Company Guide

Top Glove Corporation

Version 10 | Bloomberg: TOPG MK | Reuters: TPGC.KL
Refer to important disclosures at the end of this report

AllianceDBS Research, Malaysia Equity 10 Jul 2018

FULLY VALUED Hand in thorny gloves

Last Traded Price ( 9 Jul 2018): RM9.13 (KLCI : 1,672.63)
Price Target 12-mth: RM6.46 (-29% downside) (Prev RM8.66)
Shariah Compliant: Yes
Analyst
Siti Ruzanna Mohd Faruk +603 2604 3965
sruzannamf@alliancedbs.com
What’s New
 Lawsuit filed against Adventa Capital, claiming
overstatement and overvaluation of Aspion assets
 Business as usual, but profit guarantees no longer intact
 Cut earnings forecast by 2%-7%, factoring in lower
contribution from Aspion
 Maintain Fully Valued with lower TP of RM6.46
Price Relative
Maintain FULLY VALUED. We are maintaining our FULLY
VALUED call with a lower TP of RM6.46. We cut our earnings
forecast to include lower contribution from surgical glove
manufacturer Aspion Sdn Bhd as the profit guarantees by
vendors are no longer intact. This follows Top Glove’s lawsuit
against Adventa Capital Pvt Ltd, claiming that the latter had
overvalued Aspion by RM714.9m. Adventa Capital sold Aspion
to Top Glove earlier this year for RM1.37bn. Near term earnings
will still be supported by ongoing operations of Top Glove as
well as Aspion, albeit at a lower contribution.
Where we differ: More conservative on valuations. Our earnings
forecast is lower than consensus, as we factor in lower
contribution from Aspion. Our valuation of 16x CY19 EPS is also
conservative following an expected earnings shortfall from
Aspion, as well as Top Glove’s ongoing litigation against
Adventa Capital.

Potential catalyst: Expanding capacity. Top Glove is ramping up

its nitrile glove business by increasing its capacity in this
segment. The expansion plans put in motion, such as Factory 31
in Klang (to commence in June 2018) and Factory 32 (early
2019) will raise its total production capacity to 61.2bn gloves
Forecasts and Valuation p.a. (+18% from current capacity).
FY Aug (RMm) 2017A 2018F 2019F 2020F
Revenue 3,409 4,122 4,446 4,933 Valuation:
EBITDA 483 726 767 867
Pre-tax Profit 383 524 579 645 Maintain FULLY VALUED. We maintain our FULLY VALUED call
Net Profit 329 449 496 553 with a lower TP to RM6.46. Our TP is based on 16x CY19F EPS.
Net Pft (Pre Ex.) 329 449 496 553 This is equivalent to its 5-year mean PE.
Net Pft Gth (Pre-ex) (%) (8.9) 36.7 10.6 11.3
EPS (sen) 26.2 35.2 38.9 43.3
EPS Pre Ex. (sen) 26.2 35.2 38.9 43.3 Key Risks to Our View:
EPS Gth Pre Ex (%) (9) 34 11 11 Rising competition could erode margins. Competition is
Diluted EPS (sen) 26.2 35.2 38.9 43.3 heating up in the glove sector with several glove makers
Net DPS (sen) 14.5 17.6 19.4 21.6 expanding aggressively. This could result in higher pressure on
BV Per Share (sen) 159 187 209 233
PE (X) 34.9 26.0 23.5 21.1 margins.
PE Pre Ex. (X) 34.9 26.0 23.5 21.1
P/Cash Flow (X) 30.1 20.2 17.6 15.8 At A Glance
EV/EBITDA (X) 23.6 17.5 16.6 14.6 Issued Capital (m shrs) 1,278
Net Div Yield (%) 1.6 1.9 2.1 2.4 Mkt. Cap (RMm/US$m) 11,667 / 2,888
P/Book Value (X) 5.7 4.9 4.4 3.9 Major Shareholders (%)
Net Debt/Equity (X) CASH 0.5 0.4 0.3
Wee Chai Lim 29.4
ROAE (%) 17.2 20.4 19.6 19.6
Kumpulan Wang Persaraan (KWAP) 9.0
Earnings Rev (%): (2) (7) (7) Firstway United 5.1
Consensus EPS (sen): 34.7 43.7 48.7
Other Broker Recs: B: 10 S: 6 H: 6 Free Float (%) 51.4
3m Avg. Daily Val (US$m) 16.8
Source of all data on this page: Company, AllianceDBS, Bloomberg
ICB Industry : Health Care / Health Care Equipment & Services
Finance L.P

