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Page 1/22Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP : 890534100
TOP GLOVE CORPORATION BHDInvestor Presentation
01 Aug 2018
Page 2/22
TG BUSINESS ETHICS CLAPS
Ready, 1 2 3
Claps, 2x 3x 2x
Prepared By: Ng Chin Yong @ 14/07/17
Checked & Verified By: Ng Yong Lin @ 14/07/17
Page 3/22
Modest Beginnings
• Founded in 1991 by Tan Sri Dr Lim Wee Chai.
Family owned a small rubber plantation and was involved in the rubber trading
business.
Top Glove commenced operations with 1 factory, 1 production lines and 100
employees.
At that time, there were around 250 glove manufacturers in Malaysia following
the surge in glove demand due to the AIDS epidemic.
With oversupply and stringent quality standards imposed by the FDA, many
players were edged out of the industry.
Top Glove remained in business, and grew leaps and bounds, having set the
good Business direction of producing high quality gloves at efficient low
cost.
Page 3 / 22
• Top Glove has emerged as the world’s largest manufacturer of gloves with:-
A sizeable production capacity of 60.5 billion gloves per annum.
A listing on Bursa Malaysia (2001) and SGX (2016).
Page 4/22
World population estimate at 7.6 bil, average usage 28 pcs per population
Steady Global Demand Growth
103110
123 127 128136 135
153160
173180
190201
220
0
20
40
60
80
100
120
140
160
180
200
220
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E
bil pcsEstimate global demand growth at 8% to 10% pa
Page 4 / 22
Page 5/22
An Industry with Excellent Growth Potential
Source: International Trade Centre and Company & www.worldometers.infoPage 5 / 22
% of World Population % of Global Glove Consumption
Developed countries
(USA, EU29 and Japan)
Other regions
Widely Used in Developed Nations, but Underused in Emerging Countries
% of Global Glove Consumption by Region
70%
30%
20%
80%
Page 6/22
Source: MREPC - Private Sector Consumption of Medical Gloves
Page 6 / 22
Projected Yearly Rubber Glove Consumption Per Capita for 2017
Page 7/22
• Over 2,000 customers and growing.
• Comprising mainly distributors across 195 countries.
• A geographically diverse customer base.
• A preferred OEM manufacturer in every region.
• No single customer contributes more than 4% of revenue.
Top Glove Global Customer Base
Page 7 / 22
Sales volume by geography
9MFY18 (Sep’17 to May’18) Region Avg growth rate for the 3 years
North America 10.8%
Europe 11.3%
Japan 13.2%
Asia ex Japan 12.9%
Middle East 6.3%
Latin America 3.8%
Africa -8.1%
Total 8.8%
Page 8/22
1. An indispensable item in the healthcare sector
As a protective barrier
2. Increasing hygiene standards and healthcare
awareness
Non-medical sector in developed countries
Medical sector in developing countries
3. A growing ageing population
With the elderly being more susceptible to higher-risk
diseases
4. Progressively stringent health regulations
Healthcare reforms: US, China
Healthcare regulations: OSHA in US, EU-OSHA in
Europe, SESI in Brazil
5. The emergence of new health threats
E.g. A(H1N1), SARS, bird flu, ebola, bio-terrorism,
Anthrax
Key Industry Drivers
Page 8 / 22
Page 9/22
9MFY18 product mix by revenue
Aligning Our Product Mix with Market Demand
Latex powdered glove
Nitrile glove
Vinyl / TPE / CPE glove
Surgical glove
Latex powder-free glove
Glove type by volume
Page 9 / 22
Page 10/22Page 10 / 22
China
1 glove factory
Producing:
•Vinyl gloves
Thailand
2 glove factories
2 latex plants
Producing:
•Latex examination
gloves
•Latex concentrate
Statistics as at Aug 2018
40 Manufacturing Facilities Regionwide
• 32 glove factories | 648 production lines | 60.5 billion pcs p.a. capacity
• 2 latex concentrate/processing plants supplying 60% to 70% of our latex requirements
• 1 porcelain hand mold factory
• 2 chemical factories
• 1 packaging material plant
• 1 dental dam factory
• 1 condom factory
• Steadily expanding via organic and non-organic growth
Malaysia
29 glove factories
1 glove former factory
2 chemical factories
1 packaging material plant
1 dental dam factory
1 condom factory
Producing:
•Latex examination gloves
•Nitrile examination gloves
•Surgical gloves
•Household gloves
•Cleanroom gloves
•CPE/TPE gloves
•Former manufacturing
•Chemical manufacturing
•Packaging material plant
•Dental dam
•Condom
Page 11/22
Blueprints for Expansion
• Boosting nitrile capacity in tandem with growing demand
• Faster, more efficient and technologically advanced production lines
• Increased automation throughout the manufacturing process
• On-going facility optimization initiatives which include the construction of highly-
efficient factories
Page 11 / 22
Type No. of
production
lines
Capacity
pcs p.a.
