Top Glove Corporation Bhd
Corporate presentation
Bursa Malaysia 7113 Reuters TPGC.KL Bloomberg TOPG MK ADR CUSIP 890534100
T h e W o r l d ’ s L a r g e s t R u b be r G l o v e Ma n u f a c t u r e r
To p G l o v e , To p Q u a l i t y,
To p E f f i c i e n c y,
G o o d H e a l t h , S a f e t y F i r s t ,
B e H o n e s t
Presented by : Lim CG
Prepared by: See SF
Date: 3 January 2013
At a glance
• Commenced operations in 1991.
Listed in 2001
• Comprehensive product range
with 13 major types of rubber
gloves
• 80% of production for health care
sector and 20% for non-health
care sector
• Produce 77% natural rubber glove
and 23% synthetic rubber glove
• Target balance capacity mix of
natural rubber and synthetic
rubber glove
Page 2 / 21
1QFY13 product mix by volume
Powdered latex 52%
Powder free
latex 23%
Nitrile 16%
Vinyl 7%
Surgical 2%
Strong growth momentumEstimate Global annual demand: Approx. 160 bil pcs p.a for year 2012
No. of glo
ves (b
illion p
cs)
Year
Top Glove exponential growth in capacity (CAGR : 28%)
Expansion in global market share
Current market share Target market share by Dec 2015Page 3 / 21
1.4 2.4 3.25.1
7.29
15
22
28.23031.5
3335.25
4040.3
0
5
10
15
20
25
30
35
40
45
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13
25%
0
20
40
60
80
100
120
140
160
180
'99'00'01'02'03'04'05'06'07'08'09'10'11'12
No. of glo
ves (b
illion p
cs)
Year
As at Jan’13
Global rubber glove usage(by region, 2000 – 2009)
USAEU27
Asia Ex Japan
Latin America
Japan
11%
89%32%
% of global glove usagein 2009
% of world populationin 2009
* Source from Malaysian Rubber Export Promotion Council and Company
%
Page 4 / 21
68%
• USA and EU27 with only 11% of world population consumed 68% of
global glove usage.
• Other regions with 89% of world population consumed only 32% of
global glove usage.
Geographically diversified
• Exports to 185 countries with
more than 1,800 customers
• Geographically diversified and
no single biggest customer
constitutes more than 4% of
revenue
• Customers are mainly
distributors in the respective
countries
• Preferred OEM manufacturer
Page 5 / 21
Europe 35%
North America 27%
Latin America 20%
Asia 10%
Middle East 5%
Rest of the World 3%
1QFY13 revenue by geography
1. Medical gloves is a necessity in
healthcare industry
� As a barrier of protection
2. Increasing healthcare and hygiene
awareness
� Especially in developing countries
3. Ageing population
� As elderly are more susceptible to
higher risk diseases
4. Health regulations
� Healthcare reforms, eg. US, China
� Healthcare regulations eg. OSHA in US,
EU-OSHA in Europe, SESI in Brazil
5. Emergence of health threats
� E.g. A(H1N1), SARS, bird flu, Bio-
terrorism threats, Anthrax
Key industry drivers
Page 6 / 21
24 manufacturing facilities across 3 countries(as at Jan 2013)
• 22 glove factories 40.3 bil capacity p.a.
from 462 production
lines
• 2 latex concentrate/ processing plants supply 60% to 70% of
Top Glove’s
requirement
China
2 glove factories
Produce:
• Vinyl glove
• PE glove
Thailand
2 glove factories2 latex plants
Produce:
• Latex examination
glove
• Latex concentrate
Malaysia
17 glove factories
Produce:
• Latex examination
glove
• Nitrile examination
glove
• Surgical glove
• Household glove
• Cleanroom glove
Page 7 / 21
Production capacity expansion plan
No. of production
lines
Capacity p.a. Target completion
Current: 22 glove factories 462 lines 40.3 bil pcs p.a.
