TOP GLOVE CORPORATION BHD Corporate Presentation June 2018 Bursa - - PowerPoint PPT Presentation
TOP GLOVE CORPORATION BHD Corporate Presentation June 2018 Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP : 890534100 Top Glove business ethics Ready, 1 2 3 Claps, 2x 3x2x Prepared By: Ng Chin Yong @14/07/17
Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP : 890534100
Top Glove business ethics
Prepared By: Ng Chin Yong @14/07/17 Checked & Verified By: Ng Yong Lin @14/07/17
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Disclaimer
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This document and any related presentations have been prepared by Top Glove Corporation Bhd (the “Company”). This document and any related presentations are being given solely for your information and for your use and may not be taken away, reproduced or redistributed to any other person. By attending this presentation, you are agreeing to be bound by these restrictions. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. The information contained in this document (the “Information”) is strictly confidential and has been provided by the Company and has not been independently verified. No representation or warranty express or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or
financial condition, results of operations, trading position or prospects. The Information and opinions in this document are provided as at the date of this document and are subject to change without notice. Neither the Company nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. Certain data in this document was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly, the Company makes no representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change based on various factors. This document contains, and any related presentations may contain, financial information regarding the businesses and assets of the Company and its consolidated subsidiaries. Such financial information may not have been audited, reviewed or verified by any independent accounting firm. The inclusion of such financial information in this document or any related presentation should not be regarded as a representation or warranty by the Company, any of its affiliates, advisors or representatives or any other person as to the accuracy or completeness of such information’s portrayal of the business, financial condition, results of operations, trading position or prospects by the Company and should not be relied upon when making an investmentdecision. This document includes forward-looking statements prepared by the Company. The opinions, forecasts, projections and other statements (except statements of historical fact), including, without limitation, financial results for 1HFY2018, are forward-looking statements. Although the Company believes that the expectations reflected in such forward- looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. All forward-looking statements contained in this document are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Each forward-looking statement speaks only as of the date of this
result of new information, future events or other information. In light of these risks, actual results could differ materially from those stated, implied or inferred from the forward- looking statements contained in thisdocument. This document and any related presentation does not constitute or form part of an offer, solicitation or invitation of any offer, to subscribe for or purchase any securities and nothing contained herein shall form the basis of, or be relied on, in connection with any contract or commitment whatsoever. Any decision to purchase securities in the context of a proposed offering undertaken in the future by the Company, if any, should be made on the basis of information contained in the offering document published in relation to such an
not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption to registration. Any securities offered by the Company or any of its subsidiaries will be offered to (1) persons in Labuan or outside Malaysia or entities established or registered under the laws of Labuan and (2) persons falling within the categories of excluded offers and invitations of debentures as set out in Section 8(5) of the Labuan Financial Services and Securities Act 2010 ("LFSSA"). This document, any related presentation or any copy thereof may not be taken or transmitted or distributed, directly or indirectly, into the United States, Canada, Australia or Japan. The Company does not intend to register any offering of securities in the United States or conduct any public offering of securities in the United States. The distribution of this document and any related presentation in other jurisdictions may be restricted by law and persons into whose possession this document or any related presentation comes should inform themselves about, and observe, any such restriction. Any failure to comply with these restrictions may constitute a violation of the laws of any such other jurisdiction.
