TOP GLOVE CORPORATION BHD Investor Presentation

Transcription

1 TOP GLOVE CORPORATION BHD Investor Presentation 06 April 2016 Bursa Malaysia 7113 Reuters TPGC.KL Bloomberg TOPG MK ADR CUSIP

2 Company Overview Established in 1991 and listed on Bursa Malaysia in Firmly entrenched as the world s largest rubber glove manufacturer. Commanding 25% of the global market share for rubber gloves and rapidly expanding. A sizeable production capacity of 44.6 billion gloves per annum. Highly-resilient demand to economic uncertainty, as an essential item in the medical sector. Page 2 / 22

3 Steady Global Demand Growth World population estimate at 7.4 bil, average usage 28.6 pcs per population bil pcs 220 Estimate global demand growth at 6% to 8% pa Page 3 / 22

4 An Industry with Excellent Growth Potential Widely Used in Developed Nations, but Underused in Emerging Countries Developed countries (USA, EU28 and Japan) % of World Population % of Global Gloves Consumption 13% 68% Other regions 87% 32% % of Global Gloves Consumption by Region Source: International Trade Centre and Company Page 4 / 22

5 Top Glove, Company with A Global Customer Base 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. Our global presence positions us to tap the growing demand and seize opportunities: In developed countries where demand is consistently high and usage is expanding to the non-medical sector In developing markets where demand is rapidly on the rise, securing first mover advantage Sales volume by geography 2QFY16 (Dec 15 to Feb 16) Page 5 / 22

6 Key Industry Drivers 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, bioterrorism, Anthrax Page 6 / 22

7 Aligning Our Product Mix with Market Demand 60% 50% 40% 55% 54% 49% 48% 46% Latex powdered glove 30% 20% 10% 0% 26% 28% Nitrile glove 24% 22% 24% Latex powder free glove 14% 20% 20% 11% 18% 7% 6% 7% 6% 6% Vinyl glove 1% 3% 2% 2% 2% Surgical glove FY2011 FY2012 FY2013 FY2014 FY2015 Towards a more balanced product mix in line with global demand. Natural rubber gloves catering for emerging markets. Nitrile gloves catering for developed markets. 2QFY16 product mix by sales quantity Page 7 / 22

8 27 Manufacturing Facilities Regionwide 25 glove factories 484 production lines 44.6 billion pcs p.a. capacity 2 latex concentrate/processing plants supplying 60% to 70% of our latex requirements. Steadily expanding via organic and non-organic growth. China Malaysia 22 glove factories Producing: Latex examination gloves Nitrile examination gloves Surgical gloves Household gloves Cleanroom gloves CPE gloves 1 glove factory Producing: Vinyl gloves Thailand 2 glove factories 2 latex plants Producing: Latex examination gloves Latex concentrate Statistics as at April 2016 Page 8 / 22

9 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 highlyefficient factories. Glove Type No. of production lines Capacity pcs p.a. Target commence operations by Current: 25 glove factories 484 lines 44.6 bil Expansion in progress : F27 (Lukut, Port Dickson, Malaysia) Nitrile 16 lines 2.0 bil May 2016 F6 (Phuket, Thailand) Natural Rubber 12 lines 1.4 bil August 2016 F30 (Klang, Malaysia) New factory Nitrile 28 lines 4.4 bil February 2017 Total expansion by February lines 7.8 bil Total by February 2017 : 26 glove factories 540 lines 52.4 bil Page 9 / 22

10 Aspiring to be the World s Largest Nitrile Glove Manufacturer 100% 80% 60% 40% 20% 0% Malaysia Export of Natural Rubber Gloves vs Nitrile Gloves ratio (2009 to 2015) 78% 22% 69% 31% 58% 54% 50% 50% 42% 46% 50% 50% 42% Source : Malaysia Rubber Export Promotion Council (MREPC) 58% Natural Rubber Nitrile Page 10 / 22

11 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 RM per kg Raw Material Price Trend Natural rubber latex price trend (RM/kg) RM7.20 (03/07/08) RM7.75 (23/04/10) RM10.99 (11/04/11) RM6.45 (10/10/12) RM4.62 (01/07/15) RM4.51 (6/04/16) NR Latex & Nitrile Price (USD/KG) Correlation between natural rubber latex, nitrile latex and crude oil prices (USD/kg) Crude Oil Price (WTI) (USD/bbl) Crude Oil Nitrile NR Latex Note: NR Latex & Nitrile Latex based on 60% TSC Page 11 / 22

12 Cost breakdown Natural Rubber Gloves Nitrile Gloves 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

13 Industry Challenges Raw material price fluctuation Due to weather impact, crude oil price movement, speculation, competition with other usage Time lag in passing the difference to customers when prices move up sharply Currency exposure Majority of sales in USD, subject to USD currency movement Time lag in passing the difference to customers when USD weakens sharply Crude oil price fluctuation/speculation Impact on energy, other raw materials and logistic costs Inflation Page 13 / 22

