Corporate Presentation 2014 Scaling greater heights - - PowerPoint PPT Presentation
Growing Global Corporate Presentation 2014 Scaling greater heights
Growing Global
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Growing Global
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Manufacturer of rubber examination and surgical gloves World’s largest nitrile glove manufacturer Export to 39 countries globally Four overseas offices
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USA, 51% EU, 29% APAC, 12% Others, 8% Healthcare , 76% Laboratory , 17% Food, 5% Industrial, 2%
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2013 2010, 2011, 2012 & 2013 2013 2010 & 2012
HR Asia Best Employers to Work for in Asia Forbes Asia 200 Best Under a Billion The Edge Billion Ringgit Club – Most Profitable Company in Industrial Products Segment Asiamoney Best Managed Company in Malaysia
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“The NCII would show and benchmark where and how these corporations are active in innovation at national and international levels. These benchmarking activities are crucial as these corporations are the significant players in the market and they are needed to drive the economy.” 5
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110 160 240 282 443 572 735 921 1,032 1,107
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Revenue (RM mil) 13 19 37 40 85 146 190 201 234 234
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14
Profit After Tax (RM mil)
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CAGR for revenue from FY2005 to FY2014 of 29% CAGR for PAT from FY2005 to FY2014 of 37% Net margin improved from 12% in FY2005 to 21% in FY2014 Sales and PAT for FY2014 of RM1107 mil and RM234 mil respectively FY2014 EPS of 31.3 cents Highest profit margin in the industry Highest net profit in the industry
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Dividend per share is stated post-bonus issue*
1.7 4.0 6.7 10.5 12.5 14.5 14.5 10.4% 22.9% 33.9% 40.1% 45.2% 45.5% 45.5% FY08 FY09 FY10 FY11 FY12 FY13 FY14 DPS (sen) Payout Ratio
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Pay-out ratio has increased since listing from 10.4% to 45.5% Although number of shares have grown, DPS has also grown from 1.7 cents to 14.5 cents* 4 pay-outs per annum
Growing Global
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World‘s largest nitrile glove manufacturer. Valuable Glove Company in Malaysia (current market cap of RM4.4 billion) Highest Productivity in the Industry. World‘s fatest production line at 45,000 pcs/hr. Most advanced in-house developed production technologies. Most Innovative Glove Company. 5 breakthrough inventions that changed the landscape of glove industry.
341 1,263 1,629 1,782 3,542 5,285 2008 2009 2010 2011 2012 2013
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0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 5.00% 10.00% 15.00% 20.00% Net Margin CAGR Kossan Top Grove Supermax Hartalega
4-yr CAGR 5-yr avg net margin Hartalega 18.0 23.3 Kossan 11.7 9.3 Supermax 8.8 13.2 Top Glove 10.9 9.3
Source: Deloitte & Touche, 2014
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No 1 No 2 No 3 No 4 Margin PBT margin Hartalega 27.9% Kossan 13.9% Supermax 13.8% Top Glove 10.5% Net margin Hartalega 21.1% Supermax 11.5% Kossan 11.0% Top Glove 8.8% Profitability Return on assets Hartalega 36.8% Supermax 24.9% Kossan 24.1% Top Glove 22.7% Return on equity Hartalega 24.8% Kossan 19.9% Top Glove 14.9% Supermax 14.4% Working capital Inventory turnover Hartalega 32.4 Top Glove 34.7 Kossan 41.7 Supermax 69.7 Trade receivable turnover Hartalega 43.6 Top Glove 44.6 Kossan 64.3 Supermax 74.8 Debt Debt equity ratio Hartalega 0.5% Top Glove 4.3% Kossan 20.7% Supermax 34.9% Total liabilities to total assets Hartalega 14.5% Top Glove 23.4% Kossan 34.2% Supermax 34.6%
Source: Deloitte & Touche, 2014 – based on companies latest financial year results
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Year 2005 11 Before year 2005 Year 2010 Year 2013
Nitrile glove < 5% global market Limited usage in medical sector Hartalega invented light weight nitrile glove Launched in USA Hospitals started to switch from NR to NBR EU revised regulatory standards Users in EU started to switch from NR to NBR NBR glove market share increased from 5% to 50% Most hospital in US use NBR gloves
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“Glove makers are continuing to ramp up production of nitrile gloves as they compete for market share…”
The Edge 30th Jan 2014
“Fighting to dominate the nitrile glove sector”
RHB Analyst report 29th April 2013
“A nitrile glove price war looming ahead”
Affin Investment Bank Analyst report 6th April 2012
“Malaysian glove makers to invest RM300mil to RM500mil to improve automation”
The Star 5th Sep 2012
“Technology and automation are expected to be the game changer to move the industry forward”
Lim Kuang Sia, CEO of Kossan in interview with The Sun on 14th May 2014
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14 Engaging critical mass Knowledge management Competencies development Succession planning Capacity expansion (NGC) Lean manufacturing Invest in Information Technology Production technologies Product innovations Innovative culture at all levels Develop own brand market Emerging markets like China and India as target markets Vision to build a global multiple medical device company
Innovation Own Brand Human Resource Productivity
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16 Senior Management Management Executives, Supervisors (critical mass)
Leadership development program by Skills development and lean manufacturing
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Most admired companies in the world use IT to create competitive advantage Hartalega’s IT is an integral part of our operating systems Existing in house developed real time information are accessible on mobile device Extending our IT focus, we engaged Avanade, a global joint venture company between Microsoft and Accenture to further develop our IT systems RM20 million IT transformation project Focussing not only on efficient business processes but also on people development tools like knowledge management and team collaboration
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Sales in China grew by an average of 253% over the past 2 years Expect further significant sales growth in China Per capita consumption of gloves is still low in China, about 4 pieces per capita compared to US of 141 pieces and Europe of 100 pieces