Expansion plan :
F18 (Banting, Malaysia) Phase 2
F25 (Klang, Malaysia) New factory
F23 (Ipoh, Malaysia) Phase 2
Total expansion by August 2013
16 lines
20 lines
16 lines
52 lines
1.5 bil pcs p.a.
1.8 bil pcs p.a.
1.5 bil pcs p.a.
4.8 bil pcs p.a.
April 2013
June 2013
August 2013
Total by August 2013 : 23 glove factories 514 lines 45.1 bil pcs p.a.
Page 8 / 21
New Venture : Rubber Plantation
Page 9 / 21
1. Acquisition of PT Agro completed on 1 October
2012.
2. Plantation land located in Indonesia, south of
Sumatera.
3. Land size 30,773 ha.
4. Concessions land tenure for 60 years, renewal
for another 60 years.
5. Rubber trees has 6 years gestation period.
6. Progressive planting over 8 years, with full
development will take 13 years.
7. Estimated investment cost around RM450m,
over 13 years, including land, planting,
maintenance cost up to maturity and facilities.
Natural Rubber Supply vs Demand
Page 10 / 21
Costs breakdown
Average latex prices
2
3
4
5
6
7
8
9
10
11
12
Sep-03
Mar-04
Sep-04
Mar-05
Sep-05
Mar-06
Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
RM p
er kg
FY05
RM3.28
FY07
RM4.78
FY06
RM4.94
FY04
RM3.14
FY08
RM5.62
FY09
RM4.34
RM7.20
(03/07/08)
RM6.85
(30/06/06)
RM7.75
(23/04/10)
FY10
RM6.12
RM10.99
(11/04/11)
FY11
RM8.92
• Able to pass majority of latex cost increases to customers
• On-going internal cost improvement and efficiency measures offset cost increases
• Upstream production (latex concentrate plant) to provide greater control over latex supply
Page 11 / 21
Latex 54%
Labour 9%
Chemical 9%
Fuel 8%
Packaging 6%
Overhead and
others 14%
Breakdown of production costs (from Sept'12 to Nov'12)
FY12
RM7.36
RM6.45
(10/10/12)
RM6.09
(02/01/12)
1QFY13
Natural rubber (NR) latex, nitrile latex & crude oil price trend (in USD)
Page 12 / 21
1.86
1.00
2.19
1.00
2.37
3.61
2.07
2.05
1.91
2.39
1.19
2.91
2.20
1.851.69
74.40
140
41.68
86.15
112.79
82.92
99.74
103.02
78.4
86.11
89.03
0
20
40
60
80
100
120
140
0.5
1.5
2.5
3.5
4.5
5.5
6.5
7.5
Jun
-05
Se
p-0
5
De
c-0
5
Ma
r-0
6
Jun
-06
Se
p-0
6
De
c-0
6
Ma
r-0
7
Jun
-07
Se
p-0
7
De
c-0
7
Ma
r-0
8
Jun
-08
Se
p-0
8
De
c-0
8
Ma
r-0
9
Jun
-09
Se
p-0
9
De
c-0
9
Ma
r-1
0
Jun
-10
Se
p-1
0
De
c-1
0
Ma
r-1
1
Jun
-11
Se
p-1
1
De
c-1
1
Ma
r-1
2
Jun
-12
Se
p-1
2
De
c-1
2
Crude Oil Price (WTI)
(USD/bbl)
NR Latex & Nitrile Price
(USD/KG)
Natural Rubber (NR) Latex, Nitrile Latex
& Crude Oil Price in USD
(Jan 2005 to Dec 2012)
Crude
Oil
NR
Latex
Nitrile
Note: NR Latex & Nitrile Latex based on 60% TSC
Challenges in glove industry
$
2
3
4
5
6
7
8
9
10
11
Aug-03
Feb-04
Aug-04
Feb-05
Aug-05
Feb-06
Aug-06
Feb-07
Aug-07
Feb-08
Aug-08
Feb-09
Aug-09
Feb-10
Aug-10
Feb-11
• Due to weather impact, crude oil
price movement, speculation,
competition with other usage
• Time lag in passing on to customers
when prices move up sharply
• Majority sales in USD,