Target to
commence
operations by
Current: 32 glove factories 648 lines 60.5 bil
Expansion in progress : Glove
F32 (Klang, Malaysia) New factory Nitrile 44 lines 4.4 bil Early 2019
Total by early 2019: 33 glove factories 692 lines 64.9 bil
Condom
Current: F35CD Latex 2 lines 0.2 bil
Page 12/22
Cost breakdown
• A cost pass-through mechanism whereby both cost increases and
savings to be shared out with customers.
• Continuously improving cost efficiency through intensive R&D initiatives.
Page 12 / 22
Natural Rubber Gloves Nitrile Gloves
Page 13/22
Raw Material Price Trend
Natural rubber latex price trend (RM/kg)
Correlation between natural rubber latex, nitrile latex and crude oil prices (USD/kg)
Note: NR Latex & Nitrile Latex based on 60% TSCPage 13 / 22
Page 14/22
3Q18
1 Mar 18 –
31 May 18
3Q17
1 Mar 17 –
31 May 17
Variance
(3Q18 vs
3Q17)
2Q18
1 Dec 17 –
28 Feb 18
Variance
(3Q18 vs
2Q18)
Total sales (RM’mil) 1,100.6 869.6 26.6% 958.4 14.8%
EBITDA (RM’mil) 181.9 118.7 53.2% 158.0 15.1%
EBITDA margin 16.5% 13.6% 16.5%
PBT (RM’mil) 134.2 91.5 46.7% 124.5 2.0%
PBT margin 12.2% 10.5% 13.0%
PAT (RM’mil) 119.4 77.5 54.1% 110.0 3.9%
PAT margin 10.8% 8.9% 11.5%
EPS (sen) 9.4 6.2 51.6% 8.7 3.6%
Latest 3Q18 results
Page 14 / 22
• Sales quantity up by 37% vs 3Q17 and 8% vs 2Q18.
• ASP up by 3% vs 3Q17 and 8% vs 2Q18.
• Natural rubber latex price down by 38% vs 3Q17 and 1% vs 2Q18.
• Nitrile latex price down by 14% vs 3Q17 and up by 8% vs 2Q18.
• USD weakened by 11% vs 3Q17 and 2% vs 2Q18.
• 3Q18 with natural gas price up by 24% vs 3Q17 and 7% vs 2Q18.
Page 15/22
Steady growth since listing
(in RM’mil) 2010 2011 2012 2013 2014 2015 2016 20179MFY18
(unaudited)
Sales 2,079.4 2,053.9 2,314.5 2,313.2 2,275.4 2,510.5 2,888.5 3,409.2 2,997.1
EBITDA 364.7 196.7 297.7 310.6 301.8 441.7 524.7 484.0 491.2
EBITDA margin 17.5% 9.6% 12.9% 13.4% 13.3% 17.6% 18.2% 14.2% 16.4%
PBT 305.0 145.5 240.7 242.2 216.3 363.5 442.2 383.1 380.7
PBT margin 14.7% 7.1% 10.4% 10.5% 9.5% 14.5% 15.3% 11.2% 12.7%
Taxation 54.6 30.3 33.4 39.4 32.7 82.3 79.8 54.7 45.4
PAT 250.4 115.1 207.3 202.8 183.6 281.2 362.4 328.4 335.3
PAT margin 12.0% 5.6% 9.0% 8.8% 8.1% 11.2% 12.5% 9.6% 11.2%
# PAT Equity 245.2 113.1 202.7 196.5 180.5 279.8 360.7 328.6 332.0
ROE (%) 22.4 10.0 16.2 14.9 13.1 17.4 19.9 16.3 19.6
EPS (RM)** 0.20 0.09 0.17 0.16 0.15 0.23 0.29 0.26 0.35
Average PAT marginRevenue CAGR PAT CAGR
20.8%22.1% 9.5%For FY ended 31 August
Past 17 years since
listing in 2001 :Past 17 years since
listing in 2001 :Past 17 years since
listing in 2001 :
* Annualised **Adjusted for bonus issuePage 15 / 22
*
*
Page 16/22
Healthy balance sheet
Page 16 / 22
As at 31 May 18 As at 31 May 17
Net borrowing/net cash and short term investment
(RM’mil)
Shareholders equity (RM’mil)
Net assets per share (RM)
Return on equity
Inventory turnover days
Receivable turnover days
Payable turnover days
Working capital turnover days
(1,629.5)
2,276.1
1.78
19.5%
37
48
40
45
95.3
1,907.1
1.52
16.4%
33
49
39
43
9MFY18
31 May 18
9MFY17
31 May 17
Net cash flow from operating activities (RM’mil)
Capital expenditure (RM’mil)
298.9
336.3
177.7
306.9
** Reduction in cash balance due to spending on capital expenditure and acquisition in 9MFY2018 of
RM1,755.5 million
