Top Glove Corporation Bhd Corporate presentation docx

Top Glove Corporation Bhd Corporate presentation Bursa Malaysia 7113 Reuters TPGC.KL Bloomberg TOPG MK ADR CUSIP 890534100 T h e W o r l d ’ s L a r g e s t R u b b e r G l o v e M a n u f a c t u r e r To p G l o v e , To p Q u a l i t y, To p E f f i c i e n c y, G o o d H e a l t h , S a f e t y F i r s t , B e H o n e s t Presented by : CG Lim Prepared by: See SF Date: 27 March 2013 At a glance • Commenced operations in 1991. Listed in 2001 • 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 76% natural rubber glove and 24% synthetic rubber glove • Target balance capacity mix of natural rubber and synthetic rubber glove Page 2 / 22 2QFY13 product mix by volume Powdered latex 52% Nitrile 17% Vinyl 7% Surgical 2% Powder free latex 22% Strong growth momentum Estimate Global annual demand: Approx. 165 bil pcs p.a for year 2013 No. of gloves (billion pcs) Year Top Glove exponential growth in capacity (CAGR : 28%) Expansion in global market share Current market share Target market share by Dec 2015 Page 3 / 22 1.4 2.4 3.2 5.1 7.2 9 15 22 28.2 30 31.5 33 35.25 40 41.9 0 5 10 15 20 25 30 35 40 45 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13 25% 0 20 40 60 80 100 120 140 160 180 '99 '01 '03 '05 '07 '09 '11 '13 No. of gloves (billion pcs) Year As at April’13 Global rubber glove usage (by region, 2000 – 2009) USA EU27 Asia Ex Japan Latin America Japan 11% 89% 32% % of global glove usage in 2009 % of world population in 2009 * Source from Malaysian Rubber Export Promotion Council and Company % Page 4 / 22 68% • 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. Geographically 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 Page 5 / 22 Europe 34% North America 27% Latin America 20% Asia 11% Middle East 5% Rest of the World 3% 2QFY13 revenue by geography 1. Medical gloves is a necessity in healthcare industry  As a barrier of protection 2. Increasing healthcare and hygiene awareness  Especially in developing countries 3. Ageing population  As elderly are more susceptible to higher risk diseases 4. Health regulations  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, Bio- terrorism threats, Anthrax Key industry drivers Page 6 / 22 24 manufacturing facilities across 3 countries (as at April 2013) • 22 glove factories 40.3 bil capacity p.a. from 462 production lines • 2 latex concentrate/ processing plants supply 60% to 70% of Top Glove’s requirement China 2 glove factories Produce: • Vinyl glove • PE glove Thailand 2 glove factories 2 latex plants Produce: • Latex examination glove • Latex concentrate Malaysia 18 glove factories Produce: • Latex examination glove • Nitrile examination glove • Surgical glove • Household glove • Cleanroom glove Page 7 / 22 Production capacity expansion plan No. of production lines Capacity p.a. Target completion Current: 22 glove factories 462 lines 40.3 bil pcs p.a. Expansion plan : F28 (Banting, Malaysia) (formerly known as F18, phase 2) F25 (Klang, Malaysia) New factory F23 (Ipoh, Malaysia) Phase 2 F27 (Lukut, Malaysia) Phase 2 F29 (Klang, Malaysia) New factory Total expansion by April 2014 16 lines 20 lines 16 lines 8 lines 16 lines 76 lines 1.6 bil pcs p.a. 2.0 bil pcs p.a. 1.6 bil pcs p.a. 0.8 bil pcs p.a. 1.6 bil pcs p.a. 7.6 bil pcs p.a. April 2013 July 2013 November 2013 December 2013 April 2014 Total by April 2014 : 25 glove factories 538 lines 47.9 bil pcs p.a. Page 8 / 22 New Venture : Rubber Plantation Page 9 / 22 Bangka 1. Plantation land located in Indonesia, south of Sumatera; Land size 30,772 ha 2. Concessions land tenure for 60 years, renewal for another 60 years. 3. Target commencement of first phase of planting in Oct 2013. 4. Expecting first tapping in 2020. 5. With progressive planting over 8 years and a gestation period of 7 years, full development is expected within 14 years. 6. Estimated investment cost around RM450m over 14 years period. Positive cash flow expected from year 10. Belitung Natural Rubber Supply vs Demand -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0 2 4 6 8 10 12 14 2007 2008 2009 2010 2011 2012F 2013F 2014F mmt mmt Supply (LHS) Demand (LHS) Supply surplus (RHS) Source : International Rubber Study Group Page 10 / 22 [...]... & 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 21 / 22 Top Glove Corporation Berhad Thank you Q & A Session www.topglove.com.my invest@topglove.com.my +603 5022 2110 Page 22 / 22 ... taken into consideration, the share price should be RM5.35 x 1.3 x 1.4 x 1.4 x 2 x 2 = RM54.53 per share Page 19 / 22 Corporate culture Business Direction, Ethics, Rules & Philosophies Must know, Must do, Must teach Business direction Business rules 1 To produce consistently high quality gloves at efficient low cost 1 2 3 4 Investment direction 1 To earn 2 healthy dollars and invest 1 efficient dollar... 86.7 27% 120.6 (9%) PAT margin 9.5% 7.9% EPS (sen) 17.4 13.7 Total sales (RM’mil) Profit attributable to equity (RM’mil) • • • • 13.7% 19% 130.3 1% 10.8% 10.0% 27% 19.0 (8%) Sales volume (quantity of gloves) up 22% 1H13 vs 1H12, up 8% 1H13 vs 2H12 Latex price down 23% 1H13 vs 1H12, down 19% 1H13 vs 2H12 Improvement in margin Lower tax expense due to recognition of deferred tax assets Page 15 / 22 Financial... Mar-08 Dec-07 Sep-07 0 Jun-07 Mar-07 Sep-06 Jun-06 Mar-06 Dec-05 Sep-05 Dec-06 1.00 0.93 Mar-05 0.5 1.29 Jun-05 1.5 Dec-11 3.5 Note: NR Latex & Nitrile Latex based on 60% TSC Page 12 / 22 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 Feb-1 1 Aug-1 0 Feb-1 0 Aug-0... (13%) PAT (RM’mil) 51.3 54.2 (5%) 58.9 (13%) PAT margin 8.9% 9.9% EPS (sen) 8.1 8.6 Profit attributable to equity (RM’mil) • • • 15.3% (11%) 70.4 (13%) 12.0% 10.1% (6%) 9.3 (13%) Sales volume (quantity of gloves) up 20% 2Q13 vs 2Q12, up 3% 2Q13 vs 1Q13 Latex price down 15% 2Q13 vs 2Q12, down 1% 2Q13 vs 1Q13 Margin affected by the time lag of passing the minimum wage impact Page 14 / 22 Half yearly performance . Top Glove Corporation Bhd Corporate presentation Bursa Malaysia 7113 Reuters TPGC.KL Bloomberg TOPG MK ADR CUSIP 890534100 T. concentrate Malaysia 18 glove factories Produce: • Latex examination glove • Nitrile examination glove • Surgical glove • Household glove • Cleanroom glove Page 7