Malaysia's ATA falls as analyst airs concern after Dyson rift (updated)

ATA Creativity Global

30/11/2021 08:26

(Adds comment from analyst, ATA customers)
    By A. Ananthalakshmi and Liz Lee
    KUALA LUMPUR, Nov 30 (Reuters) - Shares of Malaysia's ATA
IMS  ATAI.KL  extended losses on Tuesday after a decision last
week by appliance maker Dyson to cut ties over accusations of
forced labour, while a research house raised doubts about its
ability to add new customers. 
    ATA, which gets 80% of its revenue from Dyson, reiterated on
Monday that it took the accusations seriously and that findings
from a labour audit were inconclusive. It also warned of revenue
decline and cost cuts.  urn:newsml:reuters.com:*:nL1N2SK0WI  urn:newsml:reuters.com:*:nL1N2SG096
    The firm, which makes parts for Dyson's vacuum cleaners and
air purifiers, faces high operational risks in the short term
and will be challenged to find new customers to replace Dyson,
AmInvestment Bank said.
    "ATA may not be in the most favourable position to negotiate
with potential new customers," it said in a research note.
    "Hence, we believe ATA's recovery from the current crisis
will be bumpy, exacerbated by the labour shortage crisis." 
    ATA said this month it was unable to recruit foreign workers
because of coronavirus curbs. 
    Its shares fell as much as 27% on Tuesday, before paring
some losses. It has lost nearly two-thirds of its value since
the Dyson termination. 
    Two other ATA customers are monitoring the accusations, they
told Reuters.    
    Ecobee, a maker of Wi-Fi-enabled thermostats, said it was
recently made aware of the accusations and was reviewing the
information to decide its next steps. 
    Cricut, which makes electronic crafting machines, said it
took the accusations seriously and was monitoring the issue to
determine further action.
    France's Sagemcom, which makes communications devices,
signed up as an ATA customer late in 2019, but said it cut ties
with the Malaysian firm this year, "given the supplier's
shortcomings and its inability to meet our standards".
    It did not say what standards ATA fell short of.
    ATA did not immediately respond to a request for comment. 

 (Reporting by A. Ananthalakshmi; Editing by Tom Hogue and
Clarence Fernandez)
 ((ananthalakshmi.as@thomsonreuters.com; Twitter:
@AnanthalakshmiA;))