Top Glove Corporation Bhd (“Top Glove”) at aglance
57.5 billion gloves pa 38 factories 618 production lines(1) 2,000+ customers across 195 countries FY17 Revenue of RM3.4bn (USD 882mn) and PATMI of RM0.3bn (USD85mn)(3) Current market capitalisation(2) of RM13.3bn (USD 3.35bn) Global leader in medical and surgical gloves
Source: Bloomberg Notes: (1) Include Aspion Sdn Bhd (“Aspion”) (2) Market capitalisation as at 01 June 2018. Translated at FX rate of USD1:RM3.9835 for convenience (3) Based on Top Glove’s consolidated financial results for FYE 31 Aug 2017. Excludes Aspion (RM0.6bn (USD162mn) revenues for FYE 31 Oct 2016). PATMI refers to profit after tax and minority interests. Translated at FX rate of USD1:RM3.8643 for convenience
World’s largest manufacturer ofgloves
Aspion: a transformational acquisition Over 17,000 employees(1)
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From humble origins to global leader
Nearly 3 decades of track record of excellence
Note: (1) Translated at FX rate of USD1:RM3.8643 for convenience
1991
local business enterprise 2013
dedicated GroupR&D Centre to drive innovation
remaining minority stake in Medi-Flex and privatisation of the company 1994
and established a marketing arm inthe USA 2006
stake in Medi-Flex 2007
2016
Singapore Stock Exchange (“SGX”) 2017
business line- condom projected to beoperational by mid-2018
(USD776mn)(1) 2018
Duramedical 2010
2011
in Germany to extend sales in Europe 2002
China
glovefactory in Thailand
2001
Kuala Lumpur StockExchange (“KLSE”)
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Tan Sri Dr Lim WeeChai Lim Hooi Sin Puan Sri Tong SiewBee
in rubber glove industry in Malaysia
the Malaysian RubberGlove Manufacturers’ Association (“MARGMA”)
President of the Federation of Malaysian Manufacturers, Director and Board Member
Honorary President of the Malaysia-China Chamber of Commerce Founder Executive Chairman Length of service: 27 years Relevant experience
Dato Lee Kim Meow
Appointed Managing Director in 2003
include Chairman of the ASEAN Rubber Glove ManufacturersAssociation (“ARGMA”) and Trustee of MARGMA Foundation Managing Director Length of service: 21 years Relevant experience Relevant experience Executive Director Length of service: 27 years
Appointed ExecutiveDirector in 2000
and information systems, human resource and general administration
in the rubber glove and banking industries Relevant experience
Inc, a wholly-owned subsidiary of Top Glove in
Director in 2000
development,marketing, sales
in the rubber glove industry in USA and Malaysia Executive Director Length of service: 24 years
Lim Cheong Guan
Relevant experience
Appointed Executive Director in 2006
accounting, treasury, corporate finance and investor relations
in the field of audit, manufacturing, plantation, trading and property development Executive Director CFO Length of service: 13 years
Low Chin Guan
Relevant experience
Director in 2018 pursuantto the acquisition of Aspion
in the rubber glove industry in Malaysia
the initial subsidiary of Adventa Berhad (Aspion)in 1988 Executive Director Founder of Aspion
Led by an experienced senior managementteam
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4 3 10 12 14 21 27 32 66 68 99 99 99 143 182 182 20 40 60 80 100 120 140 160 180 200 0.0 2.0 4.0 6.0 8.0 10.0 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-08 Mar-09 Annual Dividends TopGlove
01 June 2018: RM 10.44 27 March 2001: RM 0.13(1) (IPO price adjustedfor bonus issue andshare split since IPO)
Share Price (RM)
Total Shareholder Return:
8,495%
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Number of shares held(1) Market value Accumulated dividends Investment cost (as at 27 March 2001) Capital appreciation(2) Total shareholder return (as at 01 June 2018) # RM RM RM RM % 20,384 212,809 19,264 (2,700) 229,373 8,495%
With initial investment of 1,000 shares made based on IPO price of RM2.70 on 27 March 2001, the return would be:
Dividends (RMmn)
Source: Bloomberg as of 01 June 2018 Notes: (1) 1,000 shares at IPO, adjusted for bonus issue and share split since IPO (2) Calculated based on adding market value and accumulated dividends and subtracting the investment cost
