The

Worlds

Largest

Rubber

Glove

Manufacturer

Top Glove Corporation Bhd Corporate presentation

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, Good Health, Safety First, Be Honest

Presented by : Lim CG Prepared by: See SF Date: 3 January 2013

Bursa Malaysia 7113

Reuters TPGC.KL

Bloomberg TOPG MK

ADR CUSIP 890534100

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 77% natural rubber glove and 23% synthetic rubber glove Target balance capacity mix of natural rubber and synthetic rubber glove
Powdered latex 52%

1QFY13 product mix by volume

Powder free latex 23% Nitrile 16% Vinyl 7%

Surgical 2%

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Strong growth momentum

Estimate Global annual demand: Approx. 160 bil pcs p.a for year 2012
180 160 140 120 100 80 60 40 20 0
45 No. of gloves (billion pcs) 40 35 30 25 20 15 10 5 0 3.2 1.4 2.4 5.1 7.2 9 15 22 28.2 35.25 31.5 33 30
As at Jan13

Top Glove exponential growth in capacity (CAGR : 28%)

40 40.3

No. of gloves (billion pcs)

'99'00'01'02'03'04'05'06'07'08'09'10'11'12
Year

'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 13 Year

Expansion in global market share

25%

Current market share

Target market share by Dec 2015

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Global rubber glove usage

(by region, 2000 2009)

%

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.
% of global % of world glove usage population in 2009 in 2009

EU27 USA

68%

11%

Asia Ex Japan Latin America Japan

32% 89%

* Source from Malaysian Rubber Export Promotion Council and Company Page 4 / 21

Geographically diversified
Exports to 185 countries with more than 1,800 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
1QFY13 revenue by geography
Rest of the World 3%

Middle East 5% Asia 10%

Europe 35% Latin America 20% North America 27%

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Key industry drivers

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, Bioterrorism threats, Anthrax
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24 manufacturing facilities across 3 countries

(as at Jan 2013)
22 glove factories 40.3 bil capacity p.a. from 462 production lines 2 latex concentrate/ processing plants supply 60% to 70% of Top Gloves requirement Malaysia
China

2 glove factories Produce: Vinyl glove PE glove Thailand

17 glove factories Produce: Latex examination glove Nitrile examination glove Surgical glove Household glove Cleanroom glove

2 glove factories 2 latex plants Produce: Latex examination glove Latex concentrate

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Production capacity expansion plan

No. of production lines Current: 22 glove factories Expansion plan : F18 (Banting, Malaysia) Phase 2 F25 (Klang, Malaysia) New factory F23 (Ipoh, Malaysia) Phase 2 Total expansion by August 2013 16 lines 20 lines 16 lines 52 lines 1.5 bil pcs p.a. 1.8 bil pcs p.a. 1.5 bil pcs p.a. 4.8 bil pcs p.a. April 2013 June 2013 August 2013 462 lines Capacity p.a. Target completion

40.3 bil pcs p.a.

Total by August 2013 : 23 glove factories

514 lines

45.1 bil pcs p.a.

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New Venture : Rubber Plantation

1. Acquisition of PT Agro completed on 1 October 2012. 2. Plantation land located in Indonesia, south of Sumatera. 3. Land size 30,773 ha. 4. Concessions land tenure for 60 years, renewal for another 60 years. 5. Rubber trees has 6 years gestation period. 6. Progressive planting over 8 years, with full development will take 13 years. 7. Estimated investment cost around RM450m, over 13 years, including land, planting, maintenance cost up to maturity and facilities.

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Natural Rubber Supply vs Demand

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Costs breakdown
Breakdown of production costs (from Sept'12 to Nov'12)
12 11 10

Average latex prices

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 1QFY13 RM3.14 RM3.28 RM4.94 RM4.78 RM5.62 RM4.34 RM6.12 RM8.92 RM7.36

RM10.99 (11/04/11)

Packaging 6%

Overhead and others 14%

RM per kg

9 8 7 6 5 4 3 2 S p0 e-3 S p0 e-4 S p0 e-5 S p0 e-6 S p0 e-7 S p0 e-8 S p0 e-9 S p1 e-0 S p1 e-1 M r- 4 a 0 M r- 5 a 0 M r- 6 a 0 M r- 7 a 0 M r- 8 a 0 M r- 9 a 0 M r- 0 a 1 M r- 1 a 1 M r- 2 a 1 S p1 e-2

RM7.20 (03/07/08) RM6.85 (30/06/06)

RM7.75 (23/04/10) RM6.45 (10/10/12) RM6.09 (02/01/12)