14 Quarterly results 2Q16 1 Dec Feb 16 2Q15 1 Dec Feb 15 Variance (2Q16 vs 2Q15) 1Q16 1 Sep Nov 15 Variance (2Q16 vs 1Q16) Total sales (RM mil) % (13.3%) EBITDA (RM mil) % (16.0%) EBITDA margin 23.1% 16.6% 23.8% PBT (RM mil) % (18.3%) PBT margin 19.0% 12.2% 20.2% Profit attributable to equity (RM mil) % (18.5%) PAT (RM mil) % (18.4%) PAT margin 15.2% 9.8% 16.1% EPS (sen) % 10.3 (18.4%) Sales quantity up 16% vs 2Q15 and down 3% vs 1Q16. Natural rubber latex price down 5% vs 2Q15 and down 13% vs 1Q16. Nitrile latex price down 7% vs 2Q15 and 1Q16. USD strengthen by 20.5% vs 2Q15 and weakened by 1% vs 1Q16 Increased competition in the nitrile glove segment in 2Q16. 2Q16 affected by natural gas price hike (effective 1/1/2016) of 28% vs 2Q15 and 17% vs 1Q16. Page 14 / 22

15 Strongest 6 months results 1H16 1 Sep Feb 16 1H15 1 Sep Feb 15 Variance (1H16 vs 1H15) Total sales (RM mil) 1, , % EBITDA (RM mil) % EBITDA margin 23.5% 15.6% PBT (RM mil) % PBT margin 19.6% 11.3% Profit attributable to equity (RM mil) % PAT (RM mil) % PAT margin 15.7% 9.2% EPS (sen) % Sales quantity up 16% vs 1H15. 1H16 PAT is 83.3% of FY2015 PAT. Natural rubber latex price down by 2% vs 1H15 Nitrile latex price down by 7% vs 1H15 1H16 affected by natural gas price hike (effective 1/1/2016) of 28%. Page 15 / 22

16 Steady growth since listing REVENUE CAGR Past 15 years since listing in 2001 : PAT CAGR Past 15 years since listing in 2001 : Average PAT margin Past 15 years since listing in 2001 : 29% 25% 9.3% For FY ended 31 August (in RM mil) FY2015 1HFY2016 (unaudited) Sales 1, , , , , , , ,494.1 Average (since 2001) EBITDA EBITDA margin 18.8% 17.5% 10.1% 13.4% 14.0% 13.7% 18.6% 23.5% 14.9% PBT PBT margin 14.5% 14.7% 7.1% 10.4% 10.5% 9.5% 14.5% 19.6% 11.0% PAT PAT margin 11.0% 12.0% 5.6% 9.0% 8.8% 8.1% 11.2% 15.7% 9.3% # PAT Equity ROE (%) * 20.0 EPS (RM)** * 0.37 * Annualised **Adjusted for bonus issue Page 16 / 22

17 Strong and healthy balance sheet Net cash flow from operating activities (RM mil) Capital expenditure (RM mil) Free cash flow before dividend (RM mil) 6 Months 29 Feb Months 28 Feb As at 29 Feb 16 As at 28 Feb 15 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 * Adjusted for bonus issue ** Annualised , % ,456.3 * % Page 17 / 22

18 Dividend and payout ratio Dividend Policy : Payout ratio of 50% of PAT and MI 11.5 Total Dividend (sen) Proposed Final Dividend (sen) Final Dividend (sen) Interim Dividend (sen) Special Dividend (sen) Note: Dividend per share has been adjusted with the bonus issue of 1 for 1 existing share which was completed on 27/01/2016 For FY ended 31 August Page 18 / 22

19 At 4,320% since IPO (15 years) Assuming initial investment of 1,000 shares was made during initial public offering price of RM2.70 on 27/03/01 Date Closing share price Number of shares held Total market value Accumulated dividend received (RM) Cost of investment Capital appreciation (RM) (RM) (RM) (RM) If the bonus issues and share split are not taken into consideration, the share price should be RM5.20 x 1.3 x 1.4 x 2 x 1.4 x 2 x 2 = RM per share Note : * Shares adjusted for the bonus issues and share split of : a) FY2002 : 3 new ordinary shares of RM1.00 each for every 10 existing ordinary shares of RM1.00 each b) FY2003 : 2 new ordinary shares of RM1.00 each for every 5 existing ordinary shares of RM1.00 each c) FY2005 : subdivision of shares from one ordinary share of RM1.00 to two ordinary shares of RM0.50 each d) FY2007 : 2 new ordinary shares of RM0.50 each for every 5 existing ordinary shares of RM0.50 each e) FY2010 : 1 new ordinary shares of RM0.50 each for every 1 existing ordinary shares of RM0.50 each f) FY2016 : 1 new ordinary shares of RM0.50 each for every 1 existing ordinary shares of RM0.50 each Total s/holders return % 27-Mar (IPO) 1,000 2,700-2, Jan ,192 * 52,183 5,500 2,700 54,983 2,036% 02-Jan ,192 * 58,604 6,825 2,700 62,729 2,323% 02-Jan ,192 * 58,502 8,455 2,700 64,257 2,380% 02-Jan ,192* 46,883 10,086 2,700 54,269 2,010% 05-Apr ,384* 105,997 13,348 2, ,645 4,320% Page 19 / 22

20 Guiding Principles for Growth and Success Top Glove s Business Direction, Ethics, Rules & Philosophies 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 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 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. Page 20 / 22

21 Management Focus Moving Forward To use technology and further automate production line to reduce workers & improve quality and efficiency. Computerize the whole company s operation/ manufacturing. To invest and recruit staff that are: i. Intelligent ii. Energetic iii. Integrity Capture growth in emerging market demand Target 30% global market share in 2020 Page 21 / 22

22 Thank you Q & A Session invest@topglove.com.my Page 22 / 22