Track Record of Delivering Shareholder Value
Total dividend payment of RM1,161 million since listing in year 2001
103 127 135 173 201 2005 2008 2011 2014 2017
Steady growth in global demand for rubber gloves
Developed countries (USA, EU29 and Japan) % of World Population % of GlobalGlove Consumption 70% 30% 18% Other regions 82% CAGR 05-17: 5.7%
Driven by strong market fundamentals across geographies
item in the healthcare sector, with increasing customer awareness in developing markets
in Brazil
Strong industry fundamentals
Further growth potential from emerging markets
Based on 2016 statistics
% ofWorld Population % of GlobalGlove Consumption
In billion pieces
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Source: International Trade Centre and Company & www.worldmeters.info
Aspion Acquisition (General Surgery)
(Disposable) (Examination) (Examination) (Thermoplastic) (Cast Polyethylene)
(Disposable, Household)
Latex Powdered Nitrile Specialised Surgical CPE/ TPE Vinyl
(Examination) (Disposable, (Disposable) Household)
(Disposable)
(Disposable)
(Examination)
1 1
Latex Powder-free
(Examination)
(Disposable, (Disposable) Household)
Sale Contribution Product Category
1H18 Sales Volume (including Aspion)
Surgical Industrial Food
Majority of revenues (Specialised Surgery)
(General Surgery)
(General Surgery)
1 Top 3
Key Markets Medical
markets(Europe)
markets
markets (USA, Europe, Japan)
24% 19% 38% 12% 5% 2%
Market leader with extensive range ofproducts
Extensive products mix applied in diverse industries, with a strong focus on medical / surgical sector Applications / industry
Market Position
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Continuous growth in manufacturing capabilities
China
Producing:
Malaysia
Producing:
gloves
cleanroom, CPE/TPEgloves
Manufacturing
Thailand
Producing:
Clear blueprint for further growth
Manufacturing Glove type Number of productionlines Capacity (pieces per annum) Current: Top Glove: 28 glove factories All 543 lines 52.7 bn Aspion: 3 glove factories Surgical, Nitrile, Latex 75 lines 4.8 bn Total 31 glove factories 618 lines 57.5 bn Expansion in progress : F31 New factory (June 2018) Nitrile 30 lines 3.0 bn F32 New factory (early2019) Nitrile 48 lines 4.8 bn Total expansion 78 lines 7.8 bn Total by early 2019: 33 glovefactories 696 lines 65.3 bn Latex Processing Top Glove: 2 latex plants Sourcing majority of the latex requirements
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Global distribution across 195countries
Germany USA China Malaysia Thailand
Geography 3-year average sales volume growth rate North America 10.8% Europe 11.3% Japan 13.2% Asia ex Japan 12.9% Middle East 6.3% Latin America 3.8% Africa (8.1%) Global 8.8%
Legend: Distribution hub
Distribution
195 countries
customer base
region
c.25% of total revenue
more than 5% ofrevenue
Europe 31% North America 25% Latin America 9% Asiaex- Japan 15% Middle- East 8% Japan 8% 4%
1H18 Sales VolumeBreakdown (including Aspion)
Africa
Brazil
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442 525 484 309 238 17.6% 18.2% 14.2% 14.5% 16.3% 280 361 329 156 214 12.5% 9.6% 9.6% 11.3% 334 434 381 65 154
Proven track record of growth and profitability
Revenue and growth EBITDA and margins(2) Cash flow from operations PATMI and margins(3)
RMmn (x) 12
With strong operating cashflows
CAGR of 4.7% Growth = 29.9% 2015 USD114mn 2016 USD136mn 2017 USD125mn 1H17 USD62mn 1H18 USD80mn RMmn 11.1% USD Equivalent(1) 2015 USD72mn 2016 USD93mn 2017 USD85mn 1H17 USD40mn 1H18 USD55mn CAGR of 6.8% Growth = 138.2% 2015 USD86mn 2016 USD112mn 2017 USD99mn 1H17 USD17mn 1H18 USD40mn RMmn YoY volume growth 8% 11% 7% 19% CAGR of 16.5% 3,409 Growth = 2,511 2,889 15.9% 1,897 1,637 USD Equivalent(1) 2015 USD650mn 2016 USD747mn 2017 USD882mn 1H17 1H18 USD424mn USD491mn
Notes: Financials based on Top Glove consolidated financials for the relevant period without adjusting for the impact of the acquisition of Aspion (1) Translated at FX rate of USD1:RM3.8643 for convenience (2) EBITDA refers to earnings before interest, tax, depreciation and amortisation. EBITDA margins refer to EBITDA over Revenue (3) PATMI refers to profit after tax and minority interests. Net profit margins refer to PATMI over Revenue
