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Hot stock: Top Glove sinks to 2.5-month low on workers' Covid-19 outbreak, factory shutdowns

TG workers_Reuters.jpg
The Malaysian government will temporarily close, in stages, 28 of Top Glove's manufacturing facilities in the Klang area to screen and quarantine workers.

NEWS of thousands of Top Glove Corp workers testing positive for Covid-19 and the expected delivery delays from its shuttered operations continued to weigh on the company's stock price.

Shares of the world's biggest rubber glove maker sank to a 2.5-month low on Wednesday, dropping 2.9 per cent or 6.5 Singapore cents to S$2.185 as at 9.32am, a level not seen since Sept 10.

As at 4.50pm on Wednesday, the stock was down 2.7 per cent or S$0.06 to trade at S$2.19, on almost four million shares changing hands.

The Malaysian government has ordered a full probe into Top Glove's working and housing conditions, The Star reported. The newspaper also stated that Human Resource Minister M Saravanan described the employees' housing conditions as deplorable.

The news on the probe followed a coronavirus outbreak among more than 2,400 of the company's factory workers, which also led to the government saying it would temporarily close, in stages, 28 of its manufacturing facilities in the Klang area to screen and quarantine workers. The government did not specify when the shutdowns would begin.

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The cluster around Top Glove's factory and dormitory areas in the town of Meru alone contributed 1,511 out of the 1,623 cases recorded in the Selangor state on Tuesday, according to Malaysia's health ministry. This is the country's largest active Covid-19 cluster.

After Top Glove announced the temporary stoppages on Monday night, its stock price tumbled 4.9 per cent or S$0.14 to finish at S$2.25 on Tuesday.

The company also said on Tuesday after market close that some of its deliveries could be delayed by four weeks and new orders could take longer to process due to the factory closures.

Meanwhile, sales could fall 3 per cent short of its projections for the 2021 financial year, Top Glove added.

The company said in the Tuesday filing that it is allocating sales orders to unaffected factories and rescheduling deliveries where possible, to minimise the impact on customers.

Separately, Top Glove on Tuesday forked out about RM42.6 million (S$13.9 million) to buy back 6.2 million of its shares. And last Friday, it also announced a share buyback of some 85.2 million shares for RM629.1 million in total.

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