KUALA LUMPUR (Dec 12): The world s largest rubber glove maker Top Glove Corp Bhd s latest record-breaking net profit surged past RM2 billion, backed by strong demand for gloves in both developed and emerging markets, thanks to the pandemic.
But behind this super profit, the group has been dogged by issues ranging from import bans in the US market over allegations of forced labour, a surge of Covid-19 infections among its workers that has halted half its production capacity, and possible legal action by Malaysian authorities for housing its workers in cramped and poorly ventilated accommodations that do not meet minimum standards set by the law.
KUALA LUMPUR (Dec 10): The environmental, social and governance (ESG) issues afflicting Top Glove Corp Bhd have led to analysts revising the company’s valuations.
CGS-CIMB, while maintaining its “add” call for Top Glove, has cut its target price (TP) on the rubber glove giant by 11% to RM8.90 per share from RM10 previously. This cut is premised on a lower price-to-earnings (PE) ratio of 16 times for calendar year 2022 (CY22) from 17 times previously.
“We cut our TP to RM8.90 based on 16 times CY22 P/E, -0.5SD (standard deviation) of its five-year mean (previously 17 times P/E). The lower P/E is to account for ongoing concerns over ESG-related issues, particularly related to its foreign workers.