CAGR of 8.4% Growth = 37.1%
Prudent capital management
Adjusted net debt / (adjusted net cash) position Gearing ratio(D/E) Cash flow from operations / debt Adjusted net debt / EBITDA
RMmn (x) (x) (x) (0.41x) (0.58x) (0.15x) 2015 2016 2017 0.53x 1.09x 1.01x 2015 2016 2017 Adjusted net debt / (Adjusted netcash)(1) 0.40x 0.22x 0.19x 0.22x 0.28x 31 Aug 15 31 Aug 16 31 Aug 17 28 Feb 17 28 Feb 18 146 636 399 376 418 224 240 175 185 585 670 479 207 282 135 31 Aug 15 31 Aug 16 Cash Debt 31 Aug 17 28 Feb 17 28 Feb 18 Short-term investment securities 13 (180) (304) (71) (39) 265
Note: Financials based on Top Glove consolidated financials for the relevant period without adjusting for the impact of the acquisition of Aspion (1) Adjusted net debt / (adjusted net cash) is calculated by subtracting cash and short-term investment securities from total debt
Healthy balance sheet
14 Notes: (1) Adjusted for certain events after 31 August 2017 comprising of: a. the exercise of 2,145,060 ESOS Options between 1 September 2017 and 04 April2018; and b. the acquisition by the Company of the entire equity interest in Aspion, completed on 4 April 2018. The purchase consideration was satisfied by: (i) RM1,233.0 million in cash, which was funded via conventional term loan and Islamic term financing; and (ii) the issuance of 20,505,000 new Top Glove Shares at RM6.6813 (2) Translated at FX rate of USD1:RM3.8643 for convenience (3) Adjusted net debt / (adjusted net cash) is calculated by subtracting cash and short-term investment securities from total debt
In RMmn As of 31 Aug 2017 Proforma post Aspion acquisition(1) RMmn USDmn(2) RMmn USDmn(2) Cash and bank balances 240.1 62.1 258.4 66.9 Borrowings 376.4 97.4 1,890.0 489.1 Net debt / (netcash) 136.3 35.3 1,631.6 422.2 Shareholders’ equity 2,003.3 518.4 2,142.0 554.3 Debt / equity (x) 0.19x 0.88x Net debt / equity (x) 0.07x 0.76x Investment in securities 206.9 53.5 206.9 53.5 Adjusted cash 447.0 115.7 465.3 120.4 Adjusted net debt / (adjusted net cash)(3) (70.6) (18.3) 1,424.7 368.7 Adjusted net debt / equity (x) NM (adjusted net cash) 0.67x
Aspion – A highly synergistic and transformationalacquisition
Highly synergisticacquisition
Top Glove becomes world #1 manufacturer(1) in surgical and medical gloves globally,with leading low-cost and high-techcapabilities Access to new customers, specifically in developed markets of US, Europe andJapan Overcome high barriers entry in the surgical gloves market, including regulatory approvals Financially attractive acquisition
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Access to cutting edge technology and premium product offering that isexpected to lead the trend in preference glove adoption in developed nations
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Source: Company, Frost and Sullivan Global Surgical Gloves Market (July 2017) Note: (1) Based on production volume
17% 21% 17% 13% 12% (1) 10% 1%
Becoming the #1 surgical glove manufacturer in theworld(1)
Others 26% Propels Top Glove to become the #1 surgical glove manufacturer(1)… … accessing new clients in key developed markets in surgical gloves 12% 29%
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markets including the US with high surgical glove consumption/ capita
due to minimal duplication
segment by expanding into developed countries
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Geographical breakdown of surgical gloves annual sales(2) (volume)
Aspion Top Glove North America 7.3%
22.1% 1.0% Japan 5.0%
23.1% 13.0% South America 18.8% 15.0% Asia 20.0% 26.0% Eastern Europe 2.5% 37.0% Others 1.2% 8.0%
Competitor A Competitor B Competitor D Competitor C
Source: Company, Frost and Sullivan Global Surgical Gloves Market (July 2017) Note: (1) Based on production volume. Top Glove market share based on Company’s estimates (2) Top Glove figures based on financial year ending 31 August 2017 / Aspion figures based on financial year ending 31 October 2016
Access to new manufacturing knowledge and proprietary materials
Acquisition of Aspion will complement existing Top Glove product range with cutting edge technology surgicalglove Examination gloves Entry Mid-range Preference
