Shares in Top Glove Corp Bhd yesterday plunged after Malaysia said that it would close some factories of the world’s biggest rubber glove maker as more than 2,000 of its workers had tested positive for COVID-19.
Top Glove’s shares were down 7.48 percent at the close of trade after the government said that 28 factory buildings would be shut in phases, although it did not provide a timetable.
The company, which commands one-quarter of the global latex glove market, has racked up record profits this year on skyrocketing demand for its products and protective gear, thanks to the COVID-19 pandemic. Despite yesterday’s slump, its shares have surged more than fourfold this year.
Malaysia itself makes just less than two-thirds of the world’s rubber gloves, according to the Malaysian Rubber Glove Manufacturers Association.
Hartalega Holdings Bhd and Supermax Corp Bhd are the other two top glovemakers in the country.
The Malaysian Ministry of Health reported a sharp rise in cases in the area where Top Glove factories and dormitories are located, with 2,453 workers testing positive for the virus out of 5,767 screened.
Top Glove runs 47 factories across Malaysia, Thailand, China and Vietnam, with 36 of them producing gloves. Europe and North America are its biggest markets.
In a stock exchange filing on Monday, Top Glove said that it had temporarily stopped production at 16 of the 28 facilities since Wednesday last week, with the balance of 12 facilities operating at much reduced capacities.
The firm did not immediately respond to an e-mail seeking details, including the effect on production.
MIDF Research analyst Ng Bei Shan said in a note the closures would reduce production capacity by 50 percent, adding that a two-week closure could hurt net income by 4 percent in fiscal year 2021 if average selling prices stay the same.
However, tightened supply might also boost prices, cushioning the impact, she said.
The closures have not yet affected the company’s orders, Ng said, adding that she is maintaining her earnings estimates for fiscal year 2021.
“The development of the temporary closure of its facilities in stages is still fluid. As such, the actual impact to Top Glove’s full-year earnings may be hard to ascertain at this point,” she said.
Two other analysts predicted a 2 percent hit to annual profit.
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