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KUALA LUMPUR (Nov 25): Top Glove Corp Bhd has lost over RM12 billion in market capitalization since the beginning of November as its share price fell amid a lot of unfavorable news, the latest being the temporary closure of 28 of its factories. in Klang, while the number of Covid-19 infections among its workers increased.
However, the group estimated that the closure of the factories, which represent 50% of its total production capacity, will only cause a 3% drop in its revenue for the financial year ending August 31, 2021.
He said this in a stock exchange presentation yesterday, on the same day that the Health Ministry announced a new record increase of 2,188 Covid-19 cases in the country, with 69% or 1,511 coming from the Teratai group originating in glove manufacturer worker dormitories. in Klang.
The new cases were found just a day after the government said the 28 factories would have to be closed temporarily, in stages, to allow health authorities to test for Covid-19 and quarantine those affected, then of an increase in infections there. At that time, the ministry had found 1,889 positive cases at the Top Glove facility.
At an analyst briefing yesterday morning, Top Glove said 2,534 of its workers had tested positive after 5,767 workers were tested, AmInvestment Bank wrote in a note to clients. It is unclear what the actual count is now.
The Teratai group, which the Health Ministry identified on November 7, now has 4,036 positive cases, after 5,777 people have been tested. Among the 4,036 cases, 3,846 are migrant workers, while the rest 190 are Malaysians.
Giving the estimated revenue loss in response to a Bursa Malaysia inquiry about factory closures yesterday, Top Glove said 16 of the facilities have stopped production since Nov.17. The affected facilities will resume operation in stages, after the employee balance is tested. and disinfect the sites, he said.
“We are now working with the relevant authorities for an orderly selection process that guarantees the reopening of the facilities with the health and safety of our employees. [given the] extreme importance. Only authorized Covid-19 employees will be able to resume work at our facility.
“The remaining 12 facilities are currently operating at approximately 20% capacity and will be temporarily closed in stages for employee testing and full site cleanup, before reopening,” Top Glove said.
He added that the impact of temporary closures is expected to cause some delay in its delivery schedule, with a forecast delay of two to four weeks. You don’t see any penalty resulting from the delay materializing. “As a mitigation measure, the company has rescheduled production plans for unaffected facilities to produce such urgent orders,” he added.
In a stock buyback frenzy
Shares of Top Glove have been under selling pressure since the beginning of this month, following news of positive developments in the vaccine discovery space, with Pfizer, AstraZeneca and Moderna presenting candidate vaccines with efficacy levels above 90%.
The shares fell further amid rising infections among its workers, falling 7.48% or 55 sen to close at RM 6.80 yesterday, even as Top Glove continues to pick up its own shares in a bid to prop up prices. . The latest share price gives the group a market capitalization of RM55.73 billion, with RM12.59 billion of market capitalization removed from beloved glove stocks in the last three weeks.
According to its latest filing, Top Glove spent another 42.64 million ringgit on its share buyback spree yesterday, the eleventh consecutive trading day in which the exercise has been allowed, with the last lot of 6.23 million bought at between RM6. .80 and RM6.91 one piece.
This brought the total it has spent in the year since September to RM1.08 billion: RM721.72 million spent so far this month and RM355 million in September.
The sum is equivalent to 57.67% of Top Glove’s RM1.87 billion net earnings for the financial year ended August 31, 2020 (FY20). It also represents 88.96% of its cash and cash balances at the end of fiscal 20, which amounted to RM1.21 billion. Top Glove also has RM1.67 billion in investment securities.
Meanwhile, in a separate announcement yesterday, the Employee Provident Fund said it has purchased 1.09 million shares of Top Glove, raising its stake in the group to 534.3 million shares or a 6.64% stake. .
So far this year, despite the recent drop in its share price, Top Glove’s counter is still up 339%, from trading at RM1.55 on January 2.
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