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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