Malaysia-based rubber gloves maker Top Glove (SGX: BVA)(KLSE: 7113.KL) first became a public-listed company when its shares floated on Bursa Malaysia, Malaysia’s stock exchange, in 2001.
Then earlier this year, the company became a dual-listed company by going for a secondary listing here in Singapore by way of introduction.
Top Glove is the largest rubber gloves maker in the world with a market share of around 25%.
For investors who are studying other glove makers – such as the Singapore-listed Riverstone Holdings Limited (SGX: AP4) and the Malaysia-listed duo of Hartalega Holdings Berhad (KLSE: 5168.KL) and Kossan Rubber Industries Berhad (KLSE: 7153.KL) – it may be a good idea for them to get to know Top Glove as well.
Here are three important things to know about Top Glove’s business:
1. Strong growth in revenue and profit over the last 10 years
From its FY2006 (fiscal year ended 31 August 2006) to FY2016, Top Glove’s revenue has grown at a compound annual rate of 11.3% from RM992.6 million to RM2.89 billion. The company’s bottom-line has stepped up even faster – Top Glove’s net profit has grown by 16.5% per year from RM78.4 million to RM360.7 million.
2. Track record of growing dividends
Top Glove has consistently paid a dividend each year in its last 10 fiscal years. In the last five years alone, the company’s dividend has grown from RM0.08 per share to RM0.145. That’s an increase of over 80%.
The company, which has a dividend policy of paying out 50% of its net profit, has a yield of 3% at its current share price of RM4.93.
3. An owner-operator structure
According to Top Glove’s latest annual report, the company has a significant shareholder in Tan Sri Dr Lim Wee Chai. He and his family together control 37.65% of Top Glove’s shares as of 27 October 2016.
Tan Sri Dr Lim is the founder of Top Glove and is currently its executive chairman. His spouse, Puan Sri Tong Siew Bee, is an executive director of the company.
As the Lim family are both owners and operators of Top Glove, there seems to be at least some alignment of interests between them and minority shareholders of the company.
That said, alignment of interest can be somewhat of a judgement call and there’s likely no right or wrong answer. But, there’s one thing we can be certain: Top Glove’s minority shareholders have benefited over the last five years by investing in the company – its share price has climbed by 122% since 9 December 2011.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Riverstone Holdings. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.