Top Glove Corporation Bhd

Corporate presentation



Bursa Malaysia 7113 Reuters TPGC.KL Bloomberg TOPG MK ADR CUSIP 890534100
T h e Wor l d s L ar ges t R u bber Gl ov e Man u f act u r er
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 : CG Lim
Prepared by: See SF
Date: 04 February 2014
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 69% natural rubber glove
and 31% synthetic rubber glove
Target balance capacity mix of
natural rubber and synthetic
rubber glove
Page 2 / 20
Product mix by volume
1QFY14 (Sep13 to Nov13)
Powdered
latex
47%
Powder
free latex
21%
Nitrile
24%
Vinyl
7%
Surgical
1%
Strong growth momentum
Estimate Global annual demand:
Approx. 165 bil pcs p.a for year 2013
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Year
Top Glove exponential growth in capacity
(CAGR : 26%)

Expansion in global market share
Current market share Target market share by Dec 2015
Page 3 / 20
1.4
2.4
3.2
5.1
7.2
9
15
22
28.2
30
31.5
33
35.25
40
43.9
41.3
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 '14
25%
0
50
100
150
200
'99 '01 '03 '05 '07 '09 '11 '13
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Year
As at Jan14
Global rubber glove usage
(by region, 2000 2009)

USA
EU27
Asia Ex Japan
Latin America
Japan
11%
89% 32%
% of global
glove usage
in 2009
% of world
population
in 2009
* Source from Malaysian Rubber Export Promotion Council and Company
%
Page 4 / 20
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 195 countries with
more than 2,000 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 / 20
Europe
30%
North
America
29%
Latin
America
16%
Asia 15%
Middle East
7%
Rest of the
World 3%
Revenue by geography
1QFY14 (Sep13 to Nov13)
6
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 / 20
7
25 manufacturing facilities across 3 countries
(as at January 2014)
23 glove factories
41.3 bil capacity p.a.
from 464 production
lines
2 latex concentrate/
processing plants
supply 60% to 70% of
Top Gloves
requirement

China



1 glove factory
Produce:
Vinyl glove
PE glove
Thailand



2 glove factories
2 latex plants
Produce:
Latex examination
glove
Latex concentrate
Malaysia



20 glove factories
Produce:
Latex examination
glove
Nitrile examination
glove
Surgical glove
Household glove
Cleanroom glove
Page 7 / 20
8
Current expansion plan

No. of
production
lines
Capacity p.a. Target
completion
Current: 23 glove factories 464 lines 41.3 bil pcs p.a.
Expansion plan :
F27 (Lukut, Malaysia) Phase 2
F29 (Klang, Malaysia) New factory

Total expansion by August 2014

6 lines
14 lines

20 lines

0.6 bil pcs p.a.
1.4 bil pcs p.a.

2.0 bil pcs p.a.

May 2014
August 2014

Total by August 2014 : 24 glove factories 484 lines 43.3 bil pcs p.a.
Page 8 / 20
New Venture : Rubber Plantation

Page 9 / 20
1. Plantation land located in Indonesia, south
of Sumatera; Land size 30,772 ha
2. Concessions land tenure for 60 years,
renewal for another 60 years.
3. Purpose :
a) Target to supply around 40% of own
requirement
b) Reduce volatility of latex price impact
4. Preparation for planting commenced in Oct
2013.
5. With progressive planting over 8 years and a
gestation period of 7 years, full development
is expected within 14 years.
6. Estimated investment cost around RM450m
over 14 years period. Positive cash flow
expected from year 10.
1
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Costs breakdown
Average latex prices
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8
9
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FY05
RM3.28
FY07
RM4.78
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
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
FY12
RM7.36
RM6.45
(10/10/12)
RM4.61
(04/02/14)
FY13
RM5.77
Latex
49%
Labour
11%
Chemical
9%
Fuel
8%
Packaging
6%
Overhead
and
others
17%
Breakdown of production costs
(1QFY14, Sep'13 to Nov'13)
RM10.99
(11/04/11)
FY06
RM4.94
Page 10 / 20
1
1
Natural rubber (NR) latex, nitrile latex &
crude oil price trend (in USD)
Page 11 / 20
1.86
1.00
2.19
1.00
2.37
3.61
2.07
2.05
2.02
1.38
2.39
1.19
2.91
2.20
1.85
1.71
1.49
74.40
140
41.68
86.15
112.79
82.92
99.74
103.02
78.4
97.53
107.76
96.56
0
20
40
60
80
100
120
140
0.5
1.5
2.5
3.5
4.5
5.5
6.5
7.5
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Crude Oil Price (WTI)
(USD/bbl)
NR Latex & Nitrile Price
(USD/KG)
Crude
Oil
NR Latex
Nitrile
Note: NR Latex & Nitrile Latex based on 60% TSC
1
2
Challenges in glove industry
$
2
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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 12 / 20
Currency exposure
Raw material price fluctuation
Crude oil price fluctuation/
speculation
Quarterly performance comparison


