EMS companies face more downside risks

TheStar Fri, Mar 27, 2020 10:40am - 4 years View Original


VS Industry plant Senai

PETALING JAYA: Electronics manufacturing services (EMS) companies are likely to see further earnings declines following the extension of the government’s movement control order (MCO), which has halted production at their facilities.

According to Affin Hwang Capital Research, a 28-day factory closure would negatively impact the earnings of EMS players under its coverage as they would continue to incur fixed costs such as rental and staff costs.

“Even if they are allowed to resume production, they are required to operate at a minimal workforce (capped at 50%), according to National Security Council. This would result in lower production and adversely impact their earnings, ” it added.

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