ATA IMS Bhd, a provider of electronics manufacturing service (EMS) to renowned global brand, had denied that Dyson which is one of the company’s main customers has withdrawn its business due to forced labour allegations and abuse issues which have been uncovered by migrant worker and labour rights activist Andy Hall.
This came to light as no reprieve is in sight for ATA IMS’ share price which continued to slide this morning following the company’s unveiling of a net loss of RM11.17 mil for its 2Q FY3/2022 (2Q FY3/2021: net profit of RM52.29 mil) last Friday (Nov 12).
“Malaysia closed all borders over the past 20 months with more than five million foreigner workers having left the country,” a company spokesman told FocusM on condition of anonymity. “It’s purely labour shortages to fulfill demand and nothing else that I’m aware of.”
For the record, Hall said he has been informed by some workers at ATA IMS’ plants that Dyson has ordered the company to stop the production of its table fans.
The labour activist further claimed that labour shortages faced by ATA IMS is due to the company’s inability to easily and obviously utilise any of its 1,000 of previously illegal/irregular foreign workers as the government and customer audit increased and more scrutiny.
At time of writing (10.03am), ATA IMS’ share price dipped a further 24 sen or 12.9% to RM1.62 (intraday low: RM1.56) with 21.35 million shares traded, thus valuing the company at RM1.95 bil. Recall that the company has shed 71 sen between Monday (Nov 15) and yesterday (Nov 16).
In its latest company update, CGS-CIMB Research has reiterated its “hold” rating on ATA IMS while further slashing its target piece to RM1.93 (from RM2.48 and RM3.10 previously) as it remained concerned about the company’s profitability for FY3/2022F amid the lack of clarity on a timeline for foreign worker replenishment.
“Additionally, ATA IMS could continue to face a shift of sales orders away from the company should labour shortage issues persist going into FY3/2023F,” opined analyst Nagulan Ravi.
“In light of this, we reduce our FY3/2022F EPS (earnings per share) by 41% to reflect a further reduction in its foreign-to-local worker ratio in 2H FY3/2022F and our FY3/2023-3/2024F EPS by 7-24% to reflect a longer-than-expected time taken to ramp up efficiency due to shortage of foreign workers and components.” – Nov 17, 2021
