The
World’s
Largest
Rubber
Glove
Manufacturer
Top Glove Corporation Bhd Corporate presentation
To p G l o v e , To p Q u a l i t y , T o p E f f i c i e n c y, y, Good Health, Safety First, Be Honest
Presented by : Lim CG Prepared by: See SF Date: 3 January 2013
Bursa Malaysia 7113
Reuters TPGC.KL
Bloomberg TOPG MK
ADR CUSIP 890534100
At a glance • Commenced operations in 1991. Listed in 2001
1QFY13 product mix by volume
• Comprehensive product range with 13 major types of rubber gloves • 80% of production for health care sector and 20% for non-health care sector • Produce 77% natural rubber glove and 23% synthetic rubber glove
Powder free latex 23% Powdered latex 52%
Nitrile 16% Vinyl 7%
Surgical 2%
• Target balance capacity mix of natural rubber and synthetic rubber glove
Page 2 / 21
Strong growth momentum Estimate Global annual demand: Approx App rox.. 160 160 bil bil pcs p.a p.a fo forr year year 2012 2012 45
180
20
) s40 c p 35 n o i l l 30 i b25 ( s e20 v o l g15 f o10 . o N 5
0
0
) s c 160 p n 140 o i l l i 120 b ( s e v o l g f o . o N
Top Glove exponential growth in capacity (CAGR : 28%)
100 80 60 40
'99'00'01'02'03'04'05'06'07'08'09'10'11'12
40 40.3
28.2 22
35.25 33 31.5 30 As at Jan’1 an’13 3
15
3.2 1.4 2.4
5.1
7.2
9
'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13
Year
Year
Expansion in global market share
25%
Current market share
Target market share by Dec 2015
Page 3 / 21
Global rubber glove usage (by (b y regi region on,, 2000 2000 – 20 2009 09)) • • %
USA and EU27 with only 11% of world population consumed 68% of global glove usage. Other regions with 89% of world population consumed only 32% of global glove usage. % of global % of world glove usage population in 2009 in 2009
EU27 USA
68%
11%
Asia Ex Japan Latin America Japan
32%
89%
* Source from Malaysian Rubber Export Promotion Council and Company
Page 4 / 21
Geographically Geogr aphically diversified • Exports to 185 countries with more than 1,800 customers • Geographically diversified and no single biggest customer constitutes more than 4% of revenue • Customers are mainly distributors in the respective countries • Preferred OEM manufacturer ma nufacturer
1QFY13 revenue by geography
Middle East 5%
Rest of the World 3%
Asia 10% Europe 35% Latin America 20% North America 27%
Page 5 / 21
Key industry drivers 1. Medical gloves is a necessity in healthcare industry
As a barrier of protection
2. Incr Increa easi sing ng hea healt lthc hcar are e and and hygi hygien ene e awareness
Especially in developing countries
3. Ageing population
As elderly are more susceptible to higher risk diseases
4. Heal altth re regul ulat atio ions ns
Healthcare reforms, eg. US, China
Healthcare regulations eg. OSHA in US, EU-OSHA in Europe, SESI in Brazil
5. Emergence of health threats
E.g. A(H1N1), SARS, bird flu, Bioterrorism threats, Anthrax Page 6 / 21
24 manufacturing facilities across 3 countries (as at Jan 2013) • 22 glove factories 40.3 40 .3 bi bill ca capa paci city ty p.a p.a.. from 462 production lines • 2 latex concentrate/ processing plants supply 60% to 70% of Top Glove’s requirement Malaysia
17 glove factories Produce: • La Latex tex ex exam amin inati ation on glove • Nit Nitril rile e examin examinatio ation n glove • Sur Surgic gical al glo glove ve • Hou Househ sehold old glo glove ve • Cle Cleanr anroo oom m glov glove e
China
2 glove factories Produce: • Vi Viny nyll glov glove e • PE gl glov ove e
Thailand
2 glove factories 2 latex plants Produce: • La Late tex x ex exam amin inat atio ion n glove • La Late tex x co conc ncen entr trat ate e
Page 7 / 21
Production capacity expansion plan No. of production lines
Capacity p. p.a.
462 lines
40.3 bil pc pcs p.a.
F18 (Banting, Malaysia) Phase 2
16 lines
1.5 bil bil pc pcss p. p.a a.
April 2013
F25 (Klang, Malaysia) New factory
20 lines
1.8 1. 8 bil bil pcs p. p.a. a.
June 2013
F23 (Ipoh, Malaysia) Phase 2
16 lines
1.5 1. 5 bil bil pcs p. p.a. a.
August 2013
Total expansio expansion n by August August 2013
52 lines
4.8 4. 8 bil bil pcs p. p.a. a.
