TOP GLOVE CORPORATION BHD Investor Presentation 03 Sept 2018

Transcription

1 TOP GLOVE CORPORATION BHD Investor Presentation 03 Sept 2018 Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP : Page 1/21

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 2/21

3 Top Glove Corporation Bhd ( Top Glove ) at a glance World s largest manufacturer of gloves Global leader in medical and surgical gloves Current market capitalisation of RM14.23bn FY17 Revenue of RM3.4bn and PATMI of RM0.3bn 60.5 billion gloves pa 40 factories 648 production lines 2,000+ customers across 195 countries Over 17,000 employees Page 3/21

4 From Humble Origins to Global Leader Nearly 3 decades of track record of excellence 1991 Started as a local business enterprise 1994 First overseas foray and established a marketing arm in the USA 2001 Commenced operations in Thailand Listed on the Second Board of Kuala Lumpur Stock Exchange ( KLSE ) 2002 Commenced operations in China Established a second rubber glove factory in Thailand Transferred to the Main Board of KLSE 2013 Established first dedicated Group R&D Centre to drive innovation Acquisition of the remaining minority stake in Medi-Flex and privatisation of the company 2010 Revenues over RM2bn 2011 Acquired a marketing arm in Germany to extend sales in Europe 2016 Secondary listing on Singapore Stock Exchange ( SGX ) 2006 Acquisition of a majority stake in Medi-Flex 2007 Revenues over RM1bn 2017 Investment in new business line- condom projected to be operational by mid-2018 Revenues over RM3bn (USD776mn) (1) 2018 Acquisition of Aspion Acquisition of Eastern Press Acquisition of Duramedical Page 4/21

5 Strong Industry Fundamentals Steady growth in global demand for rubber gloves In billion pieces CAGR 05-18: 6.0% Driven by strong market fundamentals across geographies As a protective barrier for medical staff, gloves are an indispensable item in the healthcare sector, with increasing customer awareness in developing markets Increasing hygiene standards and healthcare awareness Non-medical sector in developed countries Medical sector in developing countries A growing ageing population With the elderly being more susceptible to higher risk diseases Progressively stringent health regulations Healthcare reforms in US, China Healthcare regulations: OSHA in the US, EU-OSHA in Europe, SESI in Brazil E Emergence of new health threats A(H1N1), SARS, bird flu, ebola, bio-terrorism, Anthrax Further growth potential from emerging markets Based on 2017 statistics Source: Malaysia Rubber Gloves Manufacturer Association, International Trade Centre and Company & Page 5/21

6 Global Distribution Across 195 Countries Distribution 6 marketing offices globally Over 2,000 customers Comprising distributors across 195 countries A geographically diverse customer base An OEM manufacturer in every region Top 20 customers represent c.25% of total revenue No single customer contributes more than 4% of revenue USA Germany China 9M18 Sales Volume Breakdown Africa 3% Latin America 11% Middle East 8% Japan 8% Europe 30% Malaysia Thailand Asia ex- Japan 15% North America 25% Brazil Legend: Distribution hub Page 6/21

7 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 7/21

8 Continuous Growth in Manufacturing Capabilities Existing facilities Manufacturing Country Glove type Current: Number of production lines Capacity (pieces per annum) Glove : 32 glove factories All 648 lines 60.5 bn Expansion in progress : Glove F32 1 st Phase (Early 2019) Malaysia Nitrile 24 lines 2.4 bn F32 2 nd Phase (End 2019) F33 New Block (March 2019) F5A New Block (Oct 2019) F8A New Factory (Early 2020) Malaysia Malaysia Malaysia Thailand Nitrile Nitrile Nitrile Nitrile/Latex 20 lines 12 lines 20 lines 32 lines 2.0 bn 1.2 bn 2.0 bn 3.2 bn Malaysia Headquarters 28 Glove Factories 2 Chemical Factories 1 Glove Former 1 Packaging factory 1 Dental dam factory 1 Condom factory Producing: Latex & nitrile examination gloves Surgical, household, cleanroom, CPE/TPE gloves Former & Chemical Manufacturing Dental Dam Condom Total expansion 108 lines 10.8 bn Total by 2020: 34 glove factories 756 lines 71.3 bn Current: F35CD Condom Factory Latex 1 line 0.1 bn Latex Processing Top Glove: 2 latex plants Sourcing majority of the latex requirements Clear blueprint for further growth Boosting nitrile capacity in tandem with growingdemand Faster, more efficient and technologically advanced production lines Increased automation throughout the manufacturing process On-going facility optimisation initiatives which include the construction of highly-efficient factories Thailand 2 Latex Plants 2 Glove Factories Producing: Latex examination gloves Latex concentrate China 1 Glove Factory Producing: Vinyl gloves Page 8/21

