The company is very confident it will come back just fine despite the exposé by The Guardian on alleged forced labour
By NUR HAZIQAH A MALEK & AFIQ AZIZ / Pic By MUHD AMIN NAHARUL
Top Glove Corp Bhd’s shares will hit a temporary snag as a result of the probe being initiated by the UK on the company’s alleged forced labour issue.
Analysts said the probe is not expected to affect the company in the long run.
Rakuten Trade Sdn Bhd research head Kenny Yee Shen Pin said the company had stated it would trim its dependency on foreign workers and would “bounce back even harder”.
“Considering Top Glove was also put into the FTSE Bursa Malaysia KLCI list alongside AMMB Holdings Bhd to replace KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust (stapled securities), and Telekom Malaysia Bhd on the index, the investors’ concerns will not stay for long and they will get over it,” he told The Malaysian Reserve.
He said the company seems very confident it will come back just fine despite the exposé by The Guardian.
“Unless the issue becomes prevalent and is found worse than it appears to be, which will be followed by investors’ reactions, it is unlikely we’ll adjust or revise the target price (TP) for Top Glove,” he said.
The Guardian reported on Sunday the glove maker has been alleged to subject thousands of its migrant workers from Nepal and Bangladesh to working seven days a week and at least 12 hours a day.
The article stated 16 workers were interviewed, along with three from WRP Asia Pacific Sdn Bhd — another company that was reported to have exploited foreign workers.
Following the exposé, the UK launched an investigation into the standards at the glove-making company.
Yesterday, Top Glove chairman Tan Sri Dr Lim Wee Chai denied allegations reported by The Guardian and is considering legal action against the paper.
However, he admitted the company is facing overtime and labour shortage issues with workers being requested to work longer.
Nevertheless, he said the company has targeted to reduce its labour shortage issues through automation.
Lim said the company would discuss the matter with the Human Resource Ministry, and would send a note to The Guardian over the exposé.
It was reported earlier that Top Glove planned to reduce its reliance on foreign labour workers, as the company could not maintain its operation costs due to higher minimum wage.
The company has also targeted to reduce the ratio of foreign workers to locals from 75% to 50% over the medium term.
For its fourth quarter ended Aug 31, 2018, the company posted a net profit of RM101.59 million versus the previous net profit of RM94.49 million.
Its share price closed 5.93% lower or 35 sen yesterday to RM5.55.