TOP GLOVE CORPORATION BHD Investor Presentation 21 st Aug 2020 The World’s Largest Manufacturer of Nitrile Gloves Natural Rubber Gloves and Surgical Gloves Bursa Malaysia : 7113 SGX : BVA Reuters : TPGC.KL Bloomberg : TOPG MK ADR CUSIP : 890534100 Page 1/26
TG BUSINESS ETHICS CLAPS Ready, 1 2 3 Claps, 2x 3x 2x Prepared By: Ng Chin Yong @ 14/07/17 Checked & Verified By: Ng Yong Lin @ 14/07/17 Page 2/26
Top Glove Corporation Bhd. (“Top Glove”) at a glance World’s largest manufacturer of gloves Current market World largest capitalisation (1) of manufacturer of RM 75.79bn Nitrile, Natural Rubber 9MFY2020 (USD 18.14bn) and Surgical gloves Revenue RM4.1bn (USD0.98bn) PAT RM577.8mil (USD137.0mil) 85.2 billion gloves pa About 2,000 Over 20,000 customers employees 46 factories across 195 722 production countries lines (As at August 2020) Source: Bloomberg Notes: (1) Market capitalisation as at 21 Aug 2020. Page 3/26
From Humble Origins to Global Leader 30 years track record of excellence World Largest • Revenue over RM4bn • Implementation of Artificial Manufacturer of Intelligence (AI) Empowered Nitrile Gloves Vision Inspection System Secondary • Acquisition of Aspion, Eastern listing on Press, Duramedical. Singapore Acquired a Stock • World Largest Manufacturer World Largest marketing arm Exchange • Commenced of Surgical Gloves in Germany to Manufacturer of (“SGX”) operations in extend sales in Natural Rubber Thailand 2020 Europe Gloves 2019 • Listed on the Second 2018 Board of Kuala 2017 Lumpur Stock 2016 Exchange (“KLSE”) Started as a 2013 local business 2011 2007 enterprise 2004 • Launched BioGreen 2002 Biodegradable Gloves 2001 • Revenue over • Implemented 1994 RM3bn Manufacturing Established first • Commenced 1991 Execution System dedicated Group condom (MES) and Advanced • Revenue over R&D Centre to business in Auto Packing Machine RM1bn drive innovation July 2018 • Acquisition of a • Commenced majority stake operations in China in Medi-Flex • Transferred to the First overseas foray Main Board of and established a KLSE marketing arm in the USA Page 4/26
Global demand for gloves increasing across emerging and developed markets Steady growth in global demand for rubber gloves Driven by strong market fundamentals across geographies In billion pieces 1) As a protective barrier for medical staff 2) Increasing hygiene standards and healthcare awareness 3) A growing ageing population 4) Progressively stringent health regulations in many countries 5) Emergence of new health threats such as COVID-19, A(H1N1), SARS, bird flu, ebola, bio-terrorism, Anthrax Further growth potential from emergingmarkets Based on 2017statistics % of Global Glove Consumption % of World Population 20% 70% Developed countries (USA, EU28 and Japan) Other regions 80% 30% Page 5/26 Source: Malaysia Rubber Gloves Manufacturer Association, International Trade Centre and Company & www.worldometers.info
Glove Consumption Per Capita (Pieces) Europe: 100 USA: 150 Germany: 141 EASTERN EUROPE WESTERN NORTH EUROPE AMERICA Italy: 123 Japan: 54 ASIA MIDDLE EAST Korea: 48 AFRICA China: 6 India: 4 LATIN Egypt: 2 AMERICA Indonesia: 2 Brazil: 24 Page 6/26 Source: Margma 2018, Company
3QFY20 Financial Highlights: Remarkable Results PAT (RM’mil) EBITDA margin (%) Revenue (RM’mil) 350 (3 months) YoY: 28.3% 1,688 +1540 bps YoY: +367% YoY: +42% QoQ: QoQ: QoQ: +1170bps +202% 16.6% +37% 116 1,230 1,190 75 12.9% 3QFY19 2QFY20 3QFY20 3QFY19 2QFY20 3QFY20 3QFY19 2QFY20 3QFY20 Net cash/ (borrowings) PAT (RM’mil) Sales quantity (bil pcs) (RM’mil) (9 months) 578 YoY: +24% Net cash +97% 279 QoQ: 368 +25% 294 (937) (1,991) 9MFY19 9MFY20 FY19 3QFY19 2QFY20 3QFY20 3QFY19 2QFY20 3QFY20 Page 7/26
