TOP GLOVE CORPORATION BHD - Corporate Presentation February 2019
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TOP GLOVE CORPORATION BHD
Corporate Presentation
February 2019
April 2018
Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP : 890534100
Top Glove Business Ethics Claps
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Prepared By: Ng Chin Yong @ 14/07/17
Checked & Verified By: Ng Yong Lin @ 14/07/17
2/24
Disclaimer
This document and any related presentations have been prepared by Top Glove Corporation Bhd (the “Company”). This document and any related presentations are being given
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constitute a violation of applicable securities laws.
The information contained in this document (the “Information”) is strictly confidential and has been provided by the Company and has not been independently verified. No
representation or warranty express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or
opinions contained herein. It is not the intention to provide, and you may not rely on this document as providing, a complete or comprehensive analysis of the Company’s
business, financial condition, results of operations, trading position or prospects. The Information and opinions in this document are provided as at the date of this document and
are subject to change without notice. Neither the Company nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for
any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document.
Certain data in this document was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, the
Company makes no representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change based on various
factors.
This document contains, and any related presentations may contain, financial information regarding the businesses and assets of the Company and its consolidated subsidiaries.
Such financial information may not have been audited, reviewed or verified by any independent accounting firm. The inclusion of such financial information in this document or
any related presentation should not be regarded as a representation or warranty by the Company, any of its affiliates, advisors or representatives or any other person as to the
accuracy or completeness of such information’s portrayal of the business, financial condition, results of operations, trading position or prospects by the Company and should not
be relied upon when making an investment decision.
This document includes forward-looking statements prepared by the Company. The opinions, forecasts, projections and other statements (except statements of historical facts),
including, without limitation, financial results for 1Q2019, are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking
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expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Each forward-looking statement speaks only as of the date of this
document. Neither the Company nor any of its affiliates, advisors or representatives undertakes any obligation to publicly update or revise any forward-looking statement as a
result of new information, future events or other information. In light of these risks, actual results could differ materially from those stated, implied or inferred from the forward-
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nothing contained herein shall form the basis of, or be relied on, in connection with any contract or commitment whatsoever. Any decision to purchase securities in the context of
a proposed offering undertaken in the future by the Company, if any, should be made on the basis of information contained in the offering document published in relation to such
an offering. Any securities offered by the Company or any of its subsidiaries will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) and
may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption to registration.
Any securities offered by the Company or any of its subsidiaries will be offered to (1) persons in Labuan or outside Malaysia or entities established or registered under the laws of
Labuan and (2) persons falling within the categories of excluded offers and invitations of debentures as set out in Section 8(5) of the Labuan Financial Services and Securities
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The distribution of this document and any related presentation in other jurisdictions may be restricted by law and persons into whose possession this document or any related
presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with these restrictions may constitute a violation of the laws of any
such other jurisdiction.