Refer to important disclosures at the end of this report

ed: KK/ sa: BC, CW, CS
Company Guide
Top Glove Corporation
WHAT’S NEW
Earnings shortfall from Aspion
Details of legal action: Top Glove held an analyst briefing to
address its legal action against Adventa Capital. Below are
the key takeaways from the briefing:
Aspion due diligence: Credit Suisse was appointed by
Adventa Capital as its financial advisor in the due diligence
for the sale of Aspion. During this process, Aspion’s
operational, financial, tax and legal information were
obtained through Virtual Data Room (VDR). This method was
used because the potential bidders for Aspion were also its
competitors.
Investigation on irregularities: After completing its acquisition
of Aspion on April 4, 2018, Top Glove found irregularities in
certain balance sheet items of Aspion. Subsequently, it
conducted its own investigation and appointed an
independent accounting firm to look into the matter. The key
findings were; 1) certain information provided in the VDR
were not accurate, affecting the valuation process; 2) some
inventories were non-existent or obsolete, and; 3) some plant
and machineries were non-operational, de-commissioned or
non-existent. This led to an overstatement of Aspion’s net
assets amounting to RM74.4m, as well as an overvaluation
for Aspion’s acquisition price by RM640.5m. Top Glove’s
claim of RM714.9m in the lawsuit consists of overstatement
and overvaluation of assets.
Business as usual: The litigation proceedings should have no
impact on Top Glove and Aspion’s ongoing business
operations. We understand that Low Chin Guan (one of
Aspion’s directors being sued by Top Glove) has stepped
down from managing the Aspion plant. His role has been
taken over by Top Glove. However, the profit guarantees of
RM80.9m for FYE Oct18 and RM108.3m for FYE Oct19 may
no longer be intact. Top Glove will recognise actual earnings
from Aspion instead, albeit at a lower level. The previous
forecast of RM80.9m for FYE Oct18 and RM108.3m for FYE
Oct19 seems far-fetched now. We expect an earnings
shortfall of c.RM40m for FYE Oct18 and RM55m for FYE Oct
19. Moving forward, Top Glove plans to add further value to
Aspion’s plant with transfer of technologies. However, this
plan may take up to 2-3 years.
Cut earnings by 2%-7%: We are cutting our earnings
forecast by 2%/7%/7% for FY18F/19F/20F, as we factor in
lower earnings contribution from Aspion.
Valuation: We maintain our Fully Valued call with a lower TP
of RM6.46 following our earnings cut. We have also lowered
our valuation multiple to 16x CY19 EPS which is equivalent to
its 5-year mean PE from 20x CY19 EPS previously. This is in
view of weaker earnings growth prospect which no longer
justifies a premium valuation.
Page 2
 Company Guide
Top Glove Corporation

Capacity (bn gloves)

CRITICAL DATA POINTS TO WATCH
67.9
Capacity expansion. Top Glove currently operates 31 glove factories 68.5
61.2
with a production capacity of 56.7bn gloves p.a., which includes its 58.8
51.9
56.7

Aspion acquisition. Its expansion plans include Factory 31 in Klang 49.0 44.6
(to commence in July 2018) and Factory 32 (early 2019) involving 39.2
more than 74 production lines. These will raise the group’s annual
29.4
capacity to 61.2bn gloves. However, we are lowering volume
19.6
forecast for its new acquisition Aspion. Its projected capacity was
initially 4.8bn gloves p.a. However, this will likely be revised due to 9.8

