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Company News

UPDATE 3-New Malaysia curbs to affect quarter of Top Glove workers; shares slump

* Shares slide as much as 15%

* 14-day curbs to run through Nov 30

* COVID cases in Malaysia have risen sharply since Oct

* Minimal biz impact expected unless lockdown extended - analyst (Adds analyst quote, company background)

KUALA LUMPUR, Nov 17 (Reuters) - Malaysia’s Top Glove said fresh coronavirus-related curbs in an area where its factories are located will affect a quarter of its workers, after the government put in place restrictions that sent the company’s stock down 15%.

The 14-day curbs running through Nov. 30 will affect about 5,700 workers in Meru, Klang, Top Glove said in a statement on Tuesday.

The government move is another jolt for the world’s largest latex-glove maker whose profits and shares hit record highs in 2020 as demand for medical gloves and protective gear skyrocketed due to the pandemic.

COVID-19 cases in Malaysia have risen sharply since October, with the daily count hitting its highest this month since the pandemic started. The country had a total of 48,520 infections on Monday.

Malaysia said late on Monday the curbs would be imposed on two foreign worker dorms and surrounding areas in Klang, a district west of capital Kuala Lumpur, affecting 13,190 workers and almost 1,200 residents.

The government did not respond immediately to a Reuters request on Tuesday for further details.

Top Glove shares sank as much as 15% but recouped some of the losses to be down 8% by mid-afternoon.

TA Securities analyst Tan Kong Jin said the measures were likely to hurt Top Glove’s operations only minimally.

“If the infections rise dramatically and (the lockdown) is extended, then we probably have to change our (earnings) forecast,” he said.

“Even then, we will monitor glove selling prices, as supply may tighten,” he said, noting that margins may ultimately improve for Top Glove.

The company commands a quarter of the global latex glove market, with Europe and North America its biggest markets. Top Glove runs 47 factories across Malaysia, Thailand, China and Vietnam, with 36 of them producing gloves.

It posted a record profit in its latest quarter, and its shares are up four-fold this year.

But its fortunes have fluctuated in recent months after it was hit by an American import ban on two of its subsidiaries, and more recently by positive news on development of vaccines to prevent the coronavirus.

Shares in other glove makers including Hartalega Holdings and Supermax Corp also fell on Tuesday, likely affected by news that U.S. vaccine maker Moderna Inc’s experimental vaccine is 94.5% effective in preventing COVID-19 based on interim data from a late-stage trial. (Reporting by Liz Lee; Editing by Sayantani Ghosh and Muralikumar Anantharaman)

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