subject to USD currency
movement
• Time lag in passing on to
customers when USD
weakens sharply
• Impact on energy cost, other
raw materials and logistic cost
• Inflation
Page 13 / 21
Currency exposure
Raw material price fluctuation Crude oil price fluctuation/ speculation
3 months performance comparison
1Q13
1 Sept 12 –
30 Nov12
1Q12
1 Sept 11 –
30 Nov 11
Variance(1Q13 vs
1Q12)
4Q12
1 Jun 12 –
31 Aug 12
Variance(1Q13 vs
4Q12)
Total sales (RM’mil) 584.6 554.8 5% 607.3 (4%)
EBITDA (RM’mil) 89.6 58.2 54% 85.0 5%
EBITDA margin 15.3% 10.5% 14.0%
PBT (RM’mil) 70.4 41.6 69% 66.6 6%
PBT margin 12.0% 7.5% 11.0%
Profit attributable to equity
(RM’mil)57.5 31.4 83% 64.0 (10%)
PAT (RM’mil) 58.9 32.5 81% 65.8 (10%)
PAT margin 10.1% 5.9% 10.8%
EPS (sen) 9.3 5.1 82% 10.3 (10%)
• Sales volume (quantity of gloves) up 23% 1Q13 vs 1Q12, up 6% 1Q13 vs 4Q12
• Latex price down 30% 1Q13 vs 1Q12, down 14% 1Q13 vs 4Q12
• Improvement in margin
• Lower tax expense due to recognition of deferred tax assets
Page 14 / 21
Financial highlights since listing in 2001 (12 years)
Incomestatement
Per share data
* Based on par value of RM0.50, adjusted for share split and bonus issue
# Restated to comply with FRS112 (deferred tax)
Page 15 / 21
(in RM’mil) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 CAGR12 yrs
Avg
Sales 138.9 180.2 265.1 418.1 641.8 992.6 1,228.9 1,377.9 1,529.1 2,079.4 2,053.9 2,314.4 31% -
EBITDA 23.9 27.1 39.5 60.6 89.2 130.3 175.7 197.8 287.5 364.7 207.3 310.0 30% -
EBITDA margin 17.2% 15.0% 14.9% 14.5% 13.9% 13.1% 14.3% 14.4% 18.8% 17.5% 10.1% 13.4% - 14.8%
PBT 17.2 20.2 29.3 45.2 65.7 91.8 118.6 134.6 222.0 305.0 145.5 240.7 33% -
PBT margin 12.4% 11.2% 11.0% 10.8% 10.2% 9.2% 9.7% 9.8% 14.5% 14.7% 7.1% 10.4% - 10.9%
# PAT Equity 15.9 18.1 25.3 39.5 58.1 84.1 89.6 110.1 169.1 245.2 113.1 202.7 32% -
PAT margin 11.4% 9.9% 9.7% 9.5% 9.1% 8.5% 7.2% 7.8% 11.0% 12.0% 5.6% 8.9% - 9.2%
ROE 17.0 16.1 17.8 24.3 26.9 27.8 14.0 16.0 20.0 22.0 9.9 15.8 - -
(in RM) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 CAGR
* Net Assets 0.183 0.221 0.275 0.312 0.409 0.561 1.067 1.141 1.393 1.808 1.853 2.068 26% -
* EPS 0.03 0.04 0.05 0.08 0.11 0.16 0.16 0.19 0.29 0.40 0.18 0.33 30% -
Strong and healthy balance sheet
Page 16 / 21
1QFY13
As at 30 Nov 12
FY2012
As at 31 Aug 12
Net cash flow from operating activities (RM’mil) 113.3 277.9
Capital expenditure and investment (RM’mil) 80.4 145.6
Free cash flow before dividend (RM’mil) 32.9 132.3
Net cash and short term investment (RM’mil) 345.9 308.5
Shareholders equity (RM’mil) 1,345.1 1,279.9
Net assets per share (RM) 2.17 2.07
Return on equity * 17.1 15.8
Inventory turnover days 29 28
Receivable turnover days 40 44
Payable turnover days 38 37
* Annualised
Dividend – sustainable and steady growthFinancial
year
Dividend per share
(sen)
Total
dividend
(RM’000)
