NEW HIGHS IN A NEW NORMAL WITH NEW PEAKS AHEAD - Top Glove
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TOP GLOVE CORPORATION BHD
Investor Presentation
9th November 2020
NEW HIGHS IN A NEW NORMAL
WITH NEW PEAKS AHEAD
The World’s Largest Manufacturer of
Nitrile Gloves, Natural Rubber Gloves and Surgical Gloves
Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP : 890534100 Page 1/25
1/23
TG BUSINESS ETHICS CLAPS
Ready, 1 2 3
Claps, 2x 3x 2x
Initiated By: Tan Sri Dr. Lim Wee Chai @ 17/07/2017
Revised By: Ng Kai Yee @ 21/09/2020
Verified By: Melissa Cheoh @ 21/09/2020 2/23
Page 2/25
Top Glove Corporation Bhd. (“Top Glove”) at a glance
World’s largest manufacturer of gloves
World largest Current market
manufacturer of capitalisation(1) of
Nitrile, Natural Rubber RM69.06bn, FY2020
and Surgical gloves USD16.78bn Revenue RM7.2bn, USD1.72bn
PAT RM1.8bn, USD0.42bn
About 2,000 Over 21,000
90 billion gloves pa customers employees
47 factories across 195
750 production lines countries
(As at Oct 2020)
Source: Bloomberg
Notes:
(1) Market capitalisation as at 9 Nov 2020.
3/23
Page 3/25
From Humble Origins to Global Leader
30 years track record of excellence
• Revenue over RM4bn • World Largest
• Implementation of Artificial Manufacturer
Intelligence (AI) Empowered of Nitrile
Vision Inspection System Gloves
Secondary • Acquisition of Aspion, Eastern
listing on
• Commenced
Press, Duramedical. operations in
Singapore
Acquired a Stock • World Largest Manufacturer Vietnam
• Commenced World Largest marketing arm Exchange of Surgical Gloves
operations in Manufacturer of in Germany to (“SGX”)
Thailand Natural Rubber extend sales in
• Listed on the Second Gloves Europe 2020
2019
Board of Kuala 2018
Lumpur Stock 2017
Started as a Exchange (“KLSE”) 2016
2013
local business
enterprise 2007 2011
2004 • Launched BioGreen
2002 Biodegradable Gloves
2001 • Revenue over • Implemented
1994 Established first
RM3bn Manufacturing
• Commenced
1991 dedicated Group condom
Execution System
• Revenue over (MES) and Advanced
R&D Centre to business in Auto Packing Machine
RM1bn
drive innovation July 2018
• Commenced • Acquisition of a
operations in China majority stake
• Transferred to the in Medi-Flex
First overseas foray
and established a Main Board of
marketing arm in the KLSE
USA
4/23
Page 4/25
Global demand for gloves increasing across emerging
and developed markets
Steady growth in global demand for rubber gloves Driven by strong market fundamentals across geographies
In billion pieces
1) As a protective barrier for medical staff, gloves are an
indispensable item in the healthcare sector, with increasing
customer awareness in developing markets.
2) Increasing hygiene standards and healthcare awareness
a) Non-medical sector in developed countries
b) Medical sector in developing countries
3) A growing ageing population
a) With the elderly being more susceptible to higher risk
diseases
4) Progressively stringent health regulations
a) Healthcare reforms in US, China
b) Healthcare regulations: OSHA in the US, EU-OSHA in
Europe, SESI in Brazil
5) Emergence of new health threats
a) COVID-19, A(H1N1), SARS, bird flu, ebola, bio-terrorism,
Source: Malaysia Rubber Gloves Manufacturer Association
Anthrax
Further growth potential from emergingmarkets
Based on 2017statistics % of World Population % of Global Glove Consumption
Developed countries (USA, EU28 and Japan) 20% 70%
Other regions 80% 30%
Source: International Trade Centre and Company & www.worldometers.info 5/23
Page 5/25
Glove Consumption Per Capita (Pieces)
USA: 150 Europe: 100
Germany: 141
EASTERN
EUROPE
NORTH WESTERN
AMERICA EUROPE
Italy: 123 Japan: 54
MIDDLE ASIA
EAST
Korea: 48
AFRICA
China: 6
India: 4
LATIN
AMERICA Egypt: 2
Indonesia: 2
Brazil: 24
Source: Margma 2018, Company 6/23
Page 6/25
Top Glove’s Distribution Across 195 Countries
Distribution
6 distribution hubs globally Germany China
USA
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.30% of total
revenue
No single customer contributes more than
4% of revenue
FY20 Sales Volume Breakdown
Vietnam
Thailand
Malaysia
Legend:
Brazil Distribution hub
7/23
Page 7/25
Strategically Aligning Our Product Mix with Market Demand
Product mix by volume Product mix by revenue
from FY2011 to FY2020 for FY2020
60% Global market
55%
position
Vinyl 2%TPE/CPE 1%
50% 47%
42% Nitrile glove 1st Surgical
40% 8%
27% Latex Powder Free
30% 26% 19%
22% Nitrile
Latex powdered glove 53%
20%
11% 19% 20% Latex powder-free glove 1st
Latex Powdered
10% 9% 8% Vinyl/TPE/CPE 17%
7%
0%
1% 3% 3% Surgical glove 1st
FY2018
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016
FY2019
FY2020
FY2017
8/23
Page 8/25
Strong sales order book arising from COVID-19 pandemic
1) Gloves demand continue to be robust.