Fuel 8% Chemical 9% Labour 9% Latex 54%

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
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Natural rubber (NR) latex, nitrile latex & crude oil price trend (in USD)
NR Latex & Nitrile Price (USD/KG)

Natural Rubber (NR) Latex, Nitrile Latex & Crude Oil Price in USD (Jan 2005 to Dec 2012)
140

Crude Oil Price (WTI) (USD/bbl)

7.5 6.5 5.5

140 120 103.02 86.15 99.74 82.92 3.61 86.11 100 89.03 78.4 80 Crude Oil 60

112.79

4.5 3.5 2.5

74.40

41.68 2.19 2.39 1.86 1.19 1.00

Jun-05 Jun-06 Jun-07 Jun-08 Sep-05 Sep-06 Sep-07 Sep-08 Mar-06 Mar-07 Mar-08 Dec-05 Dec-06 Dec-07

2.91 2.37 NR 40 Latex 2.20 2.05 1.91 2.07 1.85 1.69 20 Nitrile 0
Jun-09 Jun-10 Jun-11 Sep-09 Sep-10 Sep-11 Jun-12

1.5 1.00 0.5

Mar-09

Mar-10

Mar-11

Mar-12

Dec-08

Dec-09

Dec-10

Dec-11

Sep-12

Note: NR Latex & Nitrile Latex based on 60% TSC

Dec-12
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Challenges in glove industry

Currency exposure Majority sales in USD, subject to USD currency movement Time lag in passing on to customers when USD weakens sharply
Aug-0 3 Aug-0 4 Aug-0 5 Aug-0 6 Aug-0 7 Aug-0 8 Aug-0 9 Aug-1 0 Feb-0 4 Feb-0 5 Feb-0 6 Feb-0 7 Feb-0 8 Feb-0 9 Feb-1 0 Feb-1 1

11 10 9 8 7 6 5 4 3 2

Raw material price fluctuation 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

Crude oil price fluctuation/ speculation Impact on energy cost, other raw materials and logistic cost Inflation

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3 months performance comparison

1Q13 1 Sept 12 30 Nov12 Total sales (RMmil) EBITDA (RMmil) EBITDA margin PBT (RMmil) PBT margin Profit attributable to equity (RMmil) PAT (RMmil) PAT margin EPS (sen) 584.6 89.6 15.3% 70.4 12.0% 57.5 58.9 10.1% 9.3 1Q12 1 Sept 11 30 Nov 11 554.8 58.2 10.5% 41.6 7.5% 31.4 32.5 5.9% 5.1 82% 83% 81% 69% Variance (1Q13 vs 1Q12) 5% 54% 4Q12 1 Jun 12 31 Aug 12 607.3 85.0 14.0% 66.6 11.0% 64.0 65.8 10.8% 10.3 (10%) (10%) (10%) 6% Variance (1Q13 vs 4Q12) (4%) 5%

Sales volume (quantity of gloves) up 23% 1Q13 vs 1Q12, up 6% 1Q13 vs 4Q12 Latex price down 30% 1Q13 vs 1Q12, down 14% 1Q13 vs 4Q12 Improvement in margin Lower tax expense due to recognition of deferred tax assets
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Financial highlights since listing in 2001

(12 years)
(in RMmil) Sales 2001 138.9 23.9 17.2% 17.2 12.4% 15.9 11.4% 17.0 2001 0.183 0.03 2002 180.2 27.1 2003 265.1 39.5 2004 418.1 60.6 14.5% 45.2 10.8% 39.5 9.5% 24.3 2004 0.312 0.08 2005 641.8 89.2 13.9% 65.7 10.2% 58.1 9.1% 26.9 2005 0.409 0.11 2006 992.6 130.3 13.1% 91.8 9.2% 84.1 8.5% 27.8 2006 0.561 0.16 2007 1,228.9 175.7 14.3% 118.6 9.7% 89.6 7.2% 14.0 2007 1.067 0.16 2008 2009 2010 2011 2012 CAGR 31% 30% 33% 32% CAGR 26% 30% 12 yrs Avg 14.8% 10.9% 9.2% -

1,377.9 1,529.1 2,079.4 2,053.9 2,314.4 197.8 14.4% 134.6 9.8% 110.1 7.8% 16.0 2008 1.141 0.19 287.5 18.8% 222.0 14.5% 169.1 11.0% 20.0 2009 1.393 0.29 364.7 17.5% 305.0 14.7% 245.2 12.0% 22.0 2010 1.808 0.40 207.3 10.1% 145.5 7.1% 113.1 5.6% 9.9 2011 1.853 0.18 310.0 13.4% 240.7 10.4% 202.7 8.9% 15.8 2012 2.068 0.33