**
Page 17/22
Dividend and payout ratio
Dividend Policy : Payout ratio of 50% of PAT after MI
Note: Dividend per share has been adjusted with the bonus issuesPage 17 / 22
Total dividend payment of RM1.16 billion since listing in 2001
Payout Ratio
Total Dividend (RM'mil)21.2 27.4 32.4 65.9 98.9 68.0 99.0 99.3 99.0 142.8 181.6
25% 31% 29% 39% 40% 60% 49% 50% 55% 51% 50%
181.9
55%
89.4
Paid on 17 July 2018
Page 18/22
Shareholders return at 83.0 times since IPO (17 years)
With initial investment of 1,000 shares made during initial public offering price of RM2.70 on 27/03/01, the
return is as follows:
If the bonus issues and share split are not taken into consideration, the share price would have
been RM207.51 per share.
Date*share
PriceNumber ofshares held
Total market Value
Accumulated dividend
received (RM)
Cost ofinvestment
Capitalappreciation
Total s/holdersreturn %
(RM) (RM) (RM) (RM)
27-Mar-01 0.13 20,384 * 2,700 - 2,700 - -
02-Jan-13 2.875 20,384 * 58,604 6,825 2,700 62,729 2,323%
02-Jan-14 2.87 20,384 * 58,502 8,460 2,700 64,262 2,380%
02-Jan-15 2.30 20,384 * 46,883 10,091 2,700 54,274 2,010%
05-Jan-16 6.87 20,384 * 140,038 11,824 2,700 149,162 5,525%
04-Jan-17 5.41 20,384 * 110,277 14,576 2,700 122,153 4,524%
02-Jan-18 7.89 20,384 * 160,830 17,531 2,700 175,661 6,506%
01-Aug-18 10.18 20,384 * 207,509 19,264 2,700 224,073 8,299%
Top Glove list of Component Stock
*adjusted for bonus issue and share split
FTSE Bursa Malaysia ("FBM") Mid 70 Index
FTSE4Good Bursa Malaysia Index [ESG Index]
FTSE Bursa Malaysia Hijrah Shariah Index
MSCI Global Standard Index
FBM Top 100 Index
FBM Emas SyariahIndex
FBM Emas IndexPage 18 / 22
Page 19/22
Must know, Must do, Must teach
Top Glove’s Business Direction, Ethics, Rules & Philosophies
1. To produce consistently high
quality gloves at efficient low cost.
1.Do not lose our shareholders’ money;
2.Do not lose our health;
3.Do not lose our temper;
4.Do not lose our customers.
1.We work for our customers;
2.We take care of the interest of our
shareholders;
3.We ensure that our employees continue
to contribute positively to the company and
we care for their well-being; and
4.We work closely with our bankers,
suppliers, business associates and friends.
1.Honesty
2.Integrity
3.Transparency
Business rules
Business direction Business philosophies
Business ethics
Investment direction
Page 19 / 22
Guiding principles for growth and success
1. To invest 1 efficient dollar and earn 2
healthy dollars.
Page 20/22
1. To use technology and further automate production lines to reduce
reliance on workers & improve quality and efficiency.
2. To computerize the company’s operations and manufacturing
process.
3. Embark on Industrial Revolution 4.0 implementation through the
application of IoT, robotics and automated real time manufacturing
system.
4. To continuously invest in and recruit staff who are Intelligent,
Energetic and Act with Integrity.
5. To capture growth in demand from emerging markets.
6. To capture 30% of the global market share by 2020.
7. To diversify into other businesses such as condom manufacturing
and dental dam.
Management Focus Moving Forward
Page 20 / 22
Page 21/22
TOP GLOVE GROUP OF COMPANIES
