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  • 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: 04 February 2014

  • 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 69% natural rubber glove

    and 31% synthetic rubber glove

    Target balance capacity mix of

    natural rubber and synthetic

    rubber glove

    Page 2 / 20

    Product mix by volume

    1QFY14 (Sep13 to Nov13)

    Powdered latex 47%

    Powder free latex

    21% Nitrile 24%

    Vinyl 7%

    Surgical 1%

  • Strong growth momentum Estimate Global annual demand:

    Approx. 165 bil pcs p.a for year 2013

    No.

    of

    glo

    ves

    (billion p

    cs)

    Year

    Top Glove exponential growth in capacity

    (CAGR : 26%)

    Expansion in global market share

    Current market share Target market share by Dec 2015 Page 3 / 20

    1.4 2.4 3.2

    5.1 7.2

    9

    15

    22

    28.2 30

    31.5 33 35.25

    40 43.9 41.3

    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 '14

    25%

    0

    50

    100

    150

    200

    '99 '01 '03 '05 '07 '09 '11 '13

    No.

    of

    glo

    ves

    (billion p

    cs)

    Year

    As at Jan14

  • 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 / 20

    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 195 countries with

    more than 2,000 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 / 20

    Europe 30%

    North America

    29%

    Latin America

    16%

    Asia 15%

    Middle East 7%

    Rest of the World 3%

    Revenue by geography

    1QFY14 (Sep13 to Nov13)

  • 6

    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 / 20

  • 7

    25 manufacturing facilities across 3 countries (as at January 2014)

    23 glove factories

    41.3 bil capacity p.a.

    from 464 production

    lines

    2 latex concentrate/

    processing plants

    supply 60% to 70% of

    Top Gloves

    requirement

    China

    1 glove factory

    Produce:

    Vinyl glove

    PE glove

    Thailand

    2 glove factories

    2 latex plants

    Produce:

    Latex examination

    glove

    Latex concentrate

    Malaysia

    20 glove factories

    Produce:

    Latex examination

    glove

    Nitrile examination

    glove

    Surgical glove

    Household glove

    Cleanroom glove

    Page 7 / 20

  • 8

    Current expansion plan

    No. of

    production

    lines

    Capacity p.a. Target

    completion

    Current: 23 glove factories 464 lines 41.3 bil pcs p.a.

    Expansion plan :

    F27 (Lukut, Malaysia) Phase 2

    F29 (Klang, Malaysia) New factory

    Total expansion by August 2014

    6 lines

    14 lines

    20 lines

    0.6 bil pcs p.a.

    1.4 bil pcs p.a.

    2.0 bil pcs p.a.

    May 2014

    August 2014

    Total by August 2014 : 24 glove factories 484 lines 43.3 bil pcs p.a.

    Page 8 / 20

  • New Venture : Rubber Plantation

    Page 9 / 20

    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. Purpose :

    a) Target to supply around 40% of own

    requirement

    b) Reduce volatility of latex price impact

    4. Preparation for planting commenced in Oct

    2013.

    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.

  • 10

    Costs breakdown

    Average latex prices

    2

    3

    4

    5

    6

    7

    8

    9

    10

    11

    12

    Jun-

    05

    Dec-

    05

    Jun-

    06

    Dec-

    06

    Jun-

    07

    Dec-

    07

    Jun-

    08

    Dec-

    08

    Jun-

    09

    Dec-

    09

    Jun-

    10

    Dec-

    10

    Jun-

    11

    Dec-

    11

    Jun-

    12

    Dec-

    12

    Jun-

    13

    Dec-

    13

    RM

    per

    kg

    FY05

    RM3.28

    FY07

    RM4.78

    FY04

    RM3.14

    FY08

    RM5.62

    FY09

    RM4.34

    RM7.20

    (03/07/08) RM6.85

    (30/06/06)

    RM7.75

    (23/04/10)

    FY10

    RM6.12

    FY11

    RM8.92

    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

    FY12

    RM7.36

    RM6.45

    (10/10/12)

    RM4.61

    (04/02/14)

    FY13

    RM5.77

    Latex 49%

    Labour 11%

    Chemical 9%

    Fuel 8%

    Packaging 6%

    Overhead and

    others 17%

    Breakdown of production costs (1QFY14, Sep'13 to Nov'13)

    RM10.99

    (11/04/11)

    FY06

    RM4.94

    Page 10 / 20

  • 11

    Natural rubber (NR) latex, nitrile latex &

    crude oil price trend (in USD)

    Page 11 / 20

    1.86

    1.00

    2.19

    1.00

    2.37

    3.61

    2.07

    2.05 2.02

    1.38

    2.39

    1.19

    2.91

    2.20

    1.85 1.71 1.49

    74.40

    140

    41.68

    86.15

    112.79

    82.92

    99.74

    103.02

    78.4 97.53

    107.76

    96.56

    0

    20

    40

    60

    80

    100

    120

    140

    0.5

    1.5

    2.5

    3.5

    4.5

    5.5

    6.5

    7.5

    Feb

    -06

    May

    -06

    Au

    g-0

    6

    No

    v-0

    6

    Feb

    -07

    May

    -07

    Au

    g-0

    7

    No

    v-0

    7

    Feb

    -08

    May

    -08

    Au

    g-0

    8

    No

    v-0

    8

    Feb

    -09

    May

    -09

    Au

    g-0

    9

    No

    v-0

    9

    Feb

    -10

    May

    -10

    Au

    g-1

    0

    No

    v-1

    0

    Feb

    -11

    May

    -11

    Au

    g-1

    1

    No

    v-11

    Feb

    -12

    May

    -12

    Au

    g-1

    2

    No

    v-1

    2

    Feb

    -13

    May

    -13

    Au

    g-1

    3

    No

    v-1

    3

    Feb

    -14

    Crude Oil Price (WTI) (USD/bbl)

    NR Latex & Nitrile Price (USD/KG)

    Crude Oil

    NR Latex

    Nitrile

    Note: NR Latex & Nitrile Latex based on 60% TSC

  • 12

    Challenges in glove industry

    $

    2

    3

    4

    5

    6

    7

    8

    9

    10

    11

    Aug-

    03

    Feb-

    04

    Aug-

    04

    Feb-

    05

    Aug-

    05

    Feb-

    06

    Aug-

    06

    Feb-

    07

    Aug-

    07

    Feb-

    08

    Aug-

    08

    Feb-

    09

    Aug-

    09

    Feb-

    10

    Aug-

    10

    Feb-

    11

    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

    Majority sales in USD,

    subject to USD currency

    movement

    Time lag in passing on to

    customers when USD

    weakens sharply

    Impact on energy cost, other

    raw materials and logistic cost

    Inflation

    Page 12 / 20

    Currency exposure