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A Quick Overview on How Top Glove Makes Money

The Malaysia-based Top Glove (SGX: BVA)(KLSE:7113.KL) is the largest gloves maker in the world with a market share of about 25%. The company, which has a primary listing on Malaysia’s stock market, Bursa Malaysia, was dual-listed here in Singapore in June 2016.

Given the dominance of Top Glove within its industry, investors who are interested should spend time to learn more about the leader in the space.

In this article, we will focus on how Top Glove earns its keep. To do that, we will be diving into its annual report for the financial year ended 31 August 2017 (FY2017). From here, we will focus on two perspectives, namely its product mix and its geographical mix.

Product mix

Source: Top Glove FY2017 Annual Report

From the above, we can see that Top Glove’s products are categorized into five main groups, namely Latex powdered gloves, latex powder-free gloves, nitrile gloves, vinly/TPE/CPE gloves, and surgical gloves.

Over the years, nitrile gloves has grown to become the main product within Top Glove, accounting for 36% in FY2017. Latex gloves, both powdered and powder-free, account for 52% of total sales for the same period. Notably, the percentage of latex revenue is down from the sum of 81% in FY2011. As a whole, latex and nitrile gloves account for 88% of sales in FY2017, which makes up the bulk of Top Glove’s sales.

Geographical mix

Source: Top Glove FY17 Annual Report

It’s worthwhile to note that Top Glove’s revenue is highly diversified. Its gloves appear in all the major regions in the world, both in developed and developing markets.

The largest market is North America with 31% of the revenue share, followed by Europe with 28% and Asia with 20%.

From what I see, the company should benefit from the stability offered by the matured markets in North America and Europe. At the same time, it could tap on the sales growth from the higher growth markets such as Asia, Africa and Middle East.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.