TOP GLOVE CORPORATION BHD Investor Presentation 03 Nov 2017

Transcription

1 TOP GLOVE CORPORATION BHD Investor Presentation 03 Nov 2017 Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP :

2 TG BUSINESS ETHICS CLAPS Ready, Claps, 2x 3x 2x Prepared By: Ng Chin 14/07/17 Checked & Verified By: Ng Yong 14/07/17 Page 2 / 23

3 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, 3 production lines and 100 staff. 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. Top Glove has emerged as the world s largest rubber glove manufacturer with:- A sizeable production capacity of 51.9 billion gloves per annum. A listing on Bursa Malaysia (2001) and SGX (2016). Page 3 / 23

4 Steady Global Demand Growth World population estimate at 7.5 bil, average usage 26.8 pcs per population bil pcs Estimate global demand growth at 6% to 8% pa E Source : Malaysia Rubber Gloves Manufacturer Association (MARGMA) Page 4 / 23

5 An Industry with Excellent Growth Potential Widely Used in Developed Nations, but Underused in Emerging Countries Developed countries (USA, EU29 and Japan) % of World Population % of Global Glove Consumption 18% 70% Other regions 82% 30% % of Global Glove Consumption by Region Source: International Trade Centre and Company & Page 5 / 23

6 Projected Rubber Glove Consumption Per Capita in 2017 Source: MREPC - Private Sector Consumption of Medical Gloves Page 6 / 23

7 Top Glove 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. Region Avg growth rate for the 3 years North America 10.8% Europe 11.3% Asia ex Japan 12.9% Japan 13.2% Middle East 6.3% Latin America 3.8% Africa -8.1% Total 7.5% Sales volume by geography 4QFY17 (June 17 to Aug 17) Page 7 / 23

8 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 8 / 23

9 Aligning Our Product Mix with Market Demand Nitrile glove Latex powdered glove Latex powder-free glove Vinyl / TPE / CPE glove Surgical glove Towards a more balanced product mix in line with global demand. Nitrile increased by 839% over a 7 years period. 4QFY17 product mix by sales quantity Page 9 / 23

10 33 Manufacturing Facilities Regionwide 29 glove factories 550 production lines 51.9 billion pcs p.a. capacity 2 latex concentrate/processing plants supplying 60% to 70% of our latex requirements 1 porcelain hand mold factory 1 chemical factory Steadily expanding via organic and non-organic growth China Malaysia 26 glove factories 1 glove former factory 1 chemical factory Producing: Latex examination gloves Nitrile examination gloves Surgical gloves Household gloves Cleanroom gloves CPE/TPE gloves Former manufacturing Chemical manufacturing 1 glove factory Producing: Vinyl gloves Thailand 2 glove factories 2 latex plants Producing: Latex examination gloves Latex concentrate Statistics as at Oct 2017 Page 10 / 23

11 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. Current: 29 glove factories 550 lines 51.9 bil Target to commence operations by Expansion in progress : F31 (Klang, Malaysia) New factory Nitrile 30 lines 3.0 bil March 2018 F32 (Klang, Malaysia) New factory Nitrile 48 lines 4.8 bil December 2018 Total expansion by December lines 7.8 bil Total by December 2018: 31 glove factories 628 lines 59.7 bil Page 11 / 23

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 / 23

13 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% TSC Page 13 / 23

14 Latest 4Q17 results 4Q17 1 June Aug 17 4Q16 1 June Aug 16 Variance (4Q17 vs 4Q16) 3Q17 1 Mac May 17 Variance (4Q17 vs 3Q17) Total sales (RM mil) % % EBITDA (RM mil) % % EBITDA margin 14.1% 14.0% 13.6% PBT (RM mil) % % PBT margin 11.0% 10.4% 10.5% PAT (RM mil) % % PAT margin 10.9% 9.1% 8.9% EPS (sen) % % Sales quantity up by 13% vs 4Q16 and 14% vs 3Q17. ASP up by 5% vs 4Q16 and down by 7% vs 3Q17. Natural rubber latex price up 27% vs 4Q16 and down by 21% vs 3Q17. Nitrile latex price up 2% vs 4Q16 and down by 26% vs 3Q17. USD strengthened by 6% vs 4Q16 and weakened by 2% vs 3Q17. 4Q17 with natural gas price hike impact of 4% vs 4Q16 and 3% vs 3Q17. 4Q17 with minimum wage hike impact of 3% vs 4Q16. Page 14 / 23