Income statement

EBITDA EBITDA margin PBT PBT margin # PAT Equity PAT margin ROE

15.0% 14.9% 20.2 29.3

11.2% 11.0% 18.1 9.9% 16.1 2002 0.221 0.04 25.3 9.7% 17.8 2003 0.275 0.05

Per share data

(in RM) * Net Assets * EPS

* Based on par value of RM0.50, adjusted for share split and bonus issue # Restated to comply with FRS112 (deferred tax) Page 15 / 21

Strong and healthy balance sheet

1QFY13 As at 30 Nov 12 Net cash flow from operating activities (RMmil) Capital expenditure and investment (RMmil) Free cash flow before dividend (RMmil) Net cash and short term investment (RMmil) Shareholders equity (RMmil) Net assets per share (RM) Return on equity * Inventory turnover days Receivable turnover days Payable turnover days
* Annualised
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FY2012 As at 31 Aug 12 277.9 145.6 132.3 308.5 1,279.9 2.07 15.8 28 44 37

113.3 80.4 32.9 345.9 1,345.1 2.17 17.1 29 40 38

Dividend sustainable and steady growth

Dividend (sen) (Financial year ended 31 August)
20 18 16 14 12 10 8 6 4 2 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Financial year 2012

Dividend per share (sen) 9.00 (Proposed) 7.00 (interim)

Total dividend (RM000) 55,699 43,306 68,035 98,877 65,873 32,389 27,435 21,173 14,110 12,295 9,550 2,808 4,000 455,550
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Dividend per share (sen)

16.00

16.00

11.00

11.0 0

2011 2010

11.00 16.00 11.00 5.50 4.61 3.67 2.66 2.36 1.85 0.56 0.80

5.50 4.61 2.66 1.85 2.36 0.80 0.56 3.67

2009 2008 2007

Financial Year
* Dividend per share has been adjusted for share split and bonus issue

2006 2005 2004 2003 2002 2001

Target dividend payout ratio is around 50% of profit attributable to equity Dividend payout ratio : FY12 at 50% : FY11 at 60% : FY10 at 40% : FY09 at 40%

Total payout since listing

Return on investment
2323% since IPO in Mar01, assuming initial investment of 1,000 shares was made during initial public offering price of RM2.70 on 27/03/01
Date 27-Mar-01 02-Jan-04 03-Jan-05 03-Jan-06 03-Jan-07 03-Jan-08 02-Jan-09 04-Jan-10 03-Jan-11 03-Jan-12 02 Jan-13 Closing share price (RM) 2.70 (IPO) 4.90 8.65 6.80 13.80 6.50 3.64 10.06 5.05 5.12 5.75 Number of shares held 1,000 1,820 * 1,820 * 3,640 * 3,640 * 5,096 * 5,096 * 5,096 * 10,192 * 10,192 * 10,192 * Total market value (RM) 2,700 8,918 15,743 24,752 50,232 33,124 18,549 51,266 51,470 52,183 58,604 Accumulated Cost of dividend investment received (RM) (RM) 209 415 673 962 1,412 1,933 2,595 4,073 5,500 6,830 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 2,700 Capital appreciation (RM) 6,427 13,458 22,725 48,494 31,836 17,782 51,161 52,842 54,983 62,734 Total s/holders return % 238% 498% 842% 1796% 1179% 659% 1895% 1957% 2036% 2323%

* Adjusted for bonus issue and share split

If the bonus issues and share split are not taken into consideration, the share price should be RM5.75 x 1.3 x 1.4 x 1.4 x 2 x 2 = RM58.60 per share
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Corporate culture
Business Direction, Ethics, Rules & Philosophies Must know, Must do, Must teach
Business direction
1. To produce consistently high quality gloves at efficient low cost.

Business rules
1. 2. 3. 4. Do not lose our shareholders money; Do not lose our health; Do not lose our temper; Do not lose our customers.

Investment direction
1. To earn 2 healthy dollars and invest 1 efficient dollar.

Business philosophies
1. We work for our customers; 2. We take care of the interest of our shareholders; 3. We ensure that our employees continue to contribute positively to the company and we care for their well-being; and 4. We work closely with our bankers, suppliers, business associates and friends.
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Business ethics
1. Honesty 2. Integrity 3. Transparency

Management focus going forward

Further automate production line to reduce workers & improve the efficiency Target balance capacity mix of natural rubber and synthetic rubber glove Move upstream to rubber plantation Capture growth in emerging market demand Target 30% global market share

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Top Glove Corporation Berhad

Thank you
Q & A Session

www.topglove.com.my invest@topglove.com.my +603 5022 2110

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