3/24
Top Glove Corporation Bhd (“Top Glove”) at a glance
World’s largest manufacturer of gloves
Top Glove Corporation Bhd. (“Top Glove”) at a glance
World’s largest manufacturer of gloves
Global leader in Current market FY2018(3)
medical and capitalisation(1) of Revenue of RM4.2bn
surgical gloves RM12.6bn (USD1.0bn)(2)
(USD3.1bn) Net profit
attributable to owners of
the company of
RM434.2mil
(USD106.2mil)(2)
60.5 billion gloves(4) 2,000+ customers Over 17,000
32 glove factories across 195 full time
648 production lines countries employees
Source: Bloomberg
Notes:
(1) Market capitalisation as at 14 February 2019. Translated at FX rate of USD1:RM4.0750 as at 14 February 2019 4) Indicates annual production capacity
(2) Translated at FX rate of USD1:RM4.0885 as at 31 January 2019
(3) Financial Year Ended 31 August 2018 4/24
From humble origins to global leader
Nearly 3 decades of track record of excellence
From Humble Origins to Global Leader
Nearly 3 decades of track record of
excellence
1991 1994 2001 2002
Started as a First overseas foray Commenced operations in Commenced operations in China
local business and established a Thailand Established a second rubber glove
enterprise marketing arm in Listed on the Second Board of factory in Thailand
the USA Kuala Lumpur Stock Exchange Transferred to the Main Board of KLSE
(“KLSE”)
2010 2007
Group revenues over RM2bn Acquisition of a majority
stake in Medi-Flex
2011 Group revenues over
RM1bn
Acquired a marketing arm in
Germany to expand sales in
2013
Europe
Established first dedicated Group
R&D Centre to drive innovation
2014 2016 2017 2018
Acquisition of the remaining Secondary listing on Group revenues over Acquisition of Aspion
Singapore Stock
minority stake in Medi-Flex and Exchange (“SGX”) RM3bn Acquisition of Eastern Press
privatisation of the company Acquisition of Duramedical
Condom factory commenced operations
Group revenues over RM4bn
5/24
Led by an experienced senior management team
Tan Sri Dr Lim Wee Chai Dato Lee Kim Meow Lim Hooi Sin
Relevant experience Relevant experience Relevant experience
Founded Top Glove in 1991 Joined Top Glove in 1997 Founded TG Medical USA
Appointed Managing Inc, a wholly-owned
Over 31 years of experience Director in 2003
in the rubber and latex subsidiary of Top Glove in
manufacturing business Present appointments 1994. Appointed Executive
include Chairman of the Director in 2000
Founder Appointed as Director and Managing Director ASEAN Rubber Glove
Board Member of Employees Executive Director Responsible for product
Executive Chairman Manufacturers Association development, marketing,
Provident Fund and Honorary (“ARGMA”)
President of the Malaysia- Length of service: Length of service: sales
Length of service: China Chamber of Commerce 22 years 25 years Over 21 years of experience
28 years Past appointments include in the rubber glove industry in
President of the Federation of USA
Malaysian Manufacturers
Puan Sri Tong Siew Bee Lim Cheong Guan
Relevant experience Relevant experience
Joined Top Glove in 1991 Joined Top Glove in 2005
Appointed Executive Director Appointed Executive
in 2000 Director in 2006
Responsible for the computer Responsible for the
and information systems, accounting, treasury,
Executive Director human resource and general Executive Director corporate finance and
administration investor relations
Length of service: More than 10 years of Length of service: Over 29 years of experience
28 years experience in the banking 14 years in the field of audit,
industry in the information manufacturing, plantation,
technology field trading and property
development
6/24
Track record of delivering shareholder value
Total shareholder return of 8,103% over 17 years since listing in year 2001
With initial investment of 1,000 shares made based on IPO price of RM2.70 on 27 March 2001, the return would be:
Market value Accumulated Investment cost Total shareholder
Number of shares held(1) Total return (2)