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959,516 4,783,371 9,915,858 20,000,00
FY12 FY13 FY14 FY15E
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An Entry Point Project (EPP) under the ETP RM2.2 billion investment 112 acres site at Sepang 95 acres industrial land, 17 acres lake High technology and integrated Conducive work environment 6 high tech manufacturing plants 72 fastest production lines in the world Designer built offices Centre of excellence comprising training and R&D centre Sports and recreation complex Employees’ accomodation
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manufacturing technology
High level productivity leading to increased GNI contribution and affordability in providing high paying jobs
High paying jobs Human resource focus High technology
Adopting world class HR best practices Holistic talent development and management programs
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NGC – total 72 production lines; average output per line is 45,000 pcs/hr 45,000 pcs/hr
7,000 pcs/hr 12,000 pcs/hr 30,000 pcs/hr
45,000 pcs/hr Bestari Jaya – total 55 production lines; average output per line is 28,000 pcs/hr 22
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Hartalega not only invests in R&D and technologies but also its people Talents are crucial to ensure good operation and management of more sophisticated technologies that Hartalega uses Above market remuneration to reward existing employees and to attract more talents 4,727,738 2,820,753 2,211,424 1,545,986 963,657
2,000,000 3,000,000 4,000,000 5,000,000 Director Senior Manager Manager Assistant Manager Executive
5 years maximum income (year 2010 to 2015)
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Growing Global
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With NGC’s contribution to earnings growth ESOS program can be extended to Technician level Inclusive shares options scheme instills ownership and drives better performance 3,462,400 2,122,680 1,553,448 1,164,960 659,976 426,984 273,240
2,000,000 3,000,000 4,000,000 Director Senior Manager Manager Assistant Manager Executive Supervisor Technician
5 years maximum income (year 2015 to 2020)
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Floor space of 40,000 sq ft is allocated in NGC for a learning center Learning program focussed at development of workforce’s functional and soft skills As Hartalega embarks on ambitious advancement in technology, knowledge workforce is crucial to ensure success In collaboration with learning agencies such as MARA and SHRDC (MOU signed) Learning centre is open to community use
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*unit measurement used is worker per million pieces of gloves produced per month *sector average and listed companies figures from news releases and company’s quarterly and annual reports
33% jump in productivity at NGC compared to Hartalega’s exisitng setup Sets a new benchmark for the sector – NGC is 45% higher in productivity compared to other listed companies Further automation and lean manufacturing practices will improve productivity at NGC by another 23%
Hartalega NGC Sector average Average of listed glove companies in Malaysia (ex-Hartalega) Hartalega’s existing setup
7.5 4.7 3.9 2.6
Hartalega NGC with further automation and lean manufacturing practices
2.0
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Intensified competition
Average capacity growth of 15% for the next 6 years First production line at NGC is expected to begin operation in November 2014 Subsequent production capacity will come on stream progressively
27 11,787 12,900 18,426 24,993 29,739 34,258 35,307 10,000 20,000 30,000 40,000 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Projected output (mil pcs)
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Intensified competition
World demand for rubber gloves grow at an average of 8% per annum Malaysia is the largest supplier of rubber gloves for the world – 63% market share Demand of glove is inelastic Nitrile is preferred choice for developed markets
29 2.2 2.3 2.3 2.6 2.8 3.1 3.4 3.9 4.7 4.4 5.5 6.4 6.7 6.7 64 68 84 92 94 102 110 122 124 140 150 148 160 172 World's Import of Examination Gloves (US$ Bil) World's Import of Examination Gloves (Bil pcs)
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Intensified competition
Asia’s per capita consumption of gloves is significantly lower than US and EU China’s ongoing healthcare reform is expected to drive up glove demand substantially If China’s per capita glove consumption equaled that of EU, demand would be 132 billion pieces per annum, almost equivalent to the current combined global consumption 30
4.8 4.6 98 149 50 100 150 Asia China EU USA per capita glove usage (pcs)
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Intensified competition
Developed markets had limited growth in import of natural rubber gloves Emerging markets like South America and China registered strong growth in natural rubber gloves China also registered significant growth in nitrile gloves Malaysia’s export ratio of natural rubber to nitrile glove has reached 50:50 US natural rubber – nitrile import ratio for year 2013 was 24:76 EU natural rubber – nitrile import ratio for year 2013 was 46:54 31
2011 (mil pairs) 2012 (mil pairs) 2013 (mil pairs) % change (2012 to 2013) Destination Latex Nitrile Latex Nitrile Latex Nitrile Latex Nitrile USA 3,640 7,620 3,446 9,649 3,253 10,587 (5.6%) 9.72% EU 6,351 4,437 5,865 5,352 5,918 7,040 0.90% 31.53% Japan 777 1,033 737 1,394 721 1,752 (2.1%) 65.32% South America 2,868 173 3,106 175 3,894 180 25.30% 2.85% China 357 132 542 182 789 293 45.50% 60.98%
Table: Malaysia Export of Rubber Gloves (source: MREPC)
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Import ratio of natural rubber to nitrile glove for US and EU is 24:76 and 46:54 respectively EU import of nitrile is expected to grow further Asia’s per capita consumption of glove is substantially lower than US and EU (about 30 times lower) Future demand growth will be driven by emerging markets such as China and India Hartalega is well positioned to tap into opportunities in emerging markets with our branding strategy and NGC All lines at NGC are interchangeable for production of nitrile or natural rubber glove
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