TOP GLOVE CORPORATION BHD Investor Presentation

Transcription

1 TOP GLOVE CORPORATION BHD Investor Presentation 01 Sep 2016 Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP :

2 Company Overview Established in 1991, listed on Bursa Malaysia in 2001 and SGX main market in June Firmly entrenched as the world s largest rubber glove manufacturer. Commanding 25% of the global market share for rubber gloves and rapidly expanding. A sizeable production capacity of 46.6 billion gloves per annum. Highly-resilient demand to economic uncertainty, as an essential item in the medical sector. Page 2 / 20

3 Steady Global Demand Growth World population estimate at 7.4 bil, average usage 28.6 pcs per population bil pcs 220 Estimate global demand growth at 6% to 8% pa Page 3 / 20

4 An Industry with Excellent Growth Potential Widely Used in Developed Nations, but Underused in Emerging Countries Developed countries (USA, EU28 and Japan) % of World Population % of Global Gloves Consumption 13% 68% Other regions 87% 32% % of Global Gloves Consumption by Region Source: International Trade Centre and Company Page 4 / 20

5 Top Glove, Company with A Global Customer Base Over 2,000 customers and growing. Comprising mainly distributors across 195 countries. A geographically diverse customer base. A preferred OEM manufacturer in every region. No single customer contributes more than 4% of revenue. Our global presence positions us to tap the growing demand and seize opportunities: In developed countries where demand is consistently high and usage is expanding to the non-medical sector In developing markets where demand is rapidly on the rise, securing first mover advantage Sales volume by geography 3QFY16 (Mar 16 to May 16) Page 5 / 20

6 Key Industry Drivers 1. An indispensable item in the healthcare sector As a protective barrier 2. Increasing hygiene standards and healthcare awareness Non-medical sector in developed countries Medical sector in developing countries 3. A growing ageing population With the elderly being more susceptible to higher-risk diseases 4. Progressively stringent health regulations Healthcare reforms: US, China Healthcare regulations: OSHA in US, EU- OSHA in Europe, SESI in Brazil 5. The emergence of new health threats E.g. A(H1N1), SARS, bird flu, ebola, bioterrorism, Anthrax Page 6 / 20

7 Aligning Our Product Mix with Market Demand 60% 50% 40% 30% 20% 10% 0% 55% 54% 26% 24% 49% 48% 46% 22% 24% 28% 40% 32% 14% 11% 20% 20% 18% 19% 7% 6% 7% 6% 6% 7% 1% 3% 2% 2% 2% 2% FY2011 FY2012 FY2013 FY2014 FY2015 9MFY2016 Latex powdered glove Nitrile glove Latex powder free glove Vinyl glove Surgical glove Towards a more balanced product mix in line with global demand. Nitrile increase by 646% over a 6 years period. 3QFY16 product mix by sales quantity Page 7 / 20

8 28 Manufacturing Facilities Regionwide 25 glove factories 500 production lines 46.6 billion pcs p.a. capacity 2 latex concentrate/processing plants supplying 60% to 70% of our latex requirements. 1 porcelain hand mould factory Steadily expanding via organic and non-organic growth. China Malaysia 22 glove factories 1 former factory Producing: Latex examination gloves Nitrile examination gloves Surgical gloves Household gloves Cleanroom gloves CPE/TPE gloves Former manufacturing 1 glove factory Producing: Vinyl gloves Thailand 2 glove factories 2 latex plants Producing: Latex examination gloves Latex concentrate Statistics as at Sep 2016 Page 8 / 20

9 Blueprints for Expansion Boosting nitrile capacity in tandem with growing demand. Faster, more efficient and technologically advanced production lines. Increased automation throughout the manufacturing process. On-going facility optimization initiatives which include the construction of highlyefficient factories. Glove Type No. of production lines Capacity pcs p.a. Target commence operations by Current: 25 glove factories 500 lines 46.6 bil Expansion in progress : F6 (Phuket, Thailand) Natural Rubber 12 lines 1.4 bil September 2016 F30 (Klang, Malaysia) New factory Nitrile 28 lines 4.4 bil February 2017 Total expansion by February lines 5.8 bil Total by February 2017 : 26 glove factories 540 lines 52.4 bil Page 9 / 20

10 Cost breakdown Natural Rubber Gloves Nitrile Gloves A cost pass-through mechanism whereby both cost increases and savings to be shared out with customers. Continuously improving cost efficiency through intensive R&D initiatives. Page 10 / 20

11 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 RM per kg Raw Material Price Trend Natural rubber latex price trend (RM/kg) RM7.20 (03/07/08) RM7.75 (23/04/10) RM10.99 (11/04/11) RM6.45 (10/10/12) RM4.62 (01/07/15) RM4.33 (01/09/16) NR Latex & Nitrile Price (USD/KG) Correlation between natural rubber latex, nitrile latex and crude oil prices (USD/kg) Crude Oil Price (WTI) (USD/bbl) Crude Oil Nitrile NR Latex Note: NR Latex & Nitrile Latex based on 60% TSC Page 11 / 20

12 Industry Challenges Raw material price fluctuation Due to weather impact, crude oil price movement, speculation, competition with other usage Time lag in passing the difference to customers when prices move up sharply Currency exposure Majority of sales in USD, subject to USD currency movement Time lag in passing the difference to customers when USD weakens sharply Crude oil price fluctuation/speculation Impact on energy, other raw materials and logistic costs Inflation Page 12 / 20