(as at 14 Feb 2019) dividends (as at 27 March 2001) return
# RM RM RM RM %
40,768 200,171 21,302 (2,700) 218,773 8,103%
Source: Bloomberg as of 14 February 2019
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
7/24
Rubber glove industry on the rise
Global demand for gloves increasing across emerging and developed markets
Strong growth expected in the near future… … driven by strong market fundamentals across geographies
As a protective barrier for medical staff, gloves are an indispensable
Billion item in the growing healthcare sector which witnesses an increasing
pieces healthcare spending per capita in the world
CAGR:
2017 to
Increasing glove consumption / capita in emerging countries is driven
CAGR 17 to 22F: +15.1% 2022F
1,200 by demographic and economic growth as well as higher customer
awareness
1,000 954
Increasing hygiene standards and healthcare awareness in
829 Vinyl:
non-medical sector in developed countries;
11.1%
800 720 medical sector in developing countries
399
625
543 360 Ageing population and higher life expectancy, with the elderly
600
472 324 increasingly going for medical examination and being more susceptible
292 Nitrile: to higher risk diseases
400 263 246 17.4%
236 210
179 Progressively stringent health regulations:
153
200 130 healthcare reforms in US, China
111 309 Latex:
216 259 healthcare regulations: OSHA in the US, EU-OSHA in Europe, SESI
125 151 181 19.8% in Brazil
0
2017 2018F 2019F 2020F 2021F 2022F
Outbreaks of pandemic and emergence of new health threats:
A(H1N1), SARS, bird flu, ebola, bio-terrorism, Anthrax
Latex Nitrile Vinyl
Source: Frost & Sullivan
8/24
Strong growth potential in emerging markets
Emerging countries present an undertapped market for gloves Country Glove consumption
by capita
160
US 146.2 CAGR
(2013-2017)
Glove Consumption per Capita (pieces)
140 Germany 141.1
High glove consumption per US 6.0%
Canada 136.7
capita in developed countries UK 3.7%
120 Italy 122.5
Japan 8.3%
Philippines 18.0%
100
Spain 92.5 China 17.8%
80 Indonesia 26.2%
France 71.9
60 Legend
Japan 53.7
Korea 47.9 Low glove consumption per developed countries
40 capita in emerging countries emerging countries
Brazil 18.1 20
Mexico 15.3 China 2.8
Zimbabwe 8.3 Philippines 3.3 India 0.8
0 Indonesia 2.3
Egypt 1.9
0 200 400 600 800 1000 1200 1400 1600
Population (million)
The glove consumption per capita in developed countries is much higher compared to emerging countries such as China, India and Indonesia,
reflecting potential for growth in these countries, which are also ranked amongst the top four world’s most populous countries
An increase of at least one glove per capita in populated emerging markets will result in significant overall growth in numbers, also fueled by the
demographic expansion of such countries and increasing awareness on the benefits of medical and non-medical gloves
Source: Frost & Sullivan
9/24
Market leader with extensive range of products
Extensive products mix applied in diverse industries, with a strong focus on medical / surgical sector
Applications / industry
Product Sale Market Position
Key Markets Medical Surgical Industrial Food
Category Contribution by Volume
1Q2019 Sales Value Majority of revenues 2017
20% Mainly developing
markets 1
(Examination) (Disposable, (Disposable)
Household)
Latex Powdered
17%
Mainly developed
markets (Europe)
(Examination)
(Disposable,
1
(Disposable)
Latex Powder-free Household)
Mainly developed
markets (USA,
Europe, Japan)
(Examination)
(Disposable,
3
47%
Household) (Disposable)
Nitrile
12%
(1)
Global
(Surgery)
1
Surgical
3%
Global
(Examination)
(Disposable)
(Disposable)
Vinyl 1%
Global
(Examination)
(Thermoplastic)
(Cast Polyethylene)
CPE/ TPE
Source: Company, Frost and Sullivan
Note:
(1) Based on proforma combined market shares of Top Glove and Aspion
10/24Continuous growth in manufacturing capabilities
Commence Number of Existing facilities
Manufacturing production by Country Glove type Capacity
