Top Glove down but selling eases after company says 3% of revenue to be impacted by manufacturing stoppage

Top Glove down but selling eases after company says 3% of revenue to be impacted by manufacturing stoppage
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KUALA LUMPUR (Nov 25): Selling pressure on Top Glove Corp Bhd shares appeared to have eased so far today after the stock’s price fell as much as 3% compared to yesterday’s 7% drop as investors weighed the company’s updates on the impact from the temporary stoppage by stages of its manufacturing facilities within Meru in Klang, Selangor to curb the spread of the Covid-19 pandemic.

"We estimate about 3% of our FY21 sales revenue to be impacted,” Top Glove said in a Bursa Malaysia filing yesterday.

At Bursa’s 12:30pm break today, Top Glove’s share price settled down 14 sen or 2% at RM6.66 for a market capitalisation of about RM54.73 billion.

The counter, which saw some 36 million shares changed hands, pared losses after falling as much as 20 sen or 3% to RM6.60. The stock’s highest price so far today was RM6.88.

Yesterday, Top Glove’s share price closed down 55 sen or 7% at RM6.80.

After markets closed at 5pm yesterday, Top said in a Bursa filing that its 16 facilities in Meru, Klang have temporarily stopped production since Nov 17, 2020. 

Top Glove said the balance 12 facilities are currently operating at about 20% capacity and will be temporarily closed in stages for employee Covid-19 testing and full site sanitisation before re-opening.

"As part of our risk management strategy, Top Glove factories/facilities are diverse in location and countries with business continuity plans. The impact from this temporary disruption is expected to cause some delay in our delivery schedule by about two to four weeks for those facilities affected. However, we do not anticipate penalty from this delay in delivery. We estimate about 3% of our FY21 sales revenue to be impacted,” Top Glove said.

The authorities have implemented the Covid-19-driven enhanced movement control order (EMCO) from Nov 17 to Nov 30 at Top Glove’s specific foreign workers' dormitories in Meru.

In Top Glove’s Bursa filing yesterday, the company, referring to the EMCO’s impact on its production capacity, said the affected 28 facilities in Meru represent about 50% of the glove manufacturer’s total production capacity.

"As a mitigation measure, the company has rescheduled production plan for those non affected facilities to produce those very urgent orders,” Top Glove said.

According to updates on Top Glove’s website, the world’s largest rubber glove manufacturer by output capacity can produce up to 90 billion pieces of gloves a year as at October 2020 across its 36 glove factories.

Chong Jin Hun