Top Glove’s governance spoils its pandemic bounce

THERE’S bad timing and then there’s wasting opportunities. The listing plans of Malaysia’s Top Glove Corp Bhd firmly puts it in the latter category.

The world’s biggest maker of protective handwear has revived plans read more to sell stock in Hong Kong four months after US evidence of forced labour stalled an earlier effort.

Had its governance been up to scratch from the start, it could have got at least half as much again for its shares.

Top Glove shareholders this week approved its plan to seek a dual-primary listing in Hong Kong that would sit alongside its Kuala Lumpur home and a secondary ticker in Singapore.

It first applied to do so in February when soaring pandemic demand for its products sent its shares up 300% in six months to an October 2020 peak. In February, it said it hoped to raise almost US$2 bil for expansion.

That attempt was derailed for the most part by a US ban in March on all the company’s glove imports after it found evidence of forced labour.

In January, shareholder BlackRock voted against re-appointing six directors and withdrew support from the other board members over Top Glove’s “severe shortcomings” in improving labour conditions.

Indeed, its crowded migrant workers quarters inevitably contributed to one of Malaysia’s biggest COVID-19 outbreak.

The lifting of the ban in September has set the stage for the new listing attempt but the delay has cost Top Glove dearly.

This time – subject to regulatory approvals and market conditions – it is likely to raise something much nearer to US$500 mil.

Instead of highlighting supply shortages and desperate customers, investors will be more worried about the balance between Top Glove’s capacity and post-pandemic demand which –while still above pre-COVID levels – has declined more quickly than some expected.

Prices for some products which once quadrupled have now halved from their peak as countries including China have aggressively added production.

Few companies can time the market precisely, and they should avoid claiming credit when they pull it off. Top Glove, however, has only itself to blame for this missed opportunity. – Dec 9, 2021

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