production lines (pcs per annum)
(Calendar quarter) Malaysia
Current: Headquarters
Glove : 32 glove factories All 648 lines 60.5 bn 29 glove factories
2 chemical factories
Expansion in progress : Glove 1 glove former factory
1 packaging material plant
F32 1st Phase 1st quarter 2019 Malaysia Nitrile/Latex 22 lines 2.2 bn 1 dental dam factory
1 condom factory
F33 New Block 1st quarter 2019 Malaysia Latex 12 lines 1.2 bn
Producing:
F32 2nd Phase 3rd quarter 2019 Malaysia Nitrile/Latex 12 lines 1.2 bn
1) Latex & nitrile examination
F2B Refurbishment 4th quarter 2019 Malaysia Nitrile 4 lines 0.8 bn gloves
F5A New Block 4th quarter 2019 Malaysia Nitrile 20 lines 2.0 bn 2) Surgical, household,
cleanroom gloves
F40 New Factory 1st Phase 4th quarter 2019 Malaysia Nitrile 22 lines 2.2 bn 3) CPE/TPE gloves
F40 New Factory 2nd Phase 1st quarter 2020 Malaysia Nitrile 8 lines 0.8 bn 4) Former & chemical
manufacturing
F41 New Factory 1st Phase 1st quarter 2020 Vietnam PVC 20 lines 2.0 bn 5) Packaging materials
F8A New Factory 1st Phase 3rd quarter 2020 Thailand Nitrile 32 lines 3.2 bn 6) Dental dam
7) Condom
F42 New Factory 1st Phase 4th quarter 2020 Malaysia Nitrile 48 lines 4.8 bn
Thailand
Total expansion 200 lines 20.4 bn
2 glove factories
Total by 2020: 38 glove factories 848 lines 80.9 bn
2 latex plants
Current: Producing:
F35CD Condom Factory Latex 1 line 0.1 bn 1) Latex examination gloves
F39DD Dental Dam/ Latex 1 line 18 mil 2) Latex concentrate
Exercise Band China
1 glove factory
Latex Processing
Producing:
Top Glove: 2 latex plants Sourcing majority of the latex requirements 1) Vinyl gloves
Clear blueprint for further growth
Increased automation faster, more efficient and technologically advanced production lines
On-going facility optimization and initiatives which include the construction of highly-efficient factories
11/24Global distribution across 195 countries
Distribution
Over 2,000 customers
Comprising distributors across 195 USA Germany China
countries
A geographically diverse customer
base
An OEM manufacturer
Top 20 customers represent c.30%
of total revenue
No single customer currently
contributes 5% or more of revenue
1Q2019 Sales Volume Breakdown
Thailand
Middle East, Africa , 3%
7% Vietnam
Latin America,
8% North
America, 31% Malaysia
Eastern
Europe, 12%
Asia ex- Western
Japan, 15% Europe, 16%
Japan, 8% Brazil Legend:
Distribution hub
Note: Distribution hub in Vietnam will be set up in future after the manufacturing plant is completed.
12/24Proven track record of growth and profitability
Revenue and growth
RMmn
YoY volume growth 11% 7% 26% 19%
CAGR of 20.8%
4,214
3,409
Growth =
2,889
34.5%
1,262
938
2016 2017 2018 1Q2018 1Q2019
USD Equivalent(1) USD706mn USD834mn USD1,031mn USD229mn USD309mn
EBITDA Net profit
and EBITDA margins(2) attributable to owners of the company and margins
RMmn / %
18.2% 16.5% 16.1% 16.3% RMmn
1000 14.1% 20.00%
900 1000 12.5% 20.00%
10.00% 9.6% 10.3% 11.2% 8.7%
800 CAGR of 15.0% 694 900
10.00%
700 0.00% 800
600 700 0.00%
525 Growth = -10.00%
481 600 CAGR of 9.7%
500 35.7% Growth = -10.00%
-20.00% 500 434
400 361 4.5% -20.00%
400 331
300 205 -30.00% 300 -30.00%
200 151
200 105 110
-40.00% -40.00%
100 100
0 -50.00% 0 -50.00%
2016 2017 2018 1Q2018 1Q2019 2016 2017 2018 1Q2018 1Q2019
USD Equivalent(1) USD128mn USD118mn USD170mn USD37mn USD50mn USD88mn USD81mn USD106mn USD26mn USD27mn
Source: Company
Notes: Financials based on Top Glove consolidated financials for the relevant period
(1) Translated at FX rate of USD1:RM4.0885 as at 31 January 2019
(2) EBITDA refers to earnings before interest, tax, depreciation and amortisation. EBITDA margins refer to EBITDA over Revenue
13/24Prudent capital management
Adjusted net debt / (adjusted net cash) position Gearing ratio (D/E)(3)
Adjusted net debt / (x)
RMmn (304) (71) 1,854 1,849
(Adjusted net cash)(1)
USDmn(2) (74) (17) 454 452 0.92x 0.91x
Debt Cash Short Term Investment Securities Post Aspion
