Malaysia shuts 28 rubber-glove factories after virus outbreak
Kuala Lumpur — Malaysia’s Top Glove that reaped a fortune making protective gear to fight Covid-19 now finds itself exposed to the pandemic after its workers caught the virus, forcing authorities to temporarily shutter 28 of its factories.
The shares of the world’s biggest rubber-glove producer slumped as much as 7.5% on Tuesday. Its factories will be closed in stages to allow workers to undergo screenings and quarantine, defence minister Ismail Sabri Yaakob said without saying when the closures would begin.
The order came shortly before the country posted a record 1,884 new infections on Monday, with as many as 1,067 cases coming from the Teratai cluster in Selangor that is linked to Top Glove’s worker dormitories. Its impact on the company’s profitability may be limited, according to some analysts and fund managers.
“The market response to the closure is a knee-jerk reaction,” said Chua Zhu Lian, investment director at Fortress Capital Asset Management in Kuala Lumpur. “The company may face some dip in profits, but the impact should be limited. The company will do its very best to restore operations as soon as possible.”
Assuming that all 28 plants are shut for two weeks, CGS-CIMB Securities expects its fiscal 2021 forecast profit to drop by 1.9%, the brokerage said in a note on Tuesday. It held its “add” recommendation on the stock and the target price of 10 ringgit.
Still, the stoppage comes at a time when the optimism about the global vaccine rollout next year has begun denting the glove sector’s dizzying rally. Top Glove has tumbled 19% this month, paring the year-to-date surge to 340%, while its smaller rival Supermax has fallen 13%.
A spokesperson at Bursa Malaysia was not immediately available to comment on whether the recent slide in glove makers’ shares pose a risk to the broader market.
Top Glove on Monday said it had temporarily halted production at 16 facilities in Meru, Klang since November 18, and the remaining 12 have been running below capacity. The company has more than 21,000 employees that churn out 90-billion gloves annually at 750 production lines.
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