Growing Global

Rising
toChallenges

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 About us Growing Global

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 Innovative Growing Global

Game changing products

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 Disruptive innovation Growing Global

First in the world light weight nitrile glove changed the global market for glove

Invented the world’s first light weight nitrile glove in

year 2005

Triggered a global switch from natural rubber to nitrile

glove

Became the world’s largest nitrile glove manufacturer

in year 2010, a position maintained until today

Caused an industry wide re-engineering towards nitrile

glove production

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 Efficient Growing Global

Most profitable and highest productivity

PBT margin Sales per employee (RM’000)
33%
28% 29% 28% 321 319
24% 283 279 291 273
23% 247
21% 225 231
199 214 207
20% 15% 15% 14%
12% 12%
9% 10%

0%
2011 2012 2013 2014 2015 2016 1Q 2011 2012 2013 2014 2015 2016
2017
Sector's average Hartalega Sector's average Hartalega

Most profitable glove manufacturer

Most advanced production lines at 45,000 pieces per hour with high degree of automation

Productivity measured as sales per employee is the highest in the sector

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 High growth Growing Global

12 years 26% CAGR made possible with sound management

FY05 110 Revenue (RM mil)
FY06 160
FY07 240
FY08 282
FY09 443
FY10 572
FY11 735
FY12 931
FY13 1,032
FY14 1,107
FY15 1,145
FY16 1,498
FY17 1,822

CAGR for revenue for the last 12 years (from FY2005 to FY2017) of 26% - continuous growth
The only listed glove company to have consistent 12 years y-o-y growth
Experienced the highest revenue growth in the last 2 years contributed by NGC
Capacity more than doubled in the same period
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 Most valuable glove manufacturer Growing Global

Market capitalization exceeding RM11 billion

Market capitalisation (RM mil)

Most valuable glove company with market
11,260
capitalisation of RM11.3 billion as of 21st Jul 2017

8,139 Share price appreciated by 23 times from RM0.30

7,959 (IPO of RM1.80 adjusted for bonus issues) to current
6,934
price of RM7.00
5,116
Hartalega commands a premium for its healthy
3,623
2,902 financials, sales growth, innovation and productivity
1,987 1,981

463 606

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 Market outlook Growing Global

Consistent growth in global consumption

World demand for rubber gloves grow at an
Global consumption of rubber gloves (bil pcs) average of 8% to 10% per annum
251
232
210 Malaysia is the largest supplier of rubber
193
171
180 gloves to the world – 63% market share
160
150 148
140
122 124 Demand for glove is inelastic, a basic
110
92 94 102 necessity in healthcare and other sectors
84
64 68 that require hand protection

Global consumption growth will continue

stemming from increase from developing
nations where existing per capita

2017f
2018f
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
consumption is significantly lower than
developed countries

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 Market outlook Growing Global

Attractive opportunities in high growth and highly populated developing countries

335 Gloves per capita consumption (pieces)

273
216 208 208
193 190
165 153
150 147 141
135 132 124
90 89 87 76 70 68 55 52
31 21 19 6 4 3 1

Market statistics show big disparity in per capita consumption between developed and developing nations
Countries with low per capita consumption of gloves that have huge population and high GDP growth indicate big
opportunities for demand growth for gloves
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 Market outlook Growing Global

Industry’s capacity expansion

1Hartalega Top Glove Kossan Supermax Total
Current capacity (mil pcs) 27,000 48,000 22,000 21,000

Expansion plans 2NGC 3 – 4.7 bil pcs (May-17) F30 – 2.8 bil pcs (Jul-17) Meru 1 – 3.0 bil pcs (Jul-17) P10 – 2.2 bil pcs (Dec-17)
announced NGC 4 – 4.7 bil pcs (Apr-18) F31 – 3.0 bil pcs (Jan-18) Meru 2 – 4.5 bil pcs (2018) P11 – 3.4 bil pcs (Dec-19)
NGC 5 – 4.7 bil pcs (Apr-19) F32 – 4.8 bil pcs (Dec-18) Meru 3 – 3.0 bil pcs (2018)
3Estimated actual capacity 6,071 2,422 1,935 704 11,132
realized in year 2017 (mil
pcs)
3Estimated actual capacity 4,819 4,654 4,383 2,693 16,549
realized in year 2018

10,890 7,076 6,318 3,297 27,581

1. Management is committed to maintaining a healthy supply and demand balance by taking cognitive measures to regulate our rate of expansion
2. NGC plant 3’s first production line started operation in October 2016, thereafter lines were progressively commissioned
3. Estimates are based on gestation period that takes progressive commissioning of production lines into consideration using Hartalega’s historical
expansion project delivery schedule as basis of estimation

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 Market outlook Growing Global

Supply and demand remains healthy

Global consumption projected to grow more

Malaysia Big Four Global demand than industry’s capacity expansion

Malaysia competitiveness relative to China

in glove production has improved due to
China’s government clamp down on
environmental compliance

Rubber glove expected to take market share

from PVC glove

PVC glove market size is about equal to

rubber glove

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 Market outlook Growing Global

