1) INTRODUCTION
1.1 Explanation of the Background of the Company(10M)
Top Glove was starting their business in year 1991 and the main office was located at
Malaysia. The business office of Top Glove was located at Germany, United States, as well as
Brazil. Top Glove Corporation Bhd has become the largest gloves firm in all around the
world. Top Glove was a very success firm because it established from one factory and three
glove production line to become nowadays it has occupied twenty-six percent of the global
rubber glove market. The company has manufacturing operations in country such as Thailand,
Malaysia, China and Vietnam and exports more than two thousand different items to
customers in one hundred and ninety-five nations in global.
Top Glove was listed on the bursa Malaysia (also known as Kuala Lumpur Stock Exchange)
and became a public listed company on year 2001. The company also listed on Singapore
Exchange Main Board in year 2016. Over the past twenty years, Top Glove has shown stable
growth, with a compound annual growth rate (CAGR) of twenty-three point one percent as
well as a compound annual growth rate of after-tax profit of twenty-eight point two percent.
Top Glove Corporation Bhd is also the MSCI Global Standard Index, FTSE Bursa Malaysia
Composite Index, FTSE Top 100 Index, FTSE Emas Index, FTSE Sia Muslim Index, FTSE 4
Best Bursa Malaysia Index and constituent stocks of Dow Jones sustainability Index (DJSI)
(For emerging markets).
Top Glove Corporation Bhd has sell different type products such as face masks, condoms,
exercise bands, dental dams, as well as household items. The company was meets the needs of
healthcare and non-medical healthcare. In accordance with its commitment to sustainable
development, Top Glove will continue to improve its level of practice in the ESG field,
especially in labor practices. Tan Sri Dr Lim Wee Chai has biggest contribution to Top
Glove’s outstanding achievements and global reputation. His foresight and impetus have
made Top Glove a very large global success in a short period of time.
With the help of its 21,000 employees, Top Glove continues to produce high-quality gloves at
an effective low cost in accordance with proven business guidance. Top Glove was not
satisfied the success of nowadays, but focuses on higher ambitions, it plan to becoming a
Fortune Global 500 firm by year 2035. Therefore, Top Glove continues to extend its business
scope and is looking for merger and acquisition opportunities in similar and related industries.
1.2 Identification of Current Issues (10M)
First and foremost, the current issue that Top Glove faced was the burden in labor cost. The 7th
prime minister of Malaysia was announced that the lowest salary for workers was RM1200 per
month in peninsular Malaysia while RM1100 per month in Sarawak and Sabah. In top glove
firm, it only gives total of RM1100 to workers. This means that Top Glove want to add another
RM100 for their employees. This puts a heavy burden on production costs. To comply with this
regulation, Top Glove spends an additional 45 million ringgits each year. Moreover, Top gloves
must learn to better develop strategic plans, and successfully overcome industry
competitiveness.
Apart from that, the current issue that Top Glove faced was having employee in Top Glove was
test and found that positive in covid-19 test. Top glove is the country’s largest virus outbreak
site. The Star newspaper was published that last week that the worker which name as Yubaraj
Khadka that from Nepali and twenty-seven years old was fired due to no follow the SOP of
firm which is social distance. If the employee was following SOP, the employee of Top Glove
will not show positive in covid-19 test and the outbreak of covid-19 in Top Glove firm will not
occur. The outbreak of pandemic cause the company need to lock down more than one week
for sterilization and carry out covid-19 test for the worker. This cause the production of top
glove will stop and revenue decrease due to the extension of work task.
Besides that, the current issues that top glove faced are problem of air pollution. This is because
of natural rubber manufacturing and latex in recent times. Top Glove must have some action
which is put more effort on R & D to decrease the squander of latex which will increase the
cost of production and pollution. Moreover, the company can introduce some campaign about
the important of gloves usage as well as to decrease the pollution caused by the production of
gloves and natural rubber, provide trained to professional for settle the wastage without affects
the profit margin.
Moreover, the current issues that Top Glove faced was top glove 4Q earnings drops thirteen
percent. This is because of the cost of raw material was expensive. Rising natural rubber prices
and increased competition have led to a decline in Top Glove Corp Bhd’s net profit as of the
fourth quarter of 2019. The world’s leading glove manufacturer net earnings decrease by
thirteen percent year-on-year to RM80 million in fourth quarter 2019 ended Aug 31,2019
compared to RM92.3 million recorded in the previous corresponding quarter (2018). Top glove
say that because of decrease in demand became the profits and revenue decrease by 2.8% from
June to August in year 2019. Top glove added that the loss of the Vinyl glove business and the
increase in interest expenses also contributed to the decline in profit for the quarter.
Last but not least, the current issues that top glove faced was export problem. United states
prohibit imports of Malaysia’s Top Glove over labor issues. The labor issues such as employee
of Top glove has diagnosed covid-19 and forced labor to work. The US customs has issued a
detention order for imported products produced by a subsidiary of Malaysia’s top glove
company, the world’s largest medical glove manufacturer, in an action against the company
suspected of forced labor. This action will cause the company sale reduce seriously, the
company should follow the national law and improve the human resource management to
reduce the negative image of the company and to remove the prohibition form the US
government.
2) Contents
2.1 Analysis of the Spreadsheet Calculations (20M)
Trend analysis
Turnover
Top Glove turnover is an uptrend from 2014 to 2018 with continuous growth every year. In
2014, the turnover slightly decreased by 2% to RM2.28 billion in 2014 from RM2.31 billion in
2013. The continuous growth in 2015, 2016, 2017, 2018 and 2019 are by 9%, 25%, 47%, 82%
and 108% respectively compared to RM2.31 billion in 2013. There is a larger spike from 2017
(RM 3.41 billion) to 2018(RM4.22 billion) which increased by 24%. The uptrend of turnover
is due to the increasing in cost of sales and gross profit.
Net profit
Top Glove net profit is an uptrend overall from 2013 to 2019. However, there is a slight decrease
by 9% in 2014 to RM183.57 million from RM202.83 million in 2013. The continuous growth
in 2015, 2016, 2017, 2018 and 2019 are by 39%, 79%, 67%, 114% and 81% respectively. There
is a slight decrease of 6% in 2017 from 2016 mainly caused by high operating expenses. There
is 15% decrease in 2019 from 2018 due to high operating expenses and finance cost. There is a
huge increase of net profit in 2018 which is by 28% compared to 2017 due to high gross profit.
Non-current asset
Top Glove non-current asset increased continuously from 2013 to 2019. The non-current asset
in 2013 recorded is RM1.04 billion and increased in 2014,2015,2016,2017,2018 and 2019 by
6%, 17%, 27%, 63%, 255% and 277% respectively. There is a huge leap in non-current asset
in 2018 and 2019 which are RM3.68 and RM3.91 billion. There is a significant increase of 118%
in 2018 from 2017. These are contributed by higher PPE, land use rights and intangible assets.