1Q14
1 Sep 13
30 Nov 13
4Q13
1 Jun 13
31 Aug 13
Variance
(1Q14 vs
4Q13)
1Q13
1 Sep 12
30 Nov 12
Variance
(1Q14 vs
1Q13)
Total sales (RMmil) 574.0 548.2 5% 584.6 (2%)
EBITDA (RMmil) 84.4 87.6 (4%) 89.6 (6%)
EBITDA margin 14.7% 16.0% 15.3%
PBT (RMmil) 61.8 67.1 (8%) 70.4 (12%)
PBT margin 10.8% 12.2% 12.0%
PAT (RMmil) 511.9 2% 58.9 (12%)
PAT margin 9.0% 9.3% 10.1%
Profit attributable to equity
(RMmil)
50.3 48.4 4% 57.5 (13%)
EPS (sen) 8.1 7.8 4% 9.3 (13%)
51.9 51.1
Page 13 / 20
Sales quantity up 10% 1QFY14 vs 1QFY13, up 3% 1QFY14 vs 4QFY13
1QFY14 performance was affected by China operation which incurred RM5.2m loss
(4QFY13: RM1.3m loss, 1QFY13: RM0.3m gain)
Included in1QFY13 was fair value gain on forex contract of RM15.2m and loss of
RM8.4m in 4QFY13.

Financial highlights since listing in 2001
(13 years)
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* Based on par value of RM0.50, adjusted for share split and bonus issue
# Restated to comply with FRS112 (deferred tax)
(in RMmil) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 CAGR
13 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 2,313.2 28% -
EBITDA 23.9 27.1 39.5 60.6 89.2 130.3 175.7 197.8 287.5 364.7 207.3 310.0 323.3 28% -
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% 14.0% - 14.7%
PBT 17.2 20.2 29.3 45.2 65.7 91.8 118.6 134.6 222.0 305.0 145.5 240.7 242.2 30% -
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% 10.5% - 10.9%
PAT 15.9 18.0 25.7 39.9 58.2 84.8 88.7 108.1 168.1 250.4 115.1 207.3 202.8
PAT margin 11.4% 10.0% 9.7% 9.5% 9.1% 8.5% 7.2% 7.8% 11.0% 12.0% 5.6% 9.0% 8.8% - 9.2%
# PAT Equity 15.9 18.1 25.3 39.5 58.1 84.1 89.6 110.1 169.1 245.2 113.1 202.7 196.5 29% -
ROE 17.0 16.1 17.8 24.3 26.9 27.8 14.0 15.7 19.9 22.4 10.0 16.2 14.9 - -
(in RM) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 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 2.189 27% -
* 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 0.32 27% -
Page 14 / 20
1
5

For period ending
3 Months
30 Nov 13
12 Months
31 Aug 13
Net cash flow from operating activities (RMmil)
Capital expenditure and acquisition (RMmil)
Free cash flow before dividend (RMmil)
53.8
25.8
28.0
259.7
315.0
(55.3)
Strong and healthy balance sheet
* Annualised

As at
Q1FY14
30 Nov 13
FY2013
31 Aug 13
Net cash and short term investment (RMmil)
Shareholders equity (RMmil)
Net assets per share (RM)
Return on equity *
Inventory turnover days
Receivable turnover days
Payable turnover days
187.8
1,431.2
2.31
14.5
34
46
35
158.4
1,357.8
2.19
14.9
37
49
39
Page 15 / 20
Dividend sustainable and steady growth

* 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 : FY13 at 50%
: FY12 at 50%
: FY11 at 60%
: FY10 at 40%
: FY09 at 40% Page 16 / 20
Financial
year
Dividend per share
(sen)
Total
dividend
(RM000)
2013 9.00 (proposed final)
7.00 (Interim)
55,838
43,404
2012 16.00 99,038
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 554,825
0.80
0.56
1.85
2.36
2.66
3.67
4.61
5.50
11.00
16.00
11.00
16.00
16.00
-
2
4
6
8
10
12
14
16
18
20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
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Financial Year
Dividend (sen)
(Financial year ended 31 August)
1
7
Date
Closing 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%
03-Jan-13 5.68 10,192 * 57,891 6,830 2,700 62,021 2297%
03-Jan-14 5.73 10,192 * 58,400 8,460 2,700 64,160 2376%
04-Feb-14 5.41 10,192 * 55,139 9,378 2,700 61,817 2290%
Return on investment
2290% since IPO in Mar01, 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
RM5.41 x 1.3 x 1.4 x 1.4 x 2 x 2 = RM55.14 per share

Page 17 / 20
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 18 / 20
Business Direction, Ethics, Rules & Philosophies
1
9
Management focus going forward

Page 19 / 20
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 you
Q & A Session


Top Glove Corporation Berhad


www.topglove.com.my
invest@topglove.com.my
+603 5022 2110
Page 20 / 20