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7/27/2019 Latexx Corporate Presentation 4Q2011
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CORPORATE PRESENTATION
February 2012
Prepared by: Dr. Liew Lai Lai
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Latexx Partners Berhad
Stock Exchange Main Market, Bursa Malaysia
Ordinary Shares
Stock CodesBursa: LATEXX/7064Bloomberg: LTX:MK
Reuters: LATX.KL
Share Capital RM111.420 mil (222,839,670 shares of 0.50 sen each)
Market Capitalization RM441.223 mil (RM1.98/share as at 31 Jan 2012)Warrants 2007/2017
Stock CodesBursa: LATEXX-WA/7064WA
Reuters: 7064WA.KL
Balance No. of Warrants 52,009,601
Market Capitalization RM72,813 mil (RM1.40/share as at 31 Jan 2012)
Exercise Terms 1 warrant for 1 new share at RM0.53
Expiry Date 6 Jun 2017
The first rubber glove producer listed in Malaysia in 31 Jan 1996
Corporate Information
3
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Started in 1988, Latexx is a leading and among the top 5 largest
medical examination glove producers in Malaysia
Production facilities situated in a single location of 50 acres in
Kamunting, Perak, 32% still vacant
With 2,500-strong manpower, the 6-plant facilities have total of
89 production lines and annual capacity of producing 9 billion
pieces of gloves per year
Business model of contract manufacturing (OEM) of rubber and
nitrile gloves for global medical product brand names
Business Overview
Situated in one location, the Group is one of the most efficient gloves
producers in Malaysia
4
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Products
Produces both rubber and nitrile glovesnitrile gloves grew the fastest
Non-sterile, idealfor hypersensitive
persons to latexprotein
Custom-mouldedambidextrous glove
Powder-Free Latex ExaminationGlove
Non-sterile, all-
purpose latexexaminationgloves
Low inextractable
protein andchemical residue
Powdered Latex ExaminationGlove
100% syntheticrubber
Provides better gripfor wet and dry
condition. Unique design offers
excellent tactility,with no hand fatigue
and sensitivity
Powder-Free Nitrile ExaminationGlove
DescriptionFY 2008
(%)FY 2009
(%)FY 2010
(%)
YTD 2011(%)
Q1 Q2 Q3 Q4 FY 2011
Powdered Latex 56 24 17 8 4 9 10 8
Powder Free Latex 30 56 40 24 30 27 29 28
Powder Free Nitrile 14 20 43 68 66 64 61 64
Total 100 100 100 100 100 100 100 100
5
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Latexx focuses on higher-end premium segment, particularly nitrile
products......
Revenue Contribution
2010
Nitrile
43%
PP 17%
PF 40%
6
2009Nitrile
20%
PF 56%
PP 24%2011
PF
28%
Nitrile
64%
PP8%
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Production Facilities
Accredited production facilities that comply with international medical
standards Accreditations of the facilities include thefollowing:
ISO:9001:2000 (Awarded by TUV
Management service GmbH, Germany)
ISO 13485:2003 (Accredited byStandards council of Canada by TUV
America Inc.) EN ISO 13485:2003 (Awarded by TUV
product Service GmbH, Germany)
Awarded for Standard Malaysian Glove
Scheme by The Malaysian Rubber Board
7
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Clientele Base
Renowned clientele in medical supply industrytop distributors in the world,
geographically diversified customer base across more than 100 countries
Clientele base of more than 300
worldwide, consisting of global glove
brands, medical suppliers, resellers
and distributors, not dependent on
any single customer, highest numberof MNC accounts in the industry.
8
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Sales by regions
Revenue by Geographical Region
Geographically diversified, exporting to more than 100 countries, main
contribution of revenue from advance countries
Sales by sectors
9
Local
12%
Europe27%
Asia pacific
15%
Latin
America1%
Middle East
4%
USA
41%
Medical
91%
Non-Medical9%
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4Q11 Revenue
Strong and consistent quarterly performance despite challenging
headwinds in the industry .
