Hwang DBS Vickers
Research expects the minimum wage for the private sector to affect the
glove manufacturers of which Top Glove to be impacted the most while
Hartalega to be the least affected
“We maintain Hold
for Top Glove (TP: RM4.80), Hartalega (TP: RM7.70) and Kossan (TP:
RM3.30). We expect the additional staff costs to be passed to customers
over time, but in the immediate term, we expect earnings and margins to
be dampened,” it said on Wednesday.
The minimum wage for the private
sector was set at RM900 per month for employees in the peninsula, and
RM800 for workers in Sarawak, Sabah and the Federal Territory of Labuan.
There will be a six-month grace period for implementation from the date
the Minimum Wage Order is gazetted.
The government has also provided
some flexibility whereby some allowances or fixed cash payments are
allowed to be absorbed in the calculation for minimum wage. HDBSVR said
its sensitivity analysis showed staff costs would increase by 17%-22%
while earnings could fall by 5%-19%, if minimum wage of RM900 per month
is implemented assuming no change in average selling prices.
“Based on
our estimates, Hartalega's salary costs could rise by RM10mil a year
(+17%) and this would lower FY13F net profit by 5%. For Top Glove, staff
costs could rise as much as RM39mil (+22%), denting FY13F earnings by
19%.
“Meanwhile,
we estimate Kossan's annual salary costs to increase by RM18mil (+17%)
and net profit to fall by 13%. However, if fixed allowances or cash
payments are allowed in the calculation for minimum wages, the impact
will be softened,” it said.
Source: www.thestar.com.my
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