13 Quarterly results 3Q16 1 Mar May 16 3Q15 1 Mar May 15 Variance (3Q16 vs 3Q15) 2Q16 1 Dec Feb 16 Variance (3Q16 vs 2Q16) Total sales (RM mil) % (3.1%) EBITDA (RM mil) (21.7%) (38.2%) EBITDA margin 13.9% 18.1% 21.9% PBT (RM mil) (26.7%) (44.1%) PBT margin 11.0% 15.2% 19.0% Profit attributable to equity (RM mil) (13.6%) (40.2%) PAT (RM mil) (13.6%) (40.3%) PAT margin 9.3% 11.0% 15.2% EPS (sen) (15.3%) 8.4 (40.5%) Sales quantity up 11% vs 3Q15 and 5% vs 2Q16. Natural rubber latex price up 2% vs 3Q15 and 14% vs 2Q16. Nitrile latex price down 1% vs 3Q15 and 1% vs 2Q16. USD strengthen by 10.1% vs 3Q15 and weakened by 6.2% vs 2Q16. Increased competition in the nitrile glove segment in 3Q16. 3Q16 affected by natural gas price hike (effective 1/1/2016) of 28% vs 3Q15. Page 13 / 20

14 Strongest 9 months results 9M16 1 Sep May 16 9M15 1 Sep May 15 Variance (9M16 vs 9M15) Total sales (RM mil) 2, , % EBITDA (RM mil) % EBITDA margin 19.7% 16.0% PBT (RM mil) % PBT margin 16.9% 12.7% Profit attributable to equity (RM mil) % PAT (RM mil) % PAT margin 13.7% 9.9% EPS (sen) % Sales quantity increased 14% vs 9M15. 9M16 PAT is 105.6% of FY2015 PAT. Natural rubber latex price down by 0.2% vs 9M15 Nitrile latex price reduced by 5% vs 9M15 9M16 affected by natural gas price hike (effective 1/1/2016) of 28%. Page 14 / 20

15 Steady growth since listing For FY ended 31 August REVENUE CAGR Past 15 years since listing in 2001 : PAT CAGR Past 15 years since listing in 2001 : (in RM mil) FY2015 Average PAT margin Past 15 years since listing in 2001 : 29% 25% 9.3% 9MFY2016 (unaudited) Sales 1, , , , , , , ,166.4 Average (since 2001) EBITDA EBITDA margin 18.8% 17.5% 10.1% 13.4% 14.0% 13.7% 18.6% 20.9% 14.9% PBT PBT margin 14.5% 14.7% 7.1% 10.4% 10.5% 9.5% 14.5% 16.9% 11.0% Taxation PAT PAT margin 11.0% 12.0% 5.6% 9.0% 8.8% 8.1% 11.2% 13.7% 9.3% # PAT Equity ROE (%) * 19.7 EPS (RM)** * 0.32 * Annualised **Adjusted for bonus issue Page 15 / 20

16 Strong and healthy balance sheet Net cash flow from operating activities (RM mil) Capital expenditure (RM mil) Free cash flow before dividend (RM mil) 9 Months 31 May Months 31 May As at 31 May 16 As at 31 May 15 Net cash and short term investment (RM mil) Shareholders equity (RM mil) Net assets per share (RM) Return on equity ** Inventory turnover days Receivable turnover days Payable turnover days Working capital turnover days * Adjusted for bonus issue ** Annualised , % , Page 16 / 20

17 Dividend and payout ratio Dividend Policy : Payout ratio of 50% of PAT and MI Page 17 / 20

18 At 3,701% since IPO (15 years) Assuming initial investment of 1,000 shares was made during initial public offering price of RM2.70 on 27/03/01 Date Closing share price Number of shares held Total market value Accumulated dividend received (RM) Cost of investment Capital appreciation (RM) (RM) (RM) (RM) If the bonus issues and share split are not taken into consideration, the share price should be RM4.38 x 1.3 x 1.4 x 2 x 1.4 x 2 x 2 = RM89.28 per share Note : * Shares adjusted for the bonus issues and share split of : a) FY2002 : 3 new ordinary shares of RM1.00 each for every 10 existing ordinary shares of RM1.00 each b) FY2003 : 2 new ordinary shares of RM1.00 each for every 5 existing ordinary shares of RM1.00 each c) FY2005 : subdivision of shares from one ordinary share of RM1.00 to two ordinary shares of RM0.50 each d) FY2007 : 2 new ordinary shares of RM0.50 each for every 5 existing ordinary shares of RM0.50 each e) FY2010 : 1 new ordinary shares of RM0.50 each for every 1 existing ordinary shares of RM0.50 each f) FY2016 : 1 new ordinary shares of RM0.50 each for every 1 existing ordinary shares of RM0.50 each Total s/holders return % 27-Mar (IPO) 1,000 2,700-2, Jan ,384 * 58,604 6,825 2,700 62,729 2,323% 02-Jan ,384 * 58,502 8,455 2,700 64,257 2,380% 02-Jan ,384 * 46,883 10,086 2,700 54,269 2,010% 05-Jan ,384 * 140,038 11,819 2, ,157 5,524% 01-Sep ,384 * 89,282 13,348 2,700 99,930 3,701% Page 18 / 20

19 Management Focus Moving Forward To use technology and further automate production line to reduce workers & improve quality and efficiency. Computerize the whole company s operation/ manufacturing. To invest and recruit staff that are: i. Intelligent ii. Energetic iii. Integrity Capture growth in emerging market demand Target 30% global market share in 2020 Page 19 / 20

20 Thank you Q & A Session invest@topglove.com.my Page 20 / 20