What is the fate of top glove after being worn by PKPD?

 CGS-CIMB Securities Sdn Bhd assesses the negative impact on Top Glove Corp Bhd's income and net profit for the financial year ending August 31, 2021 (FY21) of -1.3% and -1.8% after the foreign worker dormitory of the company in Meru, Klang is subject to Movement Control Orders Strengthened (PKPD) started last night until 30 November.


According to the facts issued by Top Glove last night, the PKPD assigned approximately 5,700 or 27% of the 21,000 workers in the company.


CGS-CIMB analyst Walter Aw said the 5,700 workers represented 34.5% of Top Glove's labor budget which consisted of 16,500 people.


According to Aw again, the estimated net profit of FY21F for Top Gloe will be deducted by another 0.7% if PKPD in the worker dormitory continues.


"We understand that all 5,700 workers who were crushed, most of whom were foreign workers, would not be allowed to work at the refinery during PKPD. The impression is that the Top Glove refinery is likely to operate with a low capacity in the next two weeks, "he said.


However, Aw said that his party believes that Top Glove can handle this PKPD impression of continuing various initiatives including taking in temporary and permanent temporary workers to compensate for this loss of foreign workers.


In addition, Aw believes that Top Glove will be able to make up for missed expenses as well as the 5,700 workers returning to work.


"Top Glove does not expect any order cancellations or penalties by customers who accept orders due to PKPD.


"We also did not make changes to the FY21-23F income per share (EPS) budget because we believe the impact of this PKPD is minimal. We also repeated the 'add' suggestion with a target price (TP) of RM10.00 based on 17xCY22F P / E, "said Aw.


On the Malaysia Stock Exchange today, Top Glove's shares fell 13 cents or 1.86% to RM6.87, which once brought the company's value to around RM55.58 billion. A total of 27 million Top Glove shares were traded.