2012 9.00 (Proposed)
7.00 (interim)
55,699
43,306
2011 11.00 68,035
2010 16.00 98,877
2009 11.00 65,873
2008 5.50 32,389
2007 4.61 27,435
2006 3.67 21,173
2005 2.66 14,110
2004 2.36 12,295
2003 1.85 9,550
2002 0.56 2,808
2001 0.80 4,000
Total payout since listing 455,550
* Dividend per share has been adjusted for share split and bonus issue
Target dividend payout ratio is around 50% of profit
attributable to equity
Dividend payout ratio : FY12 at 50%
: FY11 at 60%
: FY10 at 40%
: FY09 at 40%Page 17 / 21
0.80 0.56
1.85 2.36
2.66 3.67
4.61 5.50
11.00
16.00
-
2
4
6
8
10
12
14
16
18
20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Dividend per share (sen)
Financial Year
Dividend (sen)(Financial year ended 31 August)
16.00
11.0
0
Return on investment
Page 18 / 21
DateClosing share price (RM)
Number of shares held
Total market value (RM)
Accumulated dividend
received (RM)
Cost of investment
(RM)
Capital appreciation
(RM)
Total s/holders return %
27-Mar-01 2.70 (IPO) 1,000 2,700 - 2,700 - -
02-Jan-04 4.90 1,820 * 8,918 209 2,700 6,427 238%
03-Jan-05 8.65 1,820 * 15,743 415 2,700 13,458 498%
03-Jan-06 6.80 3,640 * 24,752 673 2,700 22,725 842%
03-Jan-07 13.80 3,640 * 50,232 962 2,700 48,494 1796%
03-Jan-08 6.50 5,096 * 33,124 1,412 2,700 31,836 1179%
02-Jan-09 3.64 5,096 * 18,549 1,933 2,700 17,782 659%
04-Jan-10 10.06 5,096 * 51,266 2,595 2,700 51,161 1895%
03-Jan-11 5.05 10,192 * 51,470 4,073 2,700 52,842 1957%
03-Jan-12 5.12 10,192 * 52,183 5,500 2,700 54,983 2036%
02 Jan-13 5.75 10,192 * 58,604 6,830 2,700 62,734 2323%
2323% since IPO in Mar’01, assuming initial investment of 1,000 shares was made during initial public offering price of RM2.70 on 27/03/01
* Adjusted for bonus issue and share split
If the bonus issues and share split are not taken into consideration, the share price should be RM5.75 x 1.3 x 1.4 x 1.4 x 2 x 2 = RM58.60 per share
Corporate culture
Must know, Must do, Must teach
Business direction
1. To produce consistently high
quality gloves at efficient low cost.
Investment direction
1. To earn 2 healthy dollars and invest 1
efficient dollar.
Business rules
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.
Business philosophies
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.
Business ethics
1. Honesty
2. Integrity
3. Transparency
Page 19 / 21
Business Direction, Ethics, Rules & Philosophies
Management focus going forward
Page 20 / 21
• Further automate production line to reduce
workers & improve the efficiency
• Target balance capacity mix of natural
rubber and synthetic rubber glove
• Move upstream to rubber plantation
• Capture growth in emerging market demand
• Target 30% global market share
Thank youQ & A Session
Top Glove Corporation Berhad
www.topglove.com.my
+603 5022 2110
Page 21 / 21
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