Logo of Phnom Penh Post newspaper Phnom Penh Post - GTI price resilient over strikes

GTI price resilient over strikes

Garment workers sew clothes at Taiwanese garment manufacturer
Garment workers sew clothes at Taiwanese garment manufacturer Grand Twins International in Phnom Penh. Vireak Mai

GTI price resilient over strikes

It's been a testing month for Taiwanese garment manufacturer Grand Twins International (GTI), with recurring worker demonstrations and a new sector-wide minimum-wage level set just this week.

But despite the turbulence, GTI stock – one of just two companies trading on the Cambodian Stock Exchange (CSX) – has proved to be more durable than analysts initially anticipated.

Since October 20, GTI garment workers have conducted rolling demonstrations calling for increased benefits including $1.25 per day for lunch and $15 per month for travel and accommodation. The factory’s management said the strikes were the first in the company’s 18-year history.

Employees resumed work officially on November 11, according to David Liu, GTI’s strategy manager.

A day later, on November 12, labour unions and the Ministry of Labour concluded that Cambodia’s minimum wage would be increased from the current $100 per month, to $128 from January 1, 2015.

“We just settled down the strike issue after reaching an agreement with the labour bureau,” Liu told the Post.

“But we cannot comment on the minimum-wage increase, because we only learned of the decision yesterday. We will have an internal discussion about it,” he added, declining to detail how the wage increase could affect the company’s operational costs and end-of-year revenue projections.

Between October 20 and November 12, GTI’s share price weakened slightly, falling from $2.06 per share to $1.96.

However the decline in investor sentiment was to be expected, according to CSX director of market operations, Soleil Lamun.

“Normally, this kind of issue affects the investors’ sentiment, and it seemed true for GTI’s case,” Lamun told the Post via email this week.

“But the price dropped only a few hundreds riels.… This kind of issue is not something surprising if you are a GTI investor, since the same and even bigger issue already happened just before GTI’s share issuance,” he added, referring to garment industry demonstrations, which brought the industry to a standstill in January this year.

“So I believe that most investors had already taken it into account. The longer the issue persists, the more investor sentiment is affected.”

Lamun commended GTI on its quick resolution of the demonstrations.

Skepticism over the stability and longevity of GTI stock amid such industry-wide reforms was a key criticism prior to the company’s June 16 IPO.

Stanley Shen, assistant to GTI’s chief financial officer even told the Post back in June that potential investors had repeatedly voiced concerns over the share offering so soon after the January strikes and while negotiations over the Kingdom’s minimum wage continued.

Now, six months after GTI became the CSX’s second listing, the company’s stock has declined an overall 17 per cent from its opening price of $2.41.

Despite the weakening, Svay Hay, CEO of Acleda Securities, said investors are holding out for the company’s first dividend announcement, due out early next year.

“The strike was really a short-term event, and it certainly has not impacted or influenced medium- or long-term investor sentiment,” Hay told the Post. “But, to be sure, it does affect the short-term traders,” Hay explained, citing an average of just 10 trade requests per day to the CSX and securities firms.

Hay rejected concerns over GTI’s stock being volatile due to the company being engaged in Cambodia’s garment industry.

“More garment firms could easily be added to the market – it is good for Cambodia’s stock exchange. A company’s success does not hinge on the type of industry it is engaged in. It depends on how open they are with their financial and operational information – information that investors can base decisions on.”

Hay said that while GTI has provided some information to investors over the past six months, more regarding the company’s current financial performance and projects is needed.

MOST VIEWED

  • Investors’ $14.4M projects approved

    New investments from local and foreign sources continue to pour into Cambodia despite the Covid-19 pandemic remaining a lingering threat to regional and global economies. This comes as the Kingdom’s gross domestic product (GDP) is expected to contract between one and 2.9 per cent this

  • NagaWorld casinos set to reopen, schools to follow

    NAGACORP Ltd has requested that it be allowed to reopen its NagaWorld integrated resorts in Phnom Penh after the government recently approved casinos to operate again, provided they follow Covid-19 prevention measures set by the Ministry of Health. Mey Vann, the director-general of the Ministry

  • Rubber exports stretch 17%

    Cambodia exported 97,175 tonnes of natural rubber in the first five months of this year, surging 17 per cent compared to the same period last year as the Covid-19 pandemic stretches on, Ministry of Agriculture, Forestry and Fisheries official Khuong Phalla told The Post on Thursday. Phalla,

  • ASEM supports Kingdom’s proposal to postpone meeting amid Covid

    The 13th Asia-Europe Meeting (ASEM13) scheduled to be held in Cambodia in November has been postponed until mid-2021 due to the Covid-19 pandemic, a Ministry of Foreign Affairs and International Cooperation press statement released on Saturday said. The decision was made during a two-day meeting

  • Coffee maker roasted for producing fake product

    The Ministry of Interior’s Counter Counterfeit Committee will send a suspect to court on Monday after she allegedly roasted coffee mixed with soybeans and other ingredients, creating a product which could pose a high risk to consumers’ health. On the afternoon of July 2, the

  • Cash handout programme 80% complete

    Minister of Social Affairs, Veterans and Youth Rehabilitation Vong Soth confirmed on Thursday that the implementation of the Cash Transfer Programme For Poor and Vulnerable Households During Covid-19 had been implemented for more than 80% of the over 560,000 families. The programme was introduced one week ago.

  • Cambodia armed with money laundering laws

    Money laundering will now carry a penalty of up to five years in prison while those convicted of financing terrorists will be jailed for up to 20 years, according to new laws promulgated by King Norodom Sihamoni and seen by The Post on Thursday. Comprising nine

  • Where is Cambodia’s exit strategy that can save the economy?

    With the prospect of being slammed by a double whammy, the government is working on an economic recovery plan to deliver it from Covid-19 and the EU’s partial withdrawal of the Everything But Arms scheme in the next two to three years Cambodia is

  • Schools to be reopened in ‘three stages’

    With guidance from Prime Minister Hun Sen, the Ministry of Education, Youth and Sport, is in the process of reopening schools in three stages. But no timeline has been set, ministry spokesperson Ros Soveacha said on Thursday. Soveacha said the first stage will be to

  • Kingdom, UN discuss rights

    A year after Cambodia received 198 recommendations from UN member countries, the UN Office of the High Commissioner for Human Rights (OHCHR-Cambodia) met with the Cambodia Human Rights Committee (CHRC) to discuss following-up on the Kingdom’s third cycle of the Universal Periodic Review (UPR) and