recent findings of misrepresentations of Aspion’s operations. 0.0

2016A 2017A 2018F 2019F 2020F
Premised on the expected completion dates provided by
management, we expect Top Glove to grow its effective annual Utilisation rate (%)
capacity by 9%/8%/11% in FY18/19/20F.
86.7 85 85 85
82.3
75.6
Sales volume to grow at 9.4% CAGR. We expect the group’s 69.4
utilisation rate to improve to 85% in FY18F and remain flat for
FY19F/20F. Premised on this, we expect Top Glove to grow its sales 52.0

volume by 23%/8%/11% in FY18/19/20F. This translates into a 3-

34.7
year CAGR of 9.4%, which is in line with the expected
consumption growth of 8-10% p.a. We believe the market will be 17.3
able to absorb the supply growth from the top four glove
manufacturers given continued industry consolidation among 0.0
2016A 2017A 2018F 2019F 2020F
smaller glove manufacturers.
Sales volume (bn gloves)
Better metric for profitability. We assess Top Glove’s profitability by 57.7
58.84
looking at unit profitability (i.e. EBIT/k gloves), rather than profit 52
48.2
margins. This is because profit margins may fluctuate even if there 47.07
are no changes in underlying profitability, due to cost pass-through 36.7
39.3

pricing (which lags by 1-2 months). Under pricing mechanisms, 35.30

profit margins may rise when costs fall, with the same profit levels 23.54
on lower average selling price (ASP). Margins may drop when costs
rise, with the same profit levels on higher ASP and no impact on 11.77

the bottom line.

0.00
2016A 2017A 2018F 2019F 2020F
EBIT/k gloves to normalise. EBIT/k gloves increased by 9% in FY16,
backed by the strengthening of the USD, coupled with lower raw EBIT/k gloves (RM)
material prices. However, EBIT/k gloves declined by 17% to RM9.48 11.5
11.4
11 11 11
in FY17 as a result of increasing competition among glove players, 9.48
especially in the nitrile segment, as well as rising operating costs 9.2

from hikes in natural gas and raw material prices. Following the
6.9
downtrend of raw material prices and better supply-demand
dynamics, we assume Top Glove’s EBIT/k gloves to increase by 16% 4.6
in FY18F.
2.3

Gains from nitrile and surgical gloves. The company’s recent 0.0
capacity expansion is geared towards the production of nitrile 2016A 2017A 2018F 2019F 2020F
gloves, with stronger demand expected in this segment. Top
Glove’s current product mix stands at 65:35 (natural rubber: nitrile).
This could shift to 60:40 once incoming capacity for nitrile gloves Source: Company, AllianceDBS
kicks in. The acquisition of Aspion, which will increase the sales mix
of surgical gloves from 2% to 4%, will also improve Top Glove's
earnings with better margins.

Page 3
Company Guide
Top Glove Corporation

Appendix 1: Factors driving historical share price performance

TOPG Est Fwd EPS (rhs) TOPG MK USDMYR

RM
13 0.90
Announced the
12
acquisition of Aspion 0.80
11 Earnings delivery from higher which will add additional
sales volume and unit 4.8bn (+9%) to existing
10 0.70
profitability increase driven capacity
9 by stronger USD and cheaper
raw material cost. 0.60
8

7 0.50

6 0.40
5
0.30
4

3 0.20
2
0.10
1

0 0.00
Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 Nov-17 Apr-18

*Top Glove forward EPS is based on consensus

Source: Company, AllianceDBS, Bloomberg Finance L.P
Top Glove’s share price versus forward EPS Remarks
TOPG Est Fwd EPS (rhs) TOPG MK Share price has a positive correlation of 0.40
14.00 1.00 with forward EPS. This shows that share price is
12.00 not strongly driven by earnings delivery, which
0.80
10.00 is backed by capacity expansion as well as unit
8.00 0.60 profitability.
6.00 0.40
4.00
0.20
2.00
- -
Apr-16