2) Monthly increasing trend for ASP following strong demand, as well as higher raw material and operating costs.
3) 30% of production capacity allocated for spot orders.
4) Post Covid19 with vaccine available, we expect gloves usage to be stronger than pre Covid19 era due to
increase in healthcare and hygiene awareness.
Lead Time
Pre COVID-19 630 Current
days
360
200
days
30 days to 40 days days 170
days
Average
Nitrile NR Vinyl Surgical
Lead time increase significantly
9/23
Page 9/25
Full Year Results FY 31/8/2020 vs FY 31/8/2019
Outstanding growth like never before
FY20 vs FY19
10/23
Page 10/25“Vaccinated” with vaccine news in past few months
• Covid-19 vaccine eventually will be available, the question is how long it will take for a vaccine to be
available to the market.
• Glove usage is still require even when there is vaccine.
a) Pfizer and BioNTech vaccine
Dr. Albert Bourla, the Chairman of Pfizer and Professor Ugur Sahim, one of the founder of BioNTech in BBC, 9/11/2020 :
• The Covid vaccine offers 90% protection.
• Data presented is only based on first 94 volunteers and may change once finalised.
• Expected to have enough safety data by the third week of November to take their vaccine to regulators.
• Able to supply 50 million doses by the end of 2020 and around 1.3 billion by the end of 2021. Each person needs two doses.
• Massive manufacturing and logistic challenges in immunising huge numbers of people, as the vaccine has to be kept in ultra-
cold storage at below minus 80C.
Dr. Scott Gottlieb, Pfizer director and ex-FDA chief in CNBC, 9/11/2020 :
• Covid vaccine won’t help right away.
• The vaccine could be available globally by the end of the second quarter or third quarter of 2021. We are looking to have
the vaccine available in time for the fall 2021 Covid season.
b) Brazil suspends China’s Sinovac Covid-19 vaccine trial due to adverse effect
11/23
Page 11/25Estimate Demand and Supply of Gloves
Demand and supply of gloves, in bil pcs
* Margma & Company’s estimates
**Based on planned expansion by glove
manufacturers
1) New supply of gloves will be limited:
a) Shortage of contractors to build production line
b) Shortage of foreign workers
c) Constraint of Nitrile raw material
2) Post pandemic demand growth will be higher than pre pandemic:
a) More usage of gloves in developing countries
b) Wider adoption of glove usage from non medical industries such as F&B, services industry, retail etc.
12/23
Page 12/25RM10 billion Capex for the next 5 years
Total Capacity,
bil pcs Next 5 years FY2025
160
+100 bil pcs
140 +16 bil pcs
+15% 120
120 +14 bil pcs
+16% 104 The Group has earmarked RM10 billion
100 for capital expenditure over the next
90 5 years to be invested in several key
80 areas including new capacity,
enhancement of existing manufacturing
60 facilities, Industry 4.0 initiatives, a
gamma sterilisation plant, land bank for
40 future expansion, IT upgrades and
workers’ facilities.
20
0
Oct'20 FY2021 FY2022
13/23
Page 13/25Cost of Production and Raw Material Price Trend
4QFY20 Cost Breakdown Raw Material Price Trend
a) Expecting Nitrile latex price increase due to constraint in supply.
b) Natural Rubber price remain stable.
