During the event, Andy Hall, an independent migrant workers rights specialist, endorsed the world's largest glove maker's update that it had made progress with regards to its forced labour issues in terms of remediation fees and workers' hostel improvements.
While no additional issues of forced labour were discovered, the US CBP has requested Top Glove to address specific issues including identifying documents retained by recruitment agents to be returned to workers and remediation for workers who did not manage to come to Malaysia to work due to Covid-19-related lockdowns.
"Based on Impactt (independent consultant’s) assessment, the following forced labour indicators were no longer present in the group’s direct operations including abuse of vulnerability, restriction of movement, abusive working and living conditions, excessive overtime and withholding of wages," said Kenanga Research, which attended the briefing.
According to Impactt, there has been no systemic forced labour following Top Glove's ongoing effort.
Out of the 11 key International Labour Organisation (ILO) Forced Labour Indicators, six have been closed or achieved the passing mark.
Plans are already in place to rectify the remaining five forced labour indicators of which progress has been made. By next week, another indicator, being the remaining balance remediation of payment (debt bondage), will be achieved.
Kenanga reiterated its "outperform" recommendation on Top Glove based on 13x 2022 forecast earnings per share of 52.4 sen.
"Our target PER is at a 30% discount to normalised 5-year pre-Covid-19 historical forward mean averaging 16-18x.
"In our view, from the perspective of a long-term investor, we still see significant value being derived from Malaysian glove players which commands 65-68% of global market share," it said.
MIDF Research expects Top Glove to be able to relocate its supply to North American markets to other markets that have seen a resurgence in new Covid-19 cases.
In addition, the research house does not expect the WRO to have a significant impact to sales and earnings as Top Glove's factories outside of Malaysia will still be able to export to the US.
"We make no changes to our earnings estimates following the briefing as we do not expect significant impact to the company’s earnings," said MIDF while maintaining its "buy" call with an unchanged target price of RM8.29.