Acquisition
Impact of Aspion
Acquisition
2,213 2,259
0.21x 0.18x
399 376
(224) (240) (165) (202)
(479) (207) (194) (208) 31 Aug 2016 31 Aug 2017 31 Aug 2018 30 Nov 2018
31 Aug 2016 31 Aug 2017 31 Aug 2018 30 Nov 2018
Adjusted net debt / EBITDA(4) Cash flow from operations(4) / debt
(x) 2.67x (x)
2.25x
Post Aspion
Acquisition Post Aspion
Acquisition
1.01x
1.09x
(0.15x)
(0.58x)
0.24x
0.15x
31 Aug 2016 31 Aug 2017 31 Aug 2018 30-Nov-18
31 Aug 2016 31 Aug 2017 31 Aug 2018 30-Nov-18
Notes:
(1) Adjusted net debt / (adjusted net cash) is calculated by subtracting cash and short-term investment in securities from total debt
(2) Translated at FX rate of USD1:RM4.0885 as at 31 January 2019
(3) Gearing ratio is defined as debt divided by total equity
(4) Adjusted net debt / EBITDA and Cash flow from operations / debt ratios as at 30 Nov 2018 are based on annualised 1Q2019 EBITDA and annualised 1Q2019 Cash flow from operations respectively 14/24Healthy balance sheet
As of 30 Nov 2018
(1)
RMmn USDmn
Cash and bank balances 202.2 49.4
Debt 2,259.0 552.5
Net debt 2,056.8 503.1
Total equity 2,492.4 609.6
Debt / total equity (x) 0.91x
Net debt / total equity (x) 0.83x
Short-term investment in securities 208.3 50.9
(2)
Adjusted cash 410.5 100.3
(3)
Adjusted net debt 1,848.5 452.2
Adjusted net debt / equity (x) 0.74x
Notes:
(1) Translated at FX rate of USD1:RM4.0885 as at 31 January 2019
(2) Adjusted cash is calculated by adding cash and bank balances and short term investment in securities
(3) Adjusted net debt is calculated by subtracting cash and short-term investment securities from total debt
15/24Aspion – A highly synergistic and transformational acquisition
Highly synergistic acquisition
Top Glove became the world’s #1 manufacturer(1) in surgical and medical gloves globally,
1 with leading low-cost and high-tech capabilities
Overcome high barriers to entry in the surgical gloves market, including regulatory
2 approvals
Access to new customers, specifically in the developed markets of North America, Europe
3 and Japan
Access to cutting edge technology and premium product offering that is expected to lead
4 the trend in preference of surgical glove adoption in developed nations
Source: Company, Frost and Sullivan
Note:
(1) Based on production volume
16/24Becoming the #1 surgical glove manufacturer in the world(1)
Current surgical glove market is mainly dominated by multi-national corporations
Top Glove is now the largest surgical glove producer globally
Potential for capturing more production from MNCs in the future, hence increasing profitability
Accelerated Top Glove’s plan to attain c.30% market share in the global rubber glove market by 2020
Propelled Top Glove to become the #1 surgical glove manufacturer(1)… … accessing new clients in key developed markets in surgical gloves
Geographical breakdown of surgical gloves annual sales(2) (volume)
15% 16% 30% 1
Aspion Top Glove
North America 7.3% -
Competitor A 19%
Western Europe 22.1% 1.0%
Japan 5.0% -
16% Middle East 23.1% 13.0%
South America 18.8% 15.0%
15% Asia 20.0% 26.0%
Eastern Europe 2.5% 37.0%
13% Others 1.2% 8.0%
Competitor B
Competitor C 8% Provided immediate access and opportunity to tap developed and
new markets including the US with high surgical glove
consumption/ capita
4%
Competitor D
Complementary fit with Top Glove’s existing surgical glove markets
due to minimal duplication
25%
Others Diversified the risk profile of Top Glove surgical glove business
segment by expanding into developed countries
Source: Company, Frost and Sullivan
Notes:
(1) Based on sales volume in 2017
(2) Top Glove figures based on financial year ending 31 August 2017 / Aspion figures based on financial year ending 31 October 2016
17/24Access to new manufacturing knowledge and proprietary materials
Access to Top Glove is benefiting from Aspion's premium product offering, enhanced by Aspion’s highly specialised Finessis product
