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KUALA LUMPUR: Shares in Top Glove fell to a nearly two-week low of RM6.57 in early Wednesday trading on concerns over the government’s legal action over housing its workers, adding to the problems of Covid-19 that you are dealing with.
At 9.46am, Top Glove was down 11 sen to RM6.68. 20 million actions were taken at prices ranging from RM6.57 to RM6.76.
The FBM KLCI had fallen 8.52 points or 0.53% to 1,593.74. The turnover was 1.97 billion shares valued at RM975.62 thousand. There were 405 winners, 408 losers, and 445 unchanged counters.
On Tuesday, the world’s largest glove maker saw its shares drop 33 sen to RM6.79 and erased 4.26 points from the FBM KLCI.
The drop in its share price saw its market capitalization, based on issued shares of 8.20 billion units, shrink to RM55.67bil.
The government was reported to have opened an investigation and would take legal action after discovering that the company did not meet the standards for housing workers under the Minimum Standards of Housing and Services Act of 1990 for Workers (Law 446).
The Director General of the Labor Department, Asri Ab Rahman, was quoted as saying that 63 charges, involving various companies and employers, including Top Glove, have been referred to the deputy prosecutor’s office for further action.
A total of 21 research papers have been opened, 19 of which involve six Top Glove groups of companies.
Employers who defy the regulations of the Ministry of Human Resources will be fined RM50,000 per worker.
AmInvestment Research said that while the investigation is still ongoing, it is not making any changes to our earnings forecast at this time.
“However, the latest development could potentially raise Top Glove’s perceived risk premium, thereby lowering our valuation of the price-to-earnings (PER) ratio to 25 times from 28 times. With the PER of 25 times, we arrive at a value just below RM7.03 per share (previously RM7.88) based on CY22 EPS, “he said.
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