Total by August August 2013 2013 : 23 glove factories
514 lines
45.1 bil pcs p.a.
Current: 22 gl glove factories
Target completion
Expansion plan :
Page 8 / 21
New Venture : Rubber Plantation 1. Acqui Acquisit sition ion of of PT Ag Agro ro comp complet leted ed on 1 Octo October ber 2012. 2. Pla Planta ntatio tion n land land locate located d in Indon Indonesi esia, a, south south of of Sumatera. 3. Lan and d siz size e 30, 30,7 773 ha ha.. 4. Co Conce ncess ssion ions s land land tenure tenure for for 60 60 years years,, renew renewal for another 60 years. 5. Ru Rubbe bberr trees trees has 6 year years s gesta gestatio tion n perio period. d. 6. Pr Progr ogres essiv sive e plant planting ing ove overr 8 year years, s, with with full full development will take 13 years. 7. Es Estim timate ated d inves investme tment nt cost cost aro around und RM RM450 450m, m, over 13 years, including land, planting, maintenance cost up to maturity and facilities.
Pag age e 9 / 21
Natur Nat ural al Rub Rubber ber Supp Supply ly vs vs Dem Demand and
Page 10 / 21
Costs breakdown Breakdown of production costs (from Sept'12 to Nov'12)
Average latex prices 12
FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 1QFY13 RM3.14 RM3.28 RM4.94 RM4.78 RM5.62 RM4.34 RM6.12 RM8.92 RM7.36
RM10.99 (11/04/11)
11
10
Packaging 6%
Overhead and others 14%
9
8
Fuel 8% Chemical 9%
Latex 54%
RM7.75 (23/04/10)
RM7.20 (03/07/08)
g7 k r e6 p M R
RM6.85 (30/06/06)
RM6.45 (10/10/12)
5
RM6.09 (02/01/12)
4
3
Labour 9%
• • •
2
3 0 p e S
4 0 r a M
4 0 p e S
5 0 r a M
5 0 p e S
6 0 r a M
6 0 p e S
7 0 r a M
7 0 p e S
8 0 r a M
8 0 p e S
9 0 r a M
9 0 p e S
0 1 r a M
0 1 p e S
1 1 r a M
1 1 p e S
2 1 r a M
2 1 p e S
Able to pass majority of latex cost increases to customers On-going internal cost improvement and efficiency measures offset cost increases Upstream production (latex concentrate plant) to provide greater control over latex supply Page 11 / 21
Natural rubber (NR) latex, nitrile Natural ni trile latex & crude oil price trend (in USD) Natural Rubber (NR) Latex, Nitrile Latex & Crude Oil Price in USD (Jan 2005 to Dec 2012)
NR Latex & Nitrile Price (USD/KG)
Crude Oil Price (WTI) (USD/bbl)
140
7.5
140
6.5
120
112.79 103.02
5.5
99.74
86.15 4.5
74.40
82.92
86.11 100 89.03 80 Crude Oil
78.4
3.61 3.5
60 2.91
41.68 2.19 2.39
2.5
2.37
1.86
2.07
1.5 0.5
1.19
5 0 p e S
5 6 6 0 - 0 - 0 c r n e a u D M J
6 0 p e S
6 7 7 0 - 0 - 0 c r n e a u D M J
1.85
1.69 20 Nitrile
1.00
1.00 5 0 n u J
NR 40 Latex 1.91
2.20 2.05
7 0 p e S
7 8 8 0 - 0 - 0 c r n e a u D M J
Note: NR Latex & Nitrile Latex based on 60% TSC
8 0 p e S
8 9 9 0 - 0 - 0 c r n e a u D M J
9 0 p e S
9 0 0 0 - 1 - 1 c r n e a u D M J
0 1 p e S
0 1 c e D
1 1 1 - 1 r a n u M J
1 1 p e S
1 2 2 1 - 1 - 1 c r n e a u D M J
2 1 p e S
2 1 c e D
0
Page 12 / 21
Challenges in glove industry
$
Currency exposure • Majority sales in USD, subject to USD currency movement • Time lag in passing on to customers when USD weakens sharply
11
10
9
8
7
6
5
4
3
2
3 0 g u A
4 0 b e F
4 0 g u A
5 0 b e F
5 0 g u A
6 0 b e F
6 0 g u A
7 0 b e F
7 0 g u A
8 0 b e F
8 0 g u A
9 0 b e F
9 0 g u A
0 1 b e F
0 1 g u A
1 1 b e F
Raw material price fluctuation • Due to weather impact, crude oil price movement, speculation, competition with other usage • Time lag in passing on to customers when prices move up sharply