cutting edge that is expected to lead the trend in preference surgical glove adoption in developed markets
technology
Acquisition of Aspion complemented the existing Top Glove product range with cutting edge technology surgical glove
Cutting Edge Technology: FINESSISTM Surgical Glove Using FlexylonTM
Preference
Finessis’ flagship
Protection Comfort Zero Chemicals
surgical glove Orthopaedic Microsurgery General surgery
consists of 3 Trauma Neurosurgery Endoscopic surgery
brands High risk surgery Photorefractive keratectomy Obstetrics
Gynaecology
5 years to develop Finessis using “Flexylon” material created using
FUSION
FUSION
barrierONE proprietary R&D and approved by FDA, EU and TGA
Superior
Mid-range Sensiflex Maxitex Maxitex Maxitex Quality
Plus Neuro PF PF UG PF
Safety and No Allergens
Maxitex Maxitex Nuzone
No latex allergens
Maxitex
Duplex PF Duplex X2 Zero chemical accelerators
No chemical allergens
Protection (AQL(1)Conclusion
1 Market leader
World’s largest manufacturer of gloves
Market leadership in all key product segments
2 Attractive industry
Strong growth in usage of rubber gloves historically in developed countries
Future growth potential from emerging markets
fundamentals
3 Positioned strongly Continuous growth in manufacturing capacities
for growth Global distribution network across 195 countries
4 Strong financial
Strong historical growth in revenue and earnings
High profitability with EBITDA margins of 14-18%
performance
Prudent capital management with strong balance sheet
5 Highly synergistic acquisition
Aspion acquisition
Propelled Top Glove to become the #1 surgical glove manufacturer globally
19/24Thank You
20/24Appendix
21/24Top Glove guiding principles
We strive to be the world’s leading manufacturer with
Vision:
excellent quality glove products and services that enrich and protect human lives
Corporate To be a world class glove manufacturer by providing
Mission: top quality products with excellent services through continuous improvement and innovation
Business Direction Business Philosophies
To produce consistently high quality gloves at efficient low cost We work for our customers
We take care of the interest of our shareholders
We ensure that our employees continue to contribute positively to the
company and we care for their well-being
Investment Direction We work closely with our bankers, suppliers, business associates
and friends
To invest 1 efficient dollar and earn 2 healthy dollars
Business Rules
Do not lose our shareholders’ money
Business Ethics Do not lose our health
Do not lose our temper
Honesty
Do not lose our customers
Integrity
Transparency
22/24Top Glove strong CSR stewardship
Environment Social Employees
ISO 14001 Top Glove Foundation Learning & Development
All factories in the
process of being
ISO 14001 certified
Launched with the objective of providing
Transportation funds for the purpose of charity, A learning organisation with the motto:
All Klang factories are education, environment and community “Must Know, Must Do, Must Teach”
strategically located
within 500m of each Community Outreach Program Talent Recruitment & Attraction
other, minimising fuel
consumption
Water Efficiency
Stringent policies to hire well-rounded
On-site Detention
talents and provide opportunities for
tanks and rain Committed to serve the community future leaders
harvesting tanks
installed in factories Fair & Equitable Work Environment Corporate Wellness
Waste Management Practices
Rubber waste sent to
government certified
companies for Policies to govern our hiring processes
purposes of recycling and protect our workforce
Well-being of our employees continues
to be a foremost priority
23/24Top Glove group of companies
Ready, 1 2 3
TOP GLOVE
Top Quality
Top Quality
Top Quality
Claps, 2X 3X 2X
Prepared by : QA Admin (Rev. 6, Date Prepared : 14/7/17) YES! YES! YES!
Verified by : Ms. Loo Sun Nooi / QA DGM
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