Description4Q2011RM '000
3Q2011RM '000
Growth(%)
4Q2011RM '000
4Q2010RM '000
Growth(%)
Revenue 89,694 121,813 -26.4% 89,694 106,713 -15.9%
Operating Profit 8,988 15,865 -43.3% 8,988 17,964 -50.0%
Operating Profit Margin (%) 10.0% 13.0% -3.0% 10.0% 16.8% -6.8%
Profit Before Tax (PBT) 7,381 14,130 -47.8% 7,381 16,522 -55.3%
PBT Margin (%) 8.2% 11.6% -3.4% 8.2% 15.5% -7.3%
Profit After Tax (PAT) 926 12,729 -92.7% 926 5,563 -83.4%
PAT Margin (%) 1.0% 10.5% -9.4% 1.0% 5.2% -4.2%
11
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4Q11 Profit and Margin
Sustainable EBITDA margin due to effective product mix & better
operation control..contributing to higher NTA & EPS comparing toprevious quarter
Description 4Q2011RM '000
3Q2011RM '000
Growth(%)
4Q2011RM '000
4Q2010RM '000
Growth(%)
EBITDA 12,452 19,232 -35.3% 12,452 20,955 -40.6%
EBITDA Margin (%) 13.9% 15.8% -1.9% 13.9% 19.6% -5.7%
Net Tangible Asset (NTA) 269,113 273,739 -1.7% 269,113 234,784 14.6%
NTA per share (RM) 1.23 1.23 0.0% 1.23 1.07 15.0%
EPS (sen) 0.42 5.71 -92.6% 0.42 2.11 -80.1%
12
G R T d
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Gross Revenue (RM 'mil)
440.6
497.2
328.4
223.3
150.8141
127.6
60.5
2004 2005 2006 2007 2008 2009 2010 2011
Group Revenue Trend
Growth boosted by higher production capacity , global demand
growth of rubber glovespremium product mix play a key role
13
G P fit T d
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Group Profit (RM 'mil)
0
20
40
60
80
100
RM'
mil
0.0%
5.0%
10.0%
15.0%
20.0%Margin
EBIT 3.4 7.8 7.3 6.0 18.5 58.5 89.8 63.3
PAT -0.7 4.3 3.9 4.9 15.2 52.1 65.5 44.0
EBIT Margin 5.5% 6.1% 5.1% 4.0% 8.3% 17.8% 18.0% 14.4%
PATMI Margin 0.0% 3.4% 2.8% 3.2% 6.8% 15.9% 13.2% 10.0%
2004 2005 2006 2007 2008 2009 2010 2011
Improving operating profits from 2007 spurred by effective operation
and cost control..
Group Profit Trend
14
E i P Sh T d
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Earnings Per Share Trend
Strong track record of growth and financial performance
15
Earnings Per Share (Sen)
-0.34
2.18 2 2.47
7.72
26.07
31.21
19.8019.62
24.68
16.94
2004 2005 2006 2007 2008 2009 2010 2011
Adjusted EPS Diluted EPS
4Q11 BALANCE SHEET
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4Q11 BALANCE SHEET
Strong and healthy balance sheet with much financial flexibility
for expansion
DescriptionsAs at 31.12.11
RM milAs at 30.09.11
RM mil
Fixed assets, other investment & goodwill 256.0 257.9
Inventories 76.6 64.0
Trade receivables 50.7 78.6
Cash and bank balances 55.7 64.8
Shareholders equity 269.1 273.7
Total borrowings (short and long term) 101.4 112
Net Cash Flow from Operating Activities 18.4 21.1
Free Cash Flow 2.4 1.2
Trade Payables cycle (days) 52 53
Net Gearing 0.18x 0.17x
Return on Average Shareholders Equity (Annualised) 13.1% 23.2%
Return on Average Total Assets (Annualised) 8.1% 13.5%
16
Group Financial Ratios
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DescriptionFY 2008 FY 2009 FY 2010
YTD 2011
Q1 Q2 Q3 Q4 FY 2011
Receivables cycle (days) 63 46 39 54 54 58 51 54
Inventory cycle (days) 57 38 34 45 37 47 77 52
Return on Assets (ROA) 7.8% 5.1% 22.5% 4.0% 4.7% 5.8% 2.0% 4.1%
Return on Equity (ROE) 12.6% 9.8% 38.2% 6.6% 8.3% 3.4% 3.3% 5.4%
Interest cover 5.6x 9.9x 16x 11x 14x 9.2x 6x 10x
Gearing ratio (Net) 0.47 0.35 0.13 0.14 0.16 0.17 0.18 0.16
Current ratio
1.1x 1.1x 1.6x 1.8x 1.7x 1.7x 1.2x 1.6x
Group Financial Ratios
Healthy Financial Ratios indicating good financial health..
17
4Q11 Cost Structure
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Cost Structure
(in % ofTotal Production Cost)
Overhead andother
9%
Packaging
3%
Labour
5%
Chemical
8%
Fuel10%
Latex
32%
Nitrile
33%
4Q11 Cost Structure
Sustaining the effective cost structure due to due to effective
operation control, cost saving measures and enabled by being asingle location manufacturer..