Crude oil price fluctuation/ speculation • Impact on energy cost, other raw materials and logistic cost • Inflation
Page 13 / 21
3 mon months ths per perfor forman mance ce com compar pariso ison n 1Q13
1Q12
1 Sept 12 – 30 Nov12 Total sales (RM’mil) EBITDA (RM’mil) EBITDA margin PBT (RM’mil) PBT margin Profit attributable to equity (RM’mil) PAT (RM’mil) PAT margin EPS (sen)
• • • •
4Q12
1 Sept 11 – 30 Nov 11
Variance (1Q13 vs 1Q12)
1 Jun 12 – 31 Aug 12
Variance (1Q13 vs 4Q12)
584.6
554.8
5%
607.3
(4%)
89.6
58.2
54%
85.0
5%
15.3%
10.5%
70.4
41.6
12.0%
7.5%
57.5
31.4
83%
64.0
(10%)
58.9
32.5
81%
65.8
(10%)
10.1%
5.9%
9.3
5.1
14.0% 69%
66.6
6%
11.0%
10.8% 82%
10.3
(10%)
Sales volume volume (quanti (quantity ty of gloves) gloves) up 23% 1Q13 1Q13 vs 1Q12, up 6% 1Q13 vs 4Q12 Latex Lat ex price price down down 30% 1Q13 1Q13 vs vs 1Q1 1Q12, 2, down down 14% 1Q13 1Q13 vs vs 4Q1 4Q12 2 Improvement in margin Lower tax expense due to recognition of deferred tax assets Page 14 / 21
Financial highlights since listing in 2001 (12 years) (in RM’mil) Sales
t n EBITDA e m EB ITDA DA ma marg rgin in e EBIT t a t PBT s e m PBT margin o c n I # PAT Equity PAT margin RO E
a t (in RM) a d e * Net Assets r a h s * EPS r e P
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
1 3 8 .9
1 8 0 .2
2 6 5. 1
4 1 8 .1
6 4 1 .8
992.6
1 , 22 8 . 9
23.9
2 7 .1
3 9 .5
6 0 .6
8 9 .2
130.3
1 7 5 .7
197.8 19
2 8 7 .5
36 4 . 7
2 0 7. 3
17..2% 17
15.0 15 .0% %
14.9 14 .9% %
14.5% 14.5 %
13.9 13 .9% %
13.1% 13.1%
14.3 14 .3% %
14.4 14 .4% %
18.8 18 .8% %
17.5 17 .5% %
17.2
2 0 .2
2 9. 3
4 5 .2
6 5 .7
91.8
1 1 8 .6
1 34 . 6
222.0
12.4%
11.2%
1 1 .0 %
10.8%
1 0 .2 %
9 .2 %
9 .7 %
9 .8 %
1 5. 9
18 . 1
2 5. 3
3 9 .5
58.1
84.1
89.6
11.4%
9 .9 %
9 .7 %
9. 5 %
9 .1 %
8.5%
17.0
1 6 .1
1 7. 8
2 4. 3
2 6 .9
27.8
2001
2 0 02
20 0 3
2 00 4
2 0 05
2 0 06
2012
CAGR 31%
-
3 1 0 .0
30% 30
-
10..1% 10
13.4 13 .4% %
-
3 0 5 .0
145.5
2 4 0 .7
33%
14.5%
1 4 .7 %
7.1%
10 . 4 %
-
1 1 0 .1
169.1
2 4 5 .2
113.1
2 0 2 .7
32%
7 . 2%
7 .8 %
1 1. 0 %
1 2 .0 %
5. 6 %
8 .9 %
-
9 .2 %
1 4 .0
16 .0
2 0 .0
2 2 .0
9. 9
15 . 8
-
-
2 0 07
1,377.9 1,529.1 2,079.4 2,053.9 2,314.4
12 yrs Avg
2008
2 00 9
2010
2 01 1
2 0 12
14.8 14 .8% % 1 0 .9 % -
CAGR
0 .1 8 3
0 .2 2 1
0 .2 7 5
0 .3 1 2
0. 4 0 9
0 .5 6 1
1 .0 6 7
1.141
1 . 3 93
1.808
1 . 8 53
2 .0 6 8
26%
-
0 .0 3
0. 0 4
0 . 05
0 . 08
0 .1 1
0 . 16
0 .1 6
0 .1 9
0 .2 9
0 .4 0
0 . 18
0. 3 3
30%
-
* Based on par value of RM0.50, adjusted for share split and bonus issue # Restated to comply with FRS112 (deferred tax)
Page 15 / 21
Strong and healthy balance sheet 1QFY13 As at 30 Nov 12
FY2012 As at 31 Aug 12
Net cash flow from operating activities (RM’mil)
113.3
277.9
Capital expenditure and investment (RM’mil)
80.4
145.6
Free cash flow before dividend (RM’mil)
32.9
132.3
Net cash and short term investment (RM’mil)
345.9
308.5
1,345.1
1,279.9
Net assets per share (RM)
2.17
2.07
Return on equity *
17.1
15.8
Inventory turnover days
29
28
Receivable turnover days
40
44
Payable turnover days
38
37
Shareholders equity (RM’mil)
* Annualised Page 16 / 21
Dividend Dividen d – sus sustai tainab nable le and and stead steady y growth growth Dividend (sen) (Financial year ended 31 August)
Financial year
Dividend per share (sen)
Total dividend (RM’000)
2012
9.00 (Proposed)
55,699
7.00 (interim)
43,306
2011