Protection
Comfort
Zero Chemicals
Safety and No Allergens
Protection (AQL(1)<0.1)
Lasting Comfort
Finessis’ flagship surgical glove consists of 3 brands
FUSION FUSION barrierONE Sensiflex Plus Maxitex NeuroPF Maxitex PF Maxitex UGPF Maxitex DuplexPF Maxitex Maxitex Duplex Nuzone X2 Ulma Fortis PF Ulma Fortis Nugard NugardNitril Sensiflex
Cutting Edge Technology: FINESSISTM Surgical Glove Using FlexylonTM
5 years to develop Finessis using “Flexylon” material created using proprietary R&D and approved by FDA, EU andTGA
Superior Quality Access to cutting edge technology Top Glove will benefit from Aspion's premium product offering, enhanced by Aspion’s highly specialised Finessis product that is expected to lead the trend in preference surgical glove adoption in developed markets
Note: (1) AQL refers to Acceptable Quality Level
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Profit guarantee:
FY2018 and FY2019:
difference will be: i.
ii. any remaining shortfall will be paid by Vendor to Top Glove
shortfall will be paid by Vendor to Top Glove
guarantee will not exceed RM100mn
Aspion transaction highlights
Notes: (1) FY refers to FYE 31 October
Salient terms of the transaction
1 2 Finessis Incentive:
Group with strong potential but currently unproven. PAT of the Finessis product includes sales of Finessis Gloves by the Aspion Group and fees, royalties and income received for the use of any rights relating to Finessis gloves (“Finessis PAT”)
October 2017, the first financial year during which the Finessis Gloves were commercialized
initial purchase consideration for a highly attractive new product with strong potential but no proven sales track record yet and align the purchase consideration for Finessis with its future actual performance Purchase consideration arrived at after taking into account risk of the acquisition Acquisition
Vendor
Purchase price
issued at a price at RM6.6813/share Finessis Incentive
to the following payments:
Finessis % subject to PAT PAT Finessis Finessis IncentiveAmount period(1) incentive multiple FY2018 20.0% 16.93 Finessis PAT x 20.0% x16.93 FY2019 30.0% 16.93 Finessis PAT x 30.0% x16.93 FY2020 50.0% 16.93 Finessis PAT x 50.0% x16.93
Profit guarantee
shortfall in FY2018 and FY2019 up to RM100mn Completion
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Conclusion
Market leader
Attractive industry fundamentals
Positioned strongly for growth
Strong financial performance
Aspion acquisition
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www.topglove.com | invest@topglove.com.my | +603 3362 3098 www.topglove.com | invest@topglove.com.my | +603 3362 3098
Appendix
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Top Glove guiding principles
Vision: We strive to be the world’s leading manufacturer with excellent quality glove products and services that enrich and protect humanlives Corporate To be a world class glove manufacturer by providing Mission: top quality products with excellent services through continuous improvement and innovation Business Direction Business Philosophies
company and we care fortheir well-being
and friends Business Rules
Investment Direction
Business Ethics
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Top Glove strong CSR stewardship
process of being ISO 14001 certified
tanks and rain harvesting tanks installed in factories
strategically located within 500m of each
consumption
government certified companies for purposes of recycling
Transportation Water Efficiency Waste Management Practices
Environment
ISO 14001
funds for the purpose of charity, education, environment andcommunity
Social
Top Glove Foundation Community Outreach Program
to be a foremostpriority
and protect our workforce
Employees
Learning & Development
“Must Know, Must Do, Must Teach”
Talent Recruitment & Attraction
talents and provide opportunities for future leaders
Corporate Wellness
Fair & Equitable Work Environment
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Top Glove group of companies
Prepared by : QA Admin (Rev . 6, Date Prepared : 14/7/17) Verified by : Ms. Loo Sun Nooi / QA DGM
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