Apr-17

Jan-18
Apr-18
Oct-15

Oct-16

Oct-17
Jan-16

Jan-17
Jul-16

Jul-17

Top Glove’s share price versus USD/MYR Remarks

TOPG MK USDMYR From June 2012 to April 2017, Top Glove’s
12.00 5.00 share price had a high correlation of 0.87 with
4.80
10.00 4.60 the USD/MYR trend, as revenue is denominated
8.00 4.40 in USD. However, given a more competitive
4.20 environment coupled with the cost/savings
6.00 4.00 pass-through pricing mechanism, any gains/lost
3.80
4.00 3.60 from forex movements will eventually
2.00 3.40 normalise. Thus, the correlation between Top
3.20 Glove‘s share price and USD/MYR trend has
- 3.00
dropped to -0.85 from May 2017-Jun 2018.
Dec-15
Dec-12

Dec-13

Dec-14

Dec-16

Dec-17
Jun-13
Jun-12

Jun-14

Jun-15

Jun-16

Jun-17

Source: Company, AllianceDBS, Bloomberg Finance L.P

Page 4
 Company Guide
Top Glove Corporation

Leverage & asset turnover (x)

Balance Sheet: 1.3
0.80
Solid balance sheet. Top Glove is a strong cash generator and is 1.3
0.70 1.2
currently in a net cash position. With the acquisition of Aspion, 0.60 1.2
Top Glove will turn into a net debt position with gearing level of 0.50 1.1

0.55x. However, we remain unconcerned over the heightened 0.40

1.1

gearing, given Top Glove’s strong cash generation. 0.30

1.0
1.0
0.20
0.9
Share Price Drivers: 0.10 0.9

Increased market volatility. Malaysian-listed glove makers have 0.00

2016A 2017A 2018F 2019F 2020F
0.8

generally been regarded as defensive and a safe haven by Gross Debt to Equity (LHS) Asset Turnover (RHS)

investors, given their resilient earnings outlook backed by; (1)

Capital expenditure
the cost pass-through mechanism; (2) stable demand for RMm
medical glove products and; (3) exposure to global markets (not 1,800.0
1,600.0
dependent on a single geographical region). As such, share 1,400.0
prices in the sector tend to react favourably during periods of 1,200.0

increasing market volatility. 1,000.0

800.0
600.0
Earnings outlook. Top Glove’s earnings are a function of two 400.0

variables; (1) sales volume and; (2) unit profitability (EBIT/k 200.0
0.0
gloves). We assume sales volume growth of 8%-23% for 2016A 2017A 2018F 2019F 2020F

FY18F-20F, backed by strong demand. Unit profitability is Capital Expenditure (-)

influenced by the competitive environment, productivity, and ROE (%)

macroeconomic factors (i.e. currency movements, raw material
20.0%
prices, etc.).
15.0%
Key Risks:
Rising competition could erode margins. Competition is 10.0%
heating up in the glove sector with several glove makers
undertaking aggressive expansion plans, which could see unit 5.0%

profitability (EBIT/k gloves) suffer going forward. However, Top

Glove will be relatively better off than its peers, as its core 0.0%
2016A 2017A 2018F 2019F 2020F
natural rubber glove products will see relatively less
competition than nitrile gloves, because of better supply- Forward PE band (x)
demand dynamics. (x)

30.7
Company Background
+2sd: 27.3x
Top Glove is the world’s largest rubber glove manufacturer 25.7

with an annual production capacity of 51.9bn gloves. Natural 20.7

+1sd: 22.1x

rubber gloves make up the lion’s share of its product mix Avg: 16.9x
15.7
(52%), while nitrile rubber gloves account for 36%. Vinyl and
-1sd: 11.6x
surgical gloves account for the rest. Currently, the group’s 10.7

manufacturing facilities are located in Malaysia, Thailand, and 5.7 -2sd: 6.4x
Jul-14 Jul-15 Jul-16 Jul-17
Indonesia.
PB band (x)
(x)
7.1

6.1
+2sd: 5.69x
5.1
+1sd: 4.59x
4.1

Avg: 3.48x
3.1

-1sd: 2.37x
2.1

1.1 -2sd: 1.26x

Jul-14 Jul-15 Jul-16 Jul-17

Source: Company, AllianceDBS

Page 5
Company Guide
Top Glove Corporation

Key Assumptions
FY Aug 2016A 2017A 2018F 2019F 2020F
Capacity (bn gloves) 44.6 51.9 56.7 61.2 67.9
Utilisation rate (%) 82.3 75.6 85.0 85.0 85.0
Sales Volume (bn gloves) 36.7 39.3 48.2 52.0 57.7
EBIT/k gloves (RM) 11.4 9.48 11.0 11.0 11.0

