The Malaysia-based Top Glove (SGX: BVA)(KLSE:7113.KL) is the largest gloves maker in the world with a market share of about 25%. The company, which has a primary listing on Malaysia’s stock market, Bursa Malaysia, was dual-listed here in Singapore in June 2016.
The company recently published its annual report for its fiscal year ended 31 August 2017 (FY2017). I have been reading the report to better understand Top Glove’s business.
In this article, I want to share three positive points about Top Glove’s business mentioned in the annual report that I think investors should know.
Top Glove grew its revenue by 18% in FY2017 to RM 3.41 billion. The company benefitted from a 6% increase in average selling prices (ASPs), and a 7% jump in sales volume.
In the Letter To Stakeholders And Management Discussion & Analysis section of Top Glove’s FY2017 annual report, the company’s top leaders wrote:
“Nitrile glove exports for Top Glove Malaysia (TGM) also grew by 23.5%, outperforming total Malaysian nitrile glove exports which increased 17.4%, for the 12-month period ending June 2017 versus the 12-month period ending June 2016.”
We can see that the growth rate of Top Glove’s nitrile glove exports was 35% higher than the industry average in FY2017. This is a strong accomplishment, especially when we consider the size of Top Glove’s business and its market share in the industry.
Top Glove is currently the clear leader in the global rubber gloves industry. Yet, its competitors – such as the Malaysia-listed duo of Hartalega Holdings Berhad (KLSE: 5168.KL) and Kossan Rubber Industries Berhad (KLSE: 7153.KL), and the Singapore-listed Riverstone Holdings Limited (SGX: AP4) – are not sitting idle.
One of the many things that Top Glove does to remain ahead of its competitors is to innovate. The Letter To Stakeholders And Management Discussion & Analysis section of Top Glove’s FY2017 annual report contained a few examples on this topic:
“Established in 2013, the Top Glove R&D Centre has since been expanding in terms of its facilities and its people. The Top Glove R&D Unit now has 154 researchers, of which 17 staff are with PhD qualifications and 40 with Masters qualifications.
In the past year, we pride ourselves on having filed a total of 10 patents and 1 Industrial Design, further strengthening Top Glove’s Intellectual Property portfolio. To date, Top Glove has a strong and broad patent portfolio of more than 50 pending and granted patents, most of which are technological advances in the manufacturing process aimed at attaining higher quality and productivity.”
From the quotes above, it appears that Top Glove is highly committed to sustaining its current competitive position in the market over the long-term.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn't own shares in any companies mentioned. The Motley Fool Singapore has recommended shares of Riverstone.