9 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 9/21

10 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 10/21

11 Latest 9 months results ending 31/05/18 9M18 1 Sep May 18 9M17 1 Sep May 17 Variance (9M18 vs 9M17) Total sales (RM mil) 2, , % EBITDA (RM mil) % EBITDA margin 16.4% 14.2% PBT (RM mil) % PBT margin 12.7% 11.3% PAT (RM mil) % PAT margin 11.2% 9.4% EPS (sen) % 9M18 profit after tax was 102% of FY17 full year profit. Sales quantity up by 25% vs 9M17. ASP up by 3% vs 9M17. Natural rubber latex price down by 21% vs 9M17. Nitrile latex down by 5% vs 9M17. USD weakened by 7% vs 9M17. 9M18 with natural gas price up by of 12% vs 9M17. Page 11/21

12 Sales volume (quantity) comparison by glove type 9MFY18 vs 9MFY17 Latex powdered Latex powder free 27% 23% Nitrile 21% Vinyl Surgical 20% 52% TPE/CPE Total increase 51% 25% Page 12/21

13 9MFY18 Sales Volume (Quantity) Growth 9 months comparison (9MFY18 vs 9MFY17) Western Europe 25% Eastern Europe 48% Asia ex Japan 65% North America 3% NORTH AMERICA Western Europe MIDDLE EAST Eastern Europe ASIA JAPAN Japan 8% AFRICA Latin America 16% LATIN AMERICA Africa 26% Middle East 55% Page 13/21

14 Steady growth since listing in 2001 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 14/21

15 Cash Flow and Capital Management 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 15/21

16 Dividend and payout ratio Dividend Policy : Payout ratio of 50% of PAT after MI Total dividend payment of RM1.25 billion since listing in 2001 Paid on 17 July Total Dividend (RM'mil) 25% 31% 29% 39% 40% 60% 49% 50% 55% 51% 50% 55% Payout Ratio Note: Dividend per share has been adjusted with the bonus issues Page 16/21

17 Share Price (RM) Track Record of Delivering Shareholder Value Total dividend payment of RM1.25 billion since listing in year Sept 2018: RM March 2001: RM 0.13 (1) (IPO price adjusted for bonus issue and share split since IPO) Total Shareholder Return: 9,009% Dividends (RMmn) Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar Annual Dividends With initial investment of 1,000 shares made based on IPO price of RM2.70 on 27 March 2001, the return would be: Number of shares held (1) Market value Accumulated (as at 03 Sept 2018) Dividends TopGlove Investment cost (as at 27 March 2001) Capital appreciation (2) Total shareholder return # RM RM RM RM % 20, ,670 19,264 (2,700) 243,234 9,009% Source: Bloomberg as of 03 Sept 2018 Notes: (1) 1,000 shares at IPO, adjusted for bonus issue and share split since IPO (2) Calculated based on adding market value and accumulated dividends and subtracting the investment cost Page 17/21

18 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 18/21

19 Management Focus Moving Forward 1. To use technology and further automate production lines to reduce reliance on workers & improve quality and efficiency. 2. To computerize the company s operations and manufacturing process. 3. To embark into Digitalization and Automation via Industrial Revolution 4.0 implementation through the application of IoT, robotics and automated real time manufacturing system. 4. To continuously invest in and recruit staff who are Intelligent, Energetic and Act with Integrity. 5. To capture growth in demand from emerging markets. 6. To capture 30% of the global market share by To diversify into other businesses such as condom manufacturing and dental dam. Page 19/21

20 Thank you Page 20/21

21 TOP GLOVE GROUP OF COMPANIES Ready, 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 21/21