18
Dividend Payout
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Dividend Payout
First dividend payout in 1Q09.1Q10 payout 2.5 sen, 2Q10 further payout 2nd
interim dividend of 2.5 sen., final tax exempt dividend of 2.5 sen for 2010,
the Group is set for consistent dividend payout in the future..
Financial
YearDescription Payment date
Dividend
(%)
Value
(RM'000)
20091st interim tax exempt dividend
2nd interim tax exempt dividend
12.06.2009
16.12.2009
2%
2%
1,947
1,973
2010
1st interim tax exempt dividend
2nd interim tax exempt dividend
Final tax exempt dividend
05.07.2010
05.10.2010
18.07.2011
5%
5%
5%
5,271
5,445
5,552
2011 1
st
interim tax exempt dividendFinal tax exempt dividend 05.01.2012TBA 5%3% 5,553*3,332
Total 29,073
* Estimated
19
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Key Industry Trends
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Enables MNCs to focus on Core business
Brand building Market development
OEM rubber glove manufacturersto play strategic role to MNCs
Global epidemic diseases(H1N1, Bird flu, SARS)
Increased awareness in
healthcare providers &implementation of higherhygiene standards
and practices
Greater consolidation in
the pipeline
Stronger players to capturevacuum left by exiting smaller
peers
Higher economies of scale
Operational efficiency
Better bargaining power
Trend of increasing healthcarebudgets worldwide
Aging population
US Healthcare Reform Healthcare revamp in developing
countries (China, India)
Healthcare regulation
Key Industry Trends
Half of global supply met by 5 Malaysian companies not a sunset industry
for these big players, the Company is riding on these key industry trends
21
Rising Threat ofGlobal Health
Scare
RisingHealthcareExpenditure
Increasing Trendof OutsourcedManufacturers
IndustryConsolidation To
OligopolisticMarket
Industry Challenges
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Latex pricefluctuation
Volatility of rawmaterial pricescontinue toimpact glovemanufacturers.
Prices for NitrileLatex is increased
by 36% from 1Q11to 4Q11.
Currency exposure
Sales proceed inUSD.
USD exchange rateis still weak.
Tighter glovesinspection inmedical sector
More stringent USFDA inspectioncriteria, fromAQL4.0 to AQL2.5at entry startedDecember 2009.
Constrain in powersupply
Limited supply innatural gas posingthreat to capacityexpansions ofMalaysia glovemanufacturers.
Maintaining highest level of sensitivity and awareness on the foresee and
unforeseen industry challenges ahead, adopting contingency strategies tomitigate the impact of the challenges.
Industry Challenges
22
Raw Material Price & Forex Trend
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Nitrile Latex Unit price (MYR)
2.00
4.00
6.00
8.00
2007
2008
2009
2010
Jan
Feb
M
ar
Apr
M
ay
Jun
Jul
A
ug
Sep
O
ct
Nov
D
ec
2011
RMAverage USD vs. MYR Forex
2.50
3.00
3.50
4.00
Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
MYR
Average Latex Price from Dec 2007 - Dec 2011
0.0
5.0
10.0
15.0
Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12
Sen/kg
Source : www.exchange-rates.org
Source : Malaysia Rubber Board
Persistently rising prices of rawmaterials raising concerns.
Although higher prices effectively
passed to customers . still it is
affecting gloves consumer behaviors
*As at 31 January 2012
Highest3.708
Lowest2.963
*As at 31 January 2012
Highest10.87
Lowest3.350
23
Highest6.322
Lowest3.800
Source : Company Data
*As at 31 December 2011
Current6.713
Current3.033
Current4.442
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Strong Growth
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Market share expansion
Growth Strategies
High Performance
Strong Growth by focuses in capacityexpansion and expansion of market
share through market development
Continue efforts on product
improvement, offering and delivering
value to customer
Developing and reaping first mover
advantage with unique positioning thru
innovation and highly demand product
Increase overseas customer base by
participating in trade missions and
building Latexxs image in international
arena, particularly in other regions
besides the North America
Tie-up with more MNCs for OEM
manufacturing by leveraging on existing
experience with Ansell, Cardinal Health
and Kimberly Clark Corporation for
more OEM customers
Strategically venturing into the non-
medical markets in all regions
25
Strong Growth
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For futureFor futureconstructionconstruction
Strategic expansion plans with massive land banks of 50 acres, all in one
location, well ahead of the planned capacity expansion, having already
achieved the 2011 target of manufacturing 9 billion gloves per annum, underthe current expansion plan, a total of 89 lines are already in operation.