3QFY20 Strongest Ever Quarter Record breaking PAT, up 202% QoQ, and up 367% YoY. 1) Higher utilization rate (3QFY20 : above 95%, 2QFY20 : 85%) 2) Continuous focus on innovation, technology, quality and cost efficiency 3) Strong growth in sales quantity of 25% QoQ and 24% YoY 4) Improvement in ASP of 5% QoQ and 9% YoY 5) USD strengthened by 5% QoQ and YoY 6) Lower raw material price : a) NR latex down 1% QoQ and down 4% YoY b) NBR latex down by 10% QoQ and down 14% YoY Variance Variance 3QFY20 2QFY20 3QFY19 (3QFY20 vs (3QFY20 vs 1/3/20 to 31/5/20 1/12/19 to 29/2/20 1/3/19 to 31/5/19 2QFY20) 3QFY19) Revenue (RM’mil) 1,688 1,230 37% 1,190 42% EBITDA (RM’mil) 477 204 134% 153 212% EBITDA margin 28% 17% 13% PBT (RM’mil) 422 130 225% 82 415% PBT margin 25% 11% 7% Tax 72 14 7 PAT (RM’mil) 350 116 202% 75 367% PAT margin 21% 9% 6% EPS (sen) 13.5 4.5 2.9 Page 8/26
Strengthening of Balance Sheet Position Strong balance sheet to support ongoing expansion Improved by Total Assets (RM’bil) 49 46 39% +30% 28 7.4 Inventory 7.2 5.7 +3% (days) 31/8/2019 29/2/2020 31/5/2020 Improved by 31/8/2019 29/2/2020 31/5/2020 44 43 19% 35 Trade Receivable Total Equity (RM’bil) (days) +81% 4.7 4.0 +18% 31/8/2019 29/2/2020 31/5/2020 2.6 Reduced by 42 38 26% 31 Trade Payable 31/8/2019 29/2/2020 31/5/2020 (days) ROE (%) +200bps 31/8/2019 29/2/2020 31/5/2020 16.4% 14.4% Improved by 11.4% +500bps 55 47 32% Working capital 32 (days) 31/8/2019 29/2/2020 31/5/2020 31/8/2019 29/2/2020 31/5/2020 Page 9/26
Strong Cash Generation: Net cash as at 31/5/20 Net cash flow from operating activities (RM’mil) (9 months to 31 May) 1,196 Turning into Net Cash due to: a) Higher net cash flow from operating activities from 219% strong profit performance b) Improve in working capital management c) 64% of convertible bonds converted to shares as at 375 10/6/20. d) Interest savings of RM30.5mil per annum upon full conversion of convertible bonds. 31/5/2019 31/5/2020 Total borrowings / EBITDA Net Gearing ratio 3.52x 0.85x Net borrowing 3.38x 0.77x 3.17x of RM936.8mil Net cash of RM278.9mil 1.49x 0.24x -0.06x 31/8/2018 31/8/2019 29/2/2020 31/5/2020 31/8/2018 31/8/2019 29/2/2020 31/5/2020 Page 10/26
Strong sales order book from COVID-19 outbreak 1) Significant increased in sales order after Jan 2020. 2) Exceptional long order lead time. 3) Exceptional higher order from various countries. 4) Supplying quality gloves to help contain the outbreak, while protecting and saving lives. Current lead time Lead time prior to 590 460 COVID-19 days days 150 125 30 days to 40 days days days Average Nitrile Surgical NR Vinyl Lead time increase significantly Page 11/26
Continuous increase in sales order from various countries Germany: Russia: Jul’20 vs Jan’20 +520% +167% Jul’20 vs Jun’20 +22% +41% UK: +314% -5% EUROPE NORTH China: ASIA Spain: AMERICA +206% +396% -30% USA: -29% +184% MIDDLE EAST South Korea: +39% Turkey: +154% +236% -9% +3% AFRICA India: LATIN +123% AMERICA Mexico: +144% +253% Australia: +387% +83% Brazil: +5% Indonesia: +332% +175% +128% South Africa: +52% +537% +64% Page 12/26
Update on U.S Custom and Border Protection (CBP) Update on CBP issues : a) Top Glove has been actively engaging with the U.S CBP towards resolving the Withhold Release Order expeditiously. b) We are current working with an independent consultant to perform the verification work. c) The total remediation payment estimates at RM53 million, subject to finalisation with the CBP. d) We have made the first remediation payment of RM4.4million on 10/8/2020 e) We target to resolve this issue by end of August 2020. There is no impact on the Group Revenue and Profit due to the strong demand and long lead time from other countries. Page 13/26
Continuous rapid growth in capacity Total Capacity Growth Capacity FY19 to FY20 :+33% (bil pcs) FY20 to FY21 :+22% FY21 to FY22 :+12% 116.2 12.2 120.0 104.0 3 3.9 8.0 100.0 Additional new capacity to 3.9 85.2 meet the strong demand from 80.0 every country in the world, to ensure its life-savings gloves reach those who need it most. 60.0 40.0 Target utilization: 100% 20.0 0.0 As at 1QFY21 2QFY21 3QFY21 4QFY21 As at FY2022 As at 31/8/2020 31/8/2021 31/8/2022 Page 14/26
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