Nitrile glove export in Malaysia continues to grow

NR NR,
NR, NR,
NBR, 42% 40%
49% NBR, 43%
51% NBR, NBR,
58% 57% 60%

Year 2014 Year 2015 Year 2016 1Q2017

Malaysia’s Export of Rubber Gloves (source MREPC)

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 Market outlook Growing Global

Decline in importation of gloves from China

USA import of rubber and vinyl gloves (bil pcs) Share of USA import of gloves (rubber and vinyl)
(source: MREPC) (source: MREPC)

52% 51%
+14% YoY 48%
19 -3% YoY
17 36%
16 1Q15
15 15 14 1Q15 31% 33%
1Q16
1Q16
1Q17
1Q17
11% 11% 11%

4% 3% 4%

Rubber Vinyl China Malaysia Thailand Indonesia

Decline in import of gloves from China into USA

Factories in China were ordered to shut and/or carry out retrofits to meet environmental standards
Majority of gloves production in China are vinyl gloves
Ongoing Chinese Government’s policy and enforcement creates better opportunity for Malaysia gloves export growth
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 Market outlook Growing Global

Malaysia’s market share increases

Share of USA import of gloves (nitrile and vinyl)
USA is the biggest market for rubber
80% 74%
69%
71% glove demand taking up almost 35%
of global market share
60%
Malaysia is capturing market share at
2015
others’ expense due to its glove
40% quality, competitive pricing and supply
2016
stability
*2017
20% 17%
14% 13%
10% 10% 9%
3% 3% 3%

0%
Malaysia Thailand China Indonesia

(source: MREPC)
*Year 2017 figures are for the period of January to March only
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 Market outlook Growing Global

Stable raw material for the remaining year 2017

Latex and nitrile raw material price trend
12.00 120
100

USD/barrel
8.00 80
60
4.00 40
20
0.00 0
Jul-14

Jul-15

Jul-16
Jan-14

Jun-14

Jan-15

Jun-15

Jan-16

Jun-16

Jan-17

Jun-17
Apr-14

Oct-14

Oct-15

Apr-16

Oct-16

Apr-17
Apr-15
Sep-14

Nov-14
Dec-14

Aug-15

Aug-16

Nov-16
Dec-16
Feb-14
Mar-14

Aug-14

Sep-15

Nov-15
Dec-15
Feb-15
Mar-15

Feb-16
Mar-16

Sep-16

Feb-17
Mar-17
May-14

May-15

May-16

May-17
Latex (LHS) NBR (LHS) Crude Oil (RHS)

Nitrile & latex price are closely correlated as both are close substitute products for automotive industry
Nitrile raw material price is not closely correlated to crude oil price trend
Prices fell sharply mid-2015 due to oversupply concerns but rose mid-2016 due to tight available supply &
improved demand from vehicle sales before declining in Mar 2017
Expect latex and nitrile raw material to remain at about the current level for the rest of 2017
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 Our strategy Growing Global

A master plan drawn up to tackle competition

2005-2010 2010 2012 2013 2014 2017

• Disrupted the • Anticipated • Unveiled NGC • Acquired 112 • NGC started • How we fare?
glove industry competitors to as key to our acres land for its first
with innovative come into master plan to NGC production line
light weight nitrile glove tackle
nitrile glove segment competition

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 Our strategy Growing Global

What we have achieved to date

92% OEE
19% 92%
NGC’s overall
equipment
No 1
RM 1.3bln Revenue CAGR
since NGC was
effectiveness much
higher than global
gold standard of
Still the largest nitrile
glove manufacturer in
the world
Invested at NGC to date 2013 2017 announced
85%

36 2.6
Number of
production lines at
NGCrunning above
Workers per million
pcs (per month) at
100
203
203%
Increase in number
Profit margin
remains above
industry average
45,000 pcs/hr NGC plants 1&2 2013 2017 of customers

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 Our strategy Growing Global

Measures in place to maintain above industry average margins

EBITDA margin (%)
29
26 26 27 26
23 23
21 21 21 21
20 Hartalega
18
17 17 16 Industry average
14 14

1QCY15 2QCY15 3QCY15 4QCY15 1QCY16 2QCY16 3QCY16 4QCY16 1QCY17

Improved 1QCY17 EBITDA margin on the back of greater competition and upsurge in raw material cost
Efforts to maintain margins at levels higher than industry’s average will continue
Implementation of cost management, productivity improvement and waste reduction programs
Headcount reduction via lean manufacturing and further automation
Engineering improvement programs
New capacity from higher productivity production lines at NGC will improve profitability
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 Our strategy Growing Global

5 years 15% p.a. growth via capacity expansion

Capacity projection
50,000
41,064 41,142
40,000 38,496
34,160
30,000 28,687

19,387 21,348
20,000
11,787 12,502
10,000

0
Intensified
competition
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Growth via addition of new capacity through construction of new production lines
To date, 3 out of 6 plants at NGC are in full operations
First production line at NGC plant 4 will commence operation in August 2017
Construction of NGC plant 5 will commence in August 2017
Construction of NGC plant 6 will commence a year after (August 2018)
Average growth of 15% p.a. for the next 5 years
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