Income Statement (RMm)

FY Aug 2016A 2017A 2018F 2019F 2020F
Revenue 2,889 3,409 4,122 4,446 4,933
Cost of Goods Sold (2,293) (2,804) (3,304) (3,576) (3,980)
Gross Profit 596 605 818 871 954
Other Opng (Exp)/Inc (180) (232) (290) (300) (320)
Operating Profit 416 373 527 571 634
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0
Associates & JV Inc 1.28 (1.0) 1.00 1.00 1.00
Net Interest (Exp)/Inc 25.4 10.9 (4.8) 6.83 9.50
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0
Pre-tax Profit 442 383 524 579 645
Tax (79.8) (54.7) (74.7) (82.6) (92.0)
Minority Interest (1.7) 0.14 0.14 0.14 0.14
Preference Dividend 0.0 0.0 0.0 0.0 0.0
Net Profit 361 329 449 496 553
Net Profit before Except. 361 329 449 496 553
EBITDA 525 483 726 767 867
Growth
Revenue Gth (%) 15.1 18.0 20.9 7.9 11.0
EBITDA Gth (%) 19.2 (8.0) 50.5 5.6 13.0
Opg Profit Gth (%) 17.2 (10.2) 41.3 8.3 11.0
Net Profit Gth (Pre-ex) (%) 28.9 (8.9) 36.7 10.6 11.3
Margins & Ratio
Gross Margins (%) 20.6 17.8 19.8 19.6 19.3
Opg Profit Margin (%) 14.4 10.9 12.8 12.8 12.9
Net Profit Margin (%) 12.5 9.6 10.9 11.2 11.2
ROAE (%) 21.1 17.2 20.4 19.6 19.6
ROA (%) 13.5 11.8 11.4 9.8 10.2
ROCE (%) 16.9 14.4 13.0 11.2 11.8
Div Payout Ratio (%) 50.4 55.4 50.0 50.0 50.0
Net Interest Cover (x) NM NM 109.0 NM NM
Source: Company, AllianceDBS

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 Company Guide
Top Glove Corporation

Quarterly / Interim Income Statement (RMm)

FY Aug 3Q2017 4Q2017 1Q2018 2Q2018 3Q2018

Revenue 870 902 938 958 1,101

Cost of Goods Sold (736) (748) (764) (771) (890)
Gross Profit 133 155 174 187 211
Other Oper. (Exp)/Inc (43.0) (57.0) (55.1) (63.8) (67.4)
Operating Profit 90.1 97.6 119 123 143
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0
Associates & JV Inc (0.1) (0.1) 0.72 2.09 (0.5)
Net Interest (Exp)/Inc 1.42 1.69 2.02 (0.9) (8.7)
Exceptional Gain/(Loss) 0.0 0.0 0.0 0.0 0.0
Pre-tax Profit 91.5 99.1 122 125 134
Tax (14.0) (0.9) (16.1) (14.5) (14.8)
Minority Interest 0.16 0.44 (0.5) (1.0) (1.8)
Net Profit 77.7 98.6 105 109 118
Net profit bef Except. 77.7 98.6 105 109 118
EBITDA 119 127 151 158 182

Growth
Revenue Gth (%) 2.1 3.8 4.0 2.2 14.8
EBITDA Gth (%) (6.3) 7.2 19.0 4.5 15.1
Opg Profit Gth (%) (9.3) 8.2 22.2 3.4 16.2
Net Profit Gth (Pre-ex) (%) (6.4) 26.9 6.9 3.4 7.9
Margins
Gross Margins (%) 15.3 17.1 18.6 19.5 19.2
Opg Profit Margins (%) 10.4 10.8 12.7 12.9 13.0
Net Profit Margins (%) 8.9 10.9 11.2 11.4 10.7

Balance Sheet (RMm)