14/23
Page 14/25Steady Growth Since Listing in 2001
Over 20 years since listing in 2001:
`
Compound Annual Growth Rate, CAGR
Average PAT margin
Revenue PAT
For FY ended 31 August
23.1% 28.2% 12.0%
in RM’mil 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Revenue 1,529.1 2,079.4 2,053.9 2,314.5 2,313.2 2,275.4 2,510.5 2,888.5 3,409.2 4,220.7 4,801.1 7,237.4
EBITDA 287.5 364.7 196.7 297.7 310.6 301.8 441.7 524.7 489.3 694.0 687.5 2,421.5
EBITDA margin 18.8% 17.5% 9.6% 12.9% 13.4% 13.3% 17.6% 18.2% 14.4% 16.4% 14.3% 33.5%
PBT 222.0 305.0 145.5 240.7 242.2 216.3 363.5 442.2 393.4 522.8 423.6 2,165.6
PBT margin 14.5% 14.7% 7.1% 10.4% 10.5% 9.5% 14.5% 15.3% 11.5% 12.4% 8.8% 29.9%
Taxation 53.9 54.6 30.3 33.4 39.4 32.7 82.3 79.8 54.5 89.6 56.1 376.7
PAT 168.1 250.4 115.1 207.3 202.8 183.6 281.2 362.4 338.9 433.2 367.5 1,788.8
PAT margin 11.0% 12.0% 5.6% 9.0% 8.8% 8.1% 11.2% 12.5% 9.9% 10.3% 7.7% 24.7%
ROE (%) 20.5% 22.4 % 10.0% 16.2% 14.9% 13.1% 17.4% 19.9% 16.3% 18.1% 14.4% 28.9%
EPS, RM ** 0.02 0.03 0.02 0.03 0.03 0.03 0.04 0.05 0.05 0.06 0.05 0.22
**Adjusted for bonus issue
15/23
Page 15/25Sustainable High Dividend Payout Ratio
Dividend Policy : Payout ratio about 50% of PAT after MI
FY2020 Dividend payout ratio of 55%
Total dividend,
sen
Dividend payment will be on quarterly basis;
Payment in January, April, July and November
Total dividend payment of RM2.53bil since listing
in 2001
TotalDividend
14 21 27 32 66 99 68 99 99 99 143 182 182 217 192 962 (RM million)
24% 25% 31% 29% 39% 40% 60% 49% 51% 55% 51% 50% 54% 51% 53% 55% Payout Ratio
Note: Dividend per share has been adjusted with the bonus issues 16/23
Page 16/25Bursa: Track Record of Delivering Shareholder Value
Total Shareholders Return of 39,751% over 20 years since listing in year 2001
As at 9/11/2020, Number of CDS and CDP Number of account
2nd highest market capitalization in Bursa. account as at 28 Oct 2020
9th highest market capitalization in SGX. Total CDS Account, Bursa 80,081
YTD share price appreciation of 441.3% in Bursa. Total CDP Account, SGX 4,450
Grand Total 84,531
Source: Registrar of Depository
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 Capital Total shareholder
Number of shares held(1)
(as at 9 Nov 2020) Dividends (as at 27 March 2001) appreciation(2) return
# RM RM RM RM %
122,304 1,037,138 38,833 (2,700) 1,073,271 39,751%
Source: Bloomberg as of 9 Nov 2020
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 17/23
Page 17/25Creating Sustainable Value for People & Environment
Top Glove is a member of the DJSI & FTSE4Good ESG indices
• Compliant with regulatory requirements &
EMS ISO 14001
• Cognisant of climate risk & committed to
minimise our carbon footprint
• Mindful to conserve natural resources
Compliance & Climate Change & Water Material & • Practices resource optimisation, prudent use
Environmental Governance Carbon Emissions Security Waste Management of materials & proper waste management
• Zero tolerance for forced labour & human
rights abuse
• Supports employee career aspirations
• Committed to creating a hazard-free and
healthy workspace
Labour Rights, Training & Safety & Community • Building resilient communities through social
Social Equality & Diversity Development Health Engagement development
• ISO 37001 Anti-Bribery Management System
certified & adheres to high standards of
corporate governance
• Act with integrity at all times & hold our
Governance & Supply suppliers to the same standards
Governance Ethics Chain Management Page 18/23
18/25Our Ongoing Social Compliance Commitment
We adhere our social compliance practices to BSCI and SMETA standards
1. Remediation payment to more than 11,000 foreign workers with sum of RM 136 mil on top of implementing
the Zero Cost Recruitment Policy since Jan 2019
2. Verified compliance of working hours & rest day by external auditors and government authorities
3. Full custody of passports under Passport Safekeeping Policy
4. Workers are paid timely and their wages are in accordance with Malaysian labour law
5. No restriction of movement at workplace and no curfew at hostel
6. Zero Harm & Safety Health Emergency Preparedness Programme & newly launched of security Apps, TG ResQ
7. Decent accommodation in compliance with the Malaysian laws & regulations
8. Due diligence on recruitment agents under Top Glove’s Recruitment System
9. Grievance mechanism & Whistleblowing Policy in place with various reporting channels. External whistleblowing
case receiver appointed for secure & efficient case management. Third party auditors as grievance helplines
receivers, which the helplines were established in different worker native languages
10. Town hall sessions with recruitment agents and other suppliers & 824 human rights & social compliance training
hours in FY2020 19/23
Page 19/25The Best is Yet to Come
NEW PEAKS AHEAD
1) Surge in global demand will continue for next 2 years
Estimated strong growth in annual global demand.
Global demand, bil pcs
Surge in global demand of 200bil pcs from 2020 to 2022 will outstrip the estimated new supply from major
manufacturers in Malaysia, Thailand and China.
New entrants will take up to 2 years to start production, and not competitive due to small scale and unable to
access to raw material.
Vaccine will take years to be available for everyone globally.
Post pandemic growth will be higher than pre pandemic due to heightened awareness in medical and non
medical sectors.
20/23
Page 20/25The Best is Yet to Come
2) ASP will continue to rise
Lead time increasing every month.
Nitrile raw material supply constraint.
3) Spot order
Allocated 30% of capacity.
Nitrile glove spot order fully sold for next 3 months.
Increasing spot order demand for Natural Rubber Powder Free gloves due to long lead time of Nitrile gloves.
4) Minimal interest expense and increase in interest income.
21/23
Page 21/25Thank you
www.topglove.com | invest@topglove.com.my | +603 3362 3098
Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP : 890534100
22/23
Page 22/25TOP GLOVE SAFETY CLAPS
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