the machines and equipment that were affected by the floodwaters.

It added that the company has been informed that some of its suppliers were also affected by the flooding.

Malaysia Rubber Glove Manufacturers Association president said the glove sector had not been severely disrupted by the floods over the weekend.