FY Aug 2016A 2017A 2018F 2019F 2020F

Net Fixed Assets 1,196 1,564 3,036 3,241 3,409

Invts in Associates & JVs 3.96 0.0 1.00 2.00 3.00
Other LT Assets 112 121 121 121 121
Cash & ST Invts 703 447 808 844 934
Inventory 264 316 372 403 448
Debtors 346 419 507 547 607
Other Current Assets 24.2 69.3 69.3 69.3 69.3
Total Assets 2,649 2,936 4,914 5,227 5,591

ST Debt 318 315 315 315 315

Creditor 332 419 494 534 594
Other Current Liab 40.9 62.3 62.3 62.3 62.3
LT Debt 81.6 61.8 1,575 1,575 1,575
Other LT Liabilities 50.8 66.3 66.3 66.3 66.3
Shareholder’s Equity 1,818 2,003 2,393 2,665 2,970
Minority Interests 7.83 9.20 9.07 8.93 8.80
Total Cap. & Liab. 2,649 2,936 4,914 5,227 5,591

Non-Cash Wkg. Capital 260 323 393 423 468

Net Cash/(Debt) 304 70.6 (1,082) (1,046) (956)
Debtors Turn (avg days) 45.9 41.0 41.0 43.3 42.7
Creditors Turn (avg days) 55.0 50.9 53.6 55.5 55.0
Inventory Turn (avg days) 43.1 39.3 40.4 41.8 41.4
Asset Turnover (x) 1.1 1.2 1.1 0.9 0.9
Current Ratio (x) 1.9 1.6 2.0 2.0 2.1
Quick Ratio (x) 1.5 1.1 1.5 1.5 1.6
Net Debt/Equity (X) CASH CASH 0.5 0.4 0.3
Net Debt/Equity ex MI (X) CASH CASH 0.5 0.4 0.3
Capex to Debt (%) 54.3 122.7 88.4 21.2 21.2
Z-Score (X) 13.0 11.8 5.4 5.4 5.4
Source: Company, AllianceDBS

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Company Guide
Top Glove Corporation

Cash Flow Statement (RMm)

FY Aug 2016A 2017A 2018F 2019F 2020F

Pre-Tax Profit 442 383 524 579 645

Dep. & Amort. 108 110 198 195 232
Tax Paid (98.5) (65.5) (74.7) (82.6) (92.0)
Assoc. & JV Inc/(loss) (1.3) 0.98 (1.0) (1.0) (1.0)
Chg in Wkg.Cap. 25.6 (52.7) (69.3) (30.0) (45.1)
Other Operating CF (42.2) 4.74 0.0 0.0 0.0
Net Operating CF 434 381 577 660 738
Capital Exp.(net) (217) (462) (1,670) (400) (400)
Other Invts.(net) 149 268 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 0.0 0.0 0.0 0.0
Div from Assoc & JV 2.26 0.79 0.0 0.0 0.0
Other Investing CF 31.3 16.9 0.0 0.0 0.0
Net Investing CF (34.4) (177) (1,670) (400) (400)
Div Paid (169) (182) (196) (225) (248)
Chg in Gross Debt (198) (28.6) 1,514 0.0 0.0
Capital Issues 38.9 4.96 137 0.0 0.0
Other Financing CF 0.0 0.0 0.0 0.0 0.0
Net Financing CF (328) (205) 1,454 (225) (248)
Currency Adjustments 6.62 16.3 0.0 0.0 0.0
Chg in Cash 77.9 15.4 361 35.9 90.1
Opg CFPS (sen) 32.5 34.5 50.6 54.1 61.4
Free CFPS (sen) 17.3 (6.4) (85.6) 20.4 26.5
Source: Company, AllianceDBS

Target Price & Ratings History

Source: AllianceDBS
Analyst: Siti Ruzanna Mohd Faruk

Page 8
 Company Guide
Top Glove Corporation

DISCLOSURE

Stock rating definitions

STRONG BUY - > 20% total return over the next 3 months, with identifiable share price catalysts within this time frame
BUY - > 15% total return over the next 12 months for small caps, >10% for large caps
HOLD - -10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps
FULLY VALUED - negative total return > -10% over the next 12 months
SELL - negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame

Commonly used abbreviations

Adex = advertising expenditure EPS = earnings per share PBT = profit before tax
bn = billion EV = enterprise value P/B = price / book ratio
BV = book value FCF = free cash flow P/E = price / earnings ratio
CF = cash flow FV = fair value PEG = P/E ratio to growth ratio
CAGR = compounded annual growth rate FY = financial year q-o-q = quarter-on-quarter
Capex = capital expenditure m = million RM = Ringgit
CY = calendar year M-o-m = month-on-month ROA = return on assets
Div yld = dividend yield NAV = net assets value ROE = return on equity
DCF = discounted cash flow NM = not meaningful TP = target price
DDM = dividend discount model NTA = net tangible assets trn = trillion
DPS = dividend per share NR = not rated WACC = weighted average cost of capital
EBIT = earnings before interest & tax p.a. = per annum y-o-y = year-on-year
EBITDA = EBIT before depreciation and amortisation PAT = profit after tax YTD = year-to-date

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Company Guide
Top Glove Corporation

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This research report provides general information only and is not to be construed as an offer to sell or a solicitation to buy or sell any securities
or other investments or any options, futures, derivatives or other instruments related to such securities or investments. In particular, it is
highlighted that this report is not intended for nor does it have regard to the specific investment objectives, financial situation and particular
needs of any specific person who may receive this report. Investors are therefore advised to make their own independent evaluation of the
information contained in this report, consider their own individual investment objectives, financial situations and particular needs and consult
their own professional advisers (including but not limited to financial, legal and tax advisers) regarding the appropriateness of investing in any
securities or investments that may be featured in this report.

ADBSR, AIBB, DBSVH and DBS Bank Ltd, their directors, representatives and employees or any of their affiliates or their related parties may,
from time to time, have an interest in the securities mentioned in this report. AIBB, DBSVH and DBS Bank Ltd, their affiliates and/or their
related persons may do and/or seek to do business with the company(ies) covered in this report and may from time to time act as market maker
or have assumed an underwriting commitment in securities of such company(ies), may sell or buy such securities from customers on a principal
basis and may also perform or seek to perform significant investment banking, advisory or underwriting services for or relating to such
company(ies) as well as solicit such investment, advisory or other services from any entity mentioned in this report.

AIBB, DBSVH, DBS Bank Ltd (which carries on, inter alia, corporate finance activities) and their activities are separate from ADBSR. AIBB, DBSVH
and DBS Bank Ltd may have no input into company-specific coverage decisions (i.e. whether or not to initiate or terminate coverage of a
particular company or securities in reports produced by ADBSR) and ADBSR does not take into account investment banking revenues or
potential revenues when making company-specific coverage decisions.

ADBSR, AIBB, DBSVH, DBS Bank Ltd and/or other affiliates of DBS Vickers Securities (USA) Inc (“DBSVUSA”), a U.S.-registered broker-dealer,
may beneficially own a total of 1% or more of any class of common equity securities of the subject company mentioned in this report. ADBSR,
AIBB, DBSVH, DBS Bank Ltd and/or other affiliates of DBSVUSA may, within the past 12 months, have received compensation and/or within the
next 3 months seek to obtain compensation for investment banking services from the subject company. DBSVUSA does not have its own
investment banking or research department, nor has it participated in any investment banking transaction as a manager or co-manager in the
past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to
effect a transaction in any security discussed in this report should contact DBSVUSA exclusively. DBS Vickers Securities (UK) Ltd is an authorised
person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Services Authority. Research distributed in
the UK is intended only for institutional clients.

In reviewing this report, an investor should be aware that any or all of the foregoing, among other things, may give rise to real or potential
conflicts of interest. Additional information is, subject to the overriding issue of confidentiality, available upon request to enable an investor to
make their own independent evaluation of the information contained herein.

Wong Ming Tek, Executive Director

Published by
AllianceDBS Research Sdn Bhd (128540 U)
19th Floor, Menara Multi-Purpose, Capital Square, 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur, Malaysia.
Tel.: +603 2604 3333 Fax: +603 2604 3921 email : general@alliancedbs.com

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