TOP GLOVE CORPORATION BHD Investor Presentation 19 June 2018

Transcription

1 TOP GLOVE CORPORATION BHD Investor Presentation 19 June 2018 Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP : Page 1/22

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 2/22

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 manufacturer of gloves with:- A sizeable production capacity of 57.5 billion gloves per annum. A listing on Bursa Malaysia (2001) and SGX (2016). Page 3/22 Page 3 / 22

4 Steady Global Demand Growth World population estimate at 7.6 bil, average usage 28 pcs per population bil pcs Estimate global demand growth at 8% to 10% pa E 220 Page 4/22 Page 4 / 22

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 5/22 Page 5 / 22

6 Projected Yearly Rubber Glove Consumption Per Capita for 2017 Source: MREPC - Private Sector Consumption of Medical Gloves Page 6/22 Page 6 / 22

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% Japan 13.2% Asia ex Japan 12.9% Middle East 6.3% Latin America 3.8% Africa -8.1% Total 8.8% Sales volume by geography 9MFY18 (Sep 17 to May 18) Page 7/22 Page 7 / 22

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, bio-terrorism, Anthrax Page 8/22 Page 8 / 22

9 Aligning Our Product Mix with Market Demand Glove type by volume 9MFY18 product mix by revenue Nitrile glove Latex powdered glove Latex powder-free glove Vinyl / TPE / CPE glove Surgical glove Page 9/22 Page 9 / 22

10 39 Manufacturing Facilities Regionwide 31 glove factories 618 production lines 57.5 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 China 28 glove factories 1 glove former factory 2 chemical factories 1 packaging material plant 1 dental dam factory 1 condom factory 1 glove factory Producing: Vinyl gloves 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 Statistics as at June 2018 Thailand 2 glove factories 2 latex plants Producing: Latex examination gloves Latex concentrate Page 10/22 Page 10 / 22

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 Type No. of production lines Capacity pcs p.a. Current: 31 glove factories 618 lines 57.5 bil Target to commence operations by Expansion in progress : Glove F31 (Klang, Malaysia) New factory Nitrile 30 lines 3.0 bil July 2018 F32 (Klang, Malaysia) New factory Nitrile 44 lines 4.4 bil Early 2019 Total expansion by early lines 7.4 bil Total by early 2019: 33 glove factories 692 lines 64.9 bil Expansion in progress : Condom F35CD (Klang, Malaysia) New factory Latex 2 lines 0.2 bil June 2018 Page 11/22 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 Page 12 / 22

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 13/22 Page 13 / 22

14 Latest 3Q18 results 3Q18 1 Mar May 18 3Q17 1 Mar May 17 Variance (3Q18 vs 3Q17) 2Q18 1 Dec Feb 18 Variance (3Q18 vs 2Q18) Total sales (RM mil) 1, % % EBITDA (RM mil) % % EBITDA margin 16.5% 13.6% 16.5% PBT (RM mil) % % PBT margin 12.2% 10.5% 13.0% PAT (RM mil) % % PAT margin 10.8% 8.9% 11.5% EPS (sen) % % 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 14/22 Page 14 / 22

15 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 : For FY ended 31 August 20.8% 22.1% 9.5% (in RM mil) MFY18 (unaudited) Sales 2, , , , , , , , ,997.1 EBITDA EBITDA margin 17.5% 9.6% 12.9% 13.4% 13.3% 17.6% 18.2% 14.2% 16.4% PBT PBT margin 14.7% 7.1% 10.4% 10.5% 9.5% 14.5% 15.3% 11.2% 12.7% Taxation PAT PAT margin 12.0% 5.6% 9.0% 8.8% 8.1% 11.2% 12.5% 9.6% 11.2% # PAT Equity ROE (%) EPS (RM)** * Annualised **Adjusted for bonus issue * * Page 15/22 Page 15 / 22

16 Healthy balance sheet Net cash flow from operating activities (RM mil) Capital expenditure (RM mil) 9MFY18 31 May MFY17 31 May 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, % ** Reduction in cash balance due to spending on capital expenditure and acquisition in 9MFY2018 of RM1,755.5 million , % Page 16/22 Page 16 / 22

17 Dividend and payout ratio Dividend Policy : Payout ratio of 50% of PAT after MI Total dividend payment of RM1.16 billion since listing in 2001 Payment date: 17 July Total Dividend (RM'mil) 25% 31% 29% 39% 40% 60% 49% 50% 55% 51% 50% Note: Dividend per share has been adjusted with the bonus issues 55% Payout Ratio Page 17/22 Page 17 / 22

18 Shareholders return at 92.2 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: 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-Jan ,384 * 160,830 17,531 2, ,661 6,506% 18-Jun ,384 * 232,378 19,264 2, ,942 9,220% *adjusted for bonus issue and share split If the bonus issues and share split are not taken into consideration, the share price would have been RM per share. Top Glove list of Component Stock FTSE Bursa Malaysia ("FBM") Mid 70 Index FBM Top 100 Index FTSE4Good Bursa Malaysia Index [ESG Index] FBM Emas Syariah Index FTSE Bursa Malaysia Hijrah Shariah Index MSCI Global Standard Index FBM Emas Index Page 18 / 22 Page 18/22

19 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 19/22 Page 19 / 22

20 Management Focus Moving Forward To use technology and further automate production lines to reduce reliance on workers & improve quality and efficiency. To computerize the company s operations and manufacturing process. Embark on Industrial Revolution 4.0 implementation through the application of IoT, robotics and automated real time manufacturing system. To continuously invest in and recruit staff who are Intelligent, Energetic and Act with Integrity. To capture growth in demand from emerging markets. To capture 30% of the global market share by To diversify into other businesses such as condom manufacturing and dental dam. Page 20/22 Page 20 / 22

21 TOP GLOVE GROUP OF COMPANIES Page 21/22

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