11.00
68,035
2010
16.00
98,877
2009
11.00
65,873
2008
5.50
32,389
2007
4.61
27,435
2006
3.67
21,173
2005
2.66
14,110
2004
2.36
12,295
2003
1.85
9,550
2002
0.56
2,808
2001
0.80
4,000
20
) n e 18 s ( e 16 r a h 14 s r 12 e p 10 d n e 8 d i v 6 i D
16.00
11.00
11.0 0
5.50 4.61
4 2
16.00
1.85
2.36 2.66
3.67
0.80 0.56
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Financial Year * Dividend per share has been adjusted for share split and bonus issue
Target dividend payout ratio is around 50% of profit attributable to equity Dividend payout ratio : FY12 at 50% : FY11 at 60% : FY10 at 40% : FY09 at 40%
Total payout since listing
455,550 Page 17 / 21
Return on investment 2323% since IPO in Mar’01, assuming initial investment of 1,000 shares was made during initial public offering price of RM2.70 on 27/03/01 Accumulated Cost of dividend investment received (RM) (RM)
Capital appreciation (RM)
Total s/holders return %
2,700
-
-
209
2,700
6,427
238%
15,743
415
2,700
13,458
498%
3,640 *
24,752
673
2,700
22,725
842%
13.80
3,640 *
50,232
962
2,700
48,494
1796%
03-Jan-08
6.50
5,096 *
33,124
1,412
2,700
31,836
1179%
02-Jan-09
3.64
5,096 *
18,549
1,933
2,700
17,782
659%
04-Jan-10
10.06
5,096 *
51,266
2,595
2,700
51,161
1895%
03-Jan-11
5.05
10,192 *
51,470
4,073
2,700
52,842
1957%
03-Jan-12
5.12
10,192 *
52,183
5,500
2,700
54,983
2036%
02 Ja Jann-13 13
5.75
10,192 *
58,604
6,830
2,700
62,734
2323%
Date
Closing share price (RM)
Number of shares held
Total market value (RM)
27-Mar-01
2.70 (IPO)
1,000
2,700
-
02-Jan-04
4.90
1,820 *
8,918
03-Jan-05
8.65
1,820 *
03-Jan-06
6.80
03-Jan-07
* Adjusted for bonus issue and share split
If the bonus issues and share split are not taken into consideration, the share price should be RM5.75 x 1.3 x 1.4 x 1.4 x 2 x 2 = RM58.60 per share Page 18 / 21
Corporate culture Business Direction, Ethics, Rules & Philosophies Must know, know, Must do, do, Must teach teach Business direction
Business rules
1.
1. 2. 3. 4.
To prod produc uce e cons consis iste tent ntly ly hig high h quality gloves at efficient low cost.
Investment direction 1.
To earn earn 2 he heal alth thy y dol dolla lars rs an and d inve invest st 1 efficient dollar.
Business ethics 1. 2. 3.
Honesty Integrity Transparency
Do no nott los lose e our our sh shar areh ehol olde ders rs’’ mon money ey;; Do not lo losse ou ourr he heal alth th;; Do not lo losse ou ourr tem temp per er;; Do no nott lo lose se ou ourr cus custo tome merrs.
Business philosophies 1. 2. 3.
4.
We wor work k for for ou ourr cus custo tome merrs; We tak take e car care e of th the e int inter eres estt of of our our shareholders; We ensu ensure re th that at ou ourr empl employ oyee eess cont contin inue ue to contribute positively to the company and we care for their well-being; and We wor work k clos closel ely y wit with h ou ourr ban bank ker ers, s, suppliers, business associates and friends. Page 19 / 21
Management focus going forward •
Further automate production line to reduce workers & improve the efficiency
•
Target balance capacity mix of natural rubber and synthetic rubber glove
•
Move upstream to rubber plantation
•
Capture growth in emerging market demand
•
Target 30% global market share
Page 20 / 21
Top Glove Corporation Berhad
Thank you Q & A Session
www.topglove.com.my
[email protected] +603 5022 2110 Page 21 / 21