Plant 1: 28 lines running now
26
Product Expansion
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Continuous product improvement and expansion aiming to offer and
delivery more value to customers, sharing the achievement with our
customers.
Successfully launched of2.5 gram nitrile gloves, suitable for the
use in non-medical sectors, lower price compare to lower end NR
powdered gloves, positioning as perfect substitute product forlower end NR powdered gloves in the non-medical sectors, such
as food handling, personal care, beauty care, etc.
Successfully launched of3.0 gram nitrile gloves, suitable for theuse in both medical and non-medical sectors, lower price
compare to lower end NR powdered gloves and is the perfect
substitution for lower end NR powdered gloves
Successfully launched of3.5 gram nitrile gloves, suitable for use
in medical sectors, greater value compare to medical used
natural rubber gloves
27
Product Expansion
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Aggressively venturing into the non-medical market and other regions
beside the North America...
Aggressively venturing into the non-medical market, i.e. by
offering the ultra thin nitrile product range to the food handling,
beauty care, personal care, industrial and other non-medicalsectors
Intensify marketing efforts on other regions besides the North
America market, i.e. Europe, Middle East, Japan, India, China, South America, etc..
Adopting high impact penetration into the glove market of these
regions through active participation in trade-shows in bothadvance and emerging regions
28
Strategic Positioning with Breakthrough Tech
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Developing and reaping the first mover advantage with unique position thru
innovative and highly demand product, premium quality powder free
natural rubber gloves with unquantifiable protein level target to becommercialized by 2011.
JV with Budev B.V., owner of the breakthrough technology
use to reduce the major allergens that cause protein allergyin natural rubber gloves
Exclusive rights to JV vehicle, Total Glove Company Sdn Bhd
to apply and commercialize the patented method (MPXX) innatural rubber examination and surgical glove
A major breakthrough in the existing global rubber gloves
industry, targeting to commercialize by 2011
Premium pricing, expected to boost earnings and margins by
2012
29
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Investment Merits
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Centralized location with economies of scale
Effective operation control acknowledged by industry players
Stringent quality control, defect rate of 1%, lower than the
industry average of 1.5-2.5% State of art facilities, 65% of current production lines are less
than 2 years old, remaining upgraded
In-house technology to design highly flexible and high power
machines, equipment and process
Strong and solid
businessfundamentals
Poised to post fastest growth amongst peers, the strategic factors
indicating why invest in Latexx....
Global demand growing faster than expansion of production
capacity
Health scare and best practice awareness to boost demand
Industry prospects
remain bright
Strong recurring income stream attributed by superior network
support with large MNC accounts
Prompt payment resulted in low trade receivables cycle
Healthy cash flow
position
31
Investment Merits
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Earnings of 26.07 sen/share in FY09, 31.21 sen/share in FY10,
19.80 sen/share in FY11
Valuation under-
appreciated in view
of earnings growth
The Ultra thin nitrile gloves of 2.5g, 3.0g and 3.5g for the medicaland non-medical sector
The commercialization of the powder free latex gloves with
unquantifiable protein level under the FITkit testing method
Product
Innovativeness
Long-established clientele consisting of world-renowned medical
supply providers, resellers and distributors
Low cost structure gives Latexx cost advantage
Competitive edge over peers powered by high quality standard
Prime beneficiary to the increasing number of MNCs outsourcing
their glove manufacturing businesses
Favorable position as
OEM vendor
Continuous expansion driven by committed management
Future capacity increase enables Group to grab market share in
overseas markets
Well-executed
expansion plan
Rationales why Latexx as an investment choice as today ..
32
Awards & Accolades
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Latexxs excellence performance and continuing efforts in creating
shareholder values were proven and acknowledged
33
KPMG Shareholder Value Award 2010 MalaysiaNo. 2 in Sector Rank (The Industrial Market-
Manufacturing Sector)No. 21 in Top 100 Rank
Forbes Asia Best Under A Billion Award 2010
Among 9 of the Malaysian companies in the awardlist.
Awards & Accolades
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Latexxs excellence performance and continuing efforts in creating
shareholder values were proven and acknowledged
34
Forbes Asia Best Under A Billion Award 2011Among 14 of the Malaysian companies in the
award list.
FinanceAsia Asias Best Managed Companies : India
and MalaysiaBest small-cap.
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Please contact us if you have anyquestions
btlow@latexx.com.myllliew@latexx.com.mywebsite: www.latexx.com.my
THANK YOU
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