15 FY17 results FY17 1 Sep Aug 17 FY16 1 Sep Aug 16 Variance (FY17 vs FY16) Total sales (RM mil) 3, , % EBITDA (RM mil) (7.8%) EBITDA margin 14.2% 18.2% PBT (RM mil) (13.4%) PBT margin 11.2% 15.3% PAT (RM mil) (8.2%) PAT margin 9.8% 12.5% EPS (sen) (8.0%) Sales quantity up 7% vs FY16. ASP up by 6% vs FY16. Natural rubber latex price up by 46% vs FY16. Nitrile latex price up by 12% vs FY16 USD strengthened by 4% vs FY16. FY17 with natural gas price hike impact of 10% vs FY16. FY17 with minimum wage hike impact of 8% vs FY16. Page 15 / 23

16 Steady growth since listing Revenue CAGR Past 17 years since listing in 2001 : PAT CAGR Past 17 years since listing in 2001 : Average PAT margin Past 17 years since listing in 2001 : 22.1% 20.9% 9.5% For FY ended 31 August (in RM mil) (unaudited) Sales 1, , , , , , , , EBITDA EBITDA margin 18.8% 17.5% 9.6% 12.9% 13.4% 13.3% 17.6% 18.2% 14.2% PBT PBT margin 14.5% 14.7% 7.1% 10.4% 10.5% 9.5% 14.5% 15.3% 11.2% Taxation PAT PAT margin 11.0% 12.0% 5.6% 9.0% 8.8% 8.1% 11.2% 12.5% 9.8% # PAT Equity ROE (%) EPS (RM)** * Annualised **Adjusted for bonus issue Page 16 / 23

17 Healthy balance sheet Net cash flow from operating activities (RM mil) Capital expenditure (RM mil) FY17 31 Aug FY Aug As at 31 Aug 17 As at 31 Aug 16 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 , % , % ** Reduction in cash balance due to higher working capital requirement s a result of higher raw material prices and higher capex in 1HFY17 Page 17 / 23

18 Dividend and payout ratio Dividend Policy : Payout ratio of 50% of PAT after MI Total dividend payment of RM1,054 mil since listing in 2001 Note: Dividend per share has been adjusted with the bonus issues Page 18 / 23

19 At 5,381% since IPO (16 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: Date *share Price Number of shares held Total market Value Accumulated dividend received (RM) Cost of investment Capital appreciation Total s/holders return % (RM) (RM) (RM) (RM) 27-Mar ,384 * 2,700-2, Jan ,384 * 58,604 6,825 2,700 62,729 2,323% 02-Jan ,384 * 58,502 8,460 2,700 64,262 2,380% 02-Jan ,384 * 46,883 10,091 2,700 54,274 2,010% 05-Jan ,384 * 140,038 11,824 2, ,162 5,525% 04-Jan ,384 * 110,277 14,576 2, ,153 4,524% 02-Nov ,384 * 130,458 17,531 2, ,289 5,381% If the bonus issues and share split are not taken into consideration, the share price would have been RM per share. *adjusted for bonus issue and share split Top Glove list of Component Stock FTSE Bursa Malaysia ("FBM") Mid 70 Index FTSE4Good Bursa Malaysia Index [ESG Index] FTSE Bursa Malaysia Hijrah Shariah Index FBM Top 100 Index FBM Emas Syariah Index FBM Emas Index Page 19 / 23

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 invest 1 efficient dollar and earn 2 healthy dollars. 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/ 23

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 / 23

22 Ready, TOP GLOVE GROUP OF COMPANIES TOP GLOVE Top Quality Top Quality Top Quality Prepared by : QA Admin (Rev. 6, Date Prepared : 14/7/17) Verified by : Ms. Loo Sun Nooi / QA DGM Claps, 2X 3X 2X YES! YES! YES! Page 22 / 23

23 Thank you Q & A Session invest@topglove.com.my Page 23 / 23