3 Quick Things Investors Should Learn About Top Glove’s Business

Top Glove (SGX: BVA), which has a primary listing in Malaysia, held its secondary listing in Singapore back in mid-2016.

The firm is the world’s largest rubber glove manufacturer with around 2,000 customers worldwide. The glove maker has 28 factories and exports to over 195 countries. There is much more to learn about Top Glove’s business. For that, we dipped (pun intended) to its annual report for its financial year ended 31 August 2016 (FY2016).

Here are three diagrams from the report that investors may want to see.

1. Historical growth

The first diagram plots the changes in Top Glove’s revenue, profit before tax, and net profit from FY2011 to FY2016.

2017-03-17 Top Glove Revenue
Source: Top Glove’s FY2016 annual report

We can see that Top Glove has grown its revenue and profit since FY2011. From FY2011 to FY2016, the glove maker has grown its revenue by around 7% per annum. Meanwhile, its profit had increased by a factor of more than three.

It’s important to note that it wasn’t a smooth ride for the company. In FY2014, Top Glove’s revenue and profit both fell.

2. The product mix 

The second graph shows the change in product mix for Top Glove over its past six financial years.

2017-03-17 Top Glove Product
Source: Top Glove’s FY2016 annual report

As we can see, there is a notable shift from latex gloves (both powdered and powder-free) to nitrile gloves over the years. To the point, nitrile gloves’ contribution to Top Glove’s overall revenue had grown from 11% in FY2011 to 32% in FY2016. Latex powdered gloves, which used to make up the majority of Top Glove’s business in FY2011, has shrank to 39% of the company’s revenue in FY2016.

3. All around the world

The third graph shows the distribution of Top Glove’s sales by geography.

2017-03-17 Top Glove Geography
Source: Top Glove’s annual report

As we can see, Europe and North America are large markets for the glove maker, contributing 33% and 28%, respectively, to its FY2016 revenue. Closer to home, Asia makes up 18% of Top Glove’s business. Africa is the smallest at 3%.

All told, the three graphs above give us a first look at the inner workings of Top Glove’s business.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.