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Growing Global
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Growing Global
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• Established in year 1988
• Manufacturer of rubber examination gloves
• 100% export to US, EU, Japan, Australia, China, India
• World’s largest nitrile glove producer since 2011
• 6 manufacturing facilities located in Selangor, Malaysia
• Installed glove production capacity of 16 bil per annum
• Workforce of 5,100
• Sales exceeding RM1.1 billion per annum (FY2015)
• Listed on Bursa Malaysia since 2008
• Market capitalization of RM7-8 billion
• 10 years sales revenue CAGR of 26%
• 10 years profit CAGR of 32%
• Most profitable glove manufacturer in the world
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Growing Global
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Market Reachand Overseas Operations
Export to over 40 countries
Four overseas offices
• Australia (1996)
• USA (2003)
• China (2012)
• India (2013)
Growing Global
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Market Segments
� Products mainly sold to quality demanding markets such as USA, Japan and Germany
� 93% of sales to healthcare and lab industries where demand remain robust
Asia
Pacific,
14%
USA, 48%
Others,
8%
Europe,
30% Healthcare, 76%
Food, 5%
Industrial, 2%
Lab, 17%
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Growing Global
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Global Recognition
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2013 & 2014 2010, 2011, 2012 & 2013 2013, 2014 & 2015 2010 & 2012
HR Asia Best
Employers to Work for
in Asia
Forbes Asia 200 Best
Under a Billion
The Edge Billion
Ringgit Club – Most
Profitable Company in
Industrial Products
Segment
Asiamoney Best
Managed Company in
Malaysia
Growing Global
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Revenue and Profit
110 160 240 282
443 572
735
921 1,032
1,107 1,145
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Revenue (RM mil)
13 19 37 40
85
146
190 201 234 234 210
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Profit After Tax (RM mil)
CAGR for revenue from FY2005 to FY2015 of 26%
CAGR for PAT from FY2005 to FY2015 of 32%
Net margin improved from 12% in FY2005 to 21% in FY2014 but declined to 18.3% for FY15
Sales and PAT for FY2015 of RM1145 mil and RM210 mil respectively
FY2015 EPS of 27 cents
FY15 lower than FY14 due to NGC high start up cost
Highest profit margin in the industry
Highest net profit in the industry
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4
Growing Global
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Highest output with lowest number of workers
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*unit measurement used is worker per million pieces of gloves produced per month*sector average and listed companies figures from news releases and company’s quarterly and annual reports
Hartalega’s existing facilities are 48% higher in productivity compared to industry average
Compared to top listed glove companies, Hartalega is 17% higher in productivity
Higher productivity is achieved through innovative technologies
Sector average
Average of listed glove companies in Malaysia (ex-Hartalega)
Hartalega’s existing setup
7.5
4.7
3.9
Growing Global
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Intensified competition
10,800
28,000
-
10,000
20,000
30,000
Industryaverage
Hartalegaaverage
Average production line speed (pcs/hr/line)
Fastest Production Rates
� Hartalega’s average production line speed is 60% higher than industry average
� Comparing to fastest production lines in the industry, Hartalega’s most advanced production line is 12% higher in rate of output
� All production technologies are in-house developed and proprietary to Hartalega
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35,000
45,000
-
20,000
40,000
Industry fastest Hartalegafastest
Fastest production line speed (pcs/hr/line)
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Growing Global
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11% 10% 10% 8%
15% 16%
9% 11% 12%15%
12%15%
17% 17%
22%
31%33% 33%
28% 30% 28%24%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Industry average profit before tax Hartalega profit before tax
* Industry average is the average profit margin of top 3 listed glove manufacturers in Malaysia
Most Profitable & Highest Profit Margin
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Growing Global
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Sector leader
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World‘s largest nitrile glove
manufacturer.
Valuable Glove Company in
Malaysia (current market cap of
over RM8 billion)
Highest Productivity in the Industry.
World‘s fatest production line at
45,000 pcs/hr.
Most advanced in-house developed
production technologies.
Most Innovative Glove Company.
Several breakthrough inventions
that changed the landscape of
glove industry.
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1,263 1,629 1,782
3,542
5,285 5,560
2008 2009 2010 2011 2012 2013 2014
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Growing Global
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0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
5.00% 10.00% 15.00% 20.00%
Net Margin
CAGR
KossanTop Grove
Supermax
Hartalega
4-yr CAGR5-yr avg net
margin
Hartalega 18.0 23.3
Kossan 11.7 9.3
Supermax 8.8 13.2
Top Glove 10.9 9.3
Sector leader
Source: Deloitte & Touche, 2014
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Growing Global
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What are our competitors doing?
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� NR:NBR ratio for global glove market is 50:50
� All glove producers want a bigger share of nitrile glove market
� All new capacities are nitrile gloves
Nitrile glove business
� Competitors claim to have 45,000 pcs/hr lines
� Competitor investing in 35,000 pcs/hr lines
� Competitor investing in IT
� All big glove companies already have stripping machines
Production technology
� Competitors seek to differentiate themselves in terms of product offerings
� SilkSkin sericin glove
� Accelerator free glove
Product innovation
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Growing Global
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Our enemies have arrived! Are we ready?
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Growing Global
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OUR STRATEGY
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Growing Global
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Four pillars of growth
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Engaging critical mass
Knowledge management
Competencies development
Succession planning
Capacity expansion (NGC)
Lean manufacturing
Invest in Information Technology
Production technologies
Product innovations
Innovative culture at all levels
Develop own brand market
Emerging markets like China and India as target markets
Vision to build a global multiple medical device company
Innovation
Own Brand
Human Resource
Productivity
Growing Global
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Talent development
Senior
Management
Management
Executives, Supervisors
(critical mass)
Leadership development program by
Skills development and lean manufacturing
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Growing Global
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High paying jobs – extended ESOS program
With NGC’s contribution to earnings growth
ESOS program can be extended to Technician level
Inclusive shares options scheme instills ownership and drives better performance
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3,462,400
2,122,680
1,553,448
1,164,960
659,976
426,984
273,240
- 1,000,000 2,000,000 3,000,000 4,000,000
Director
Senior Manager
Manager
Assistant Manager
Executive
Supervisor
Technician
5 years maximum income (year 2015 to 2020)
Growing Global
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5S & Kaizen positive impact on OEE (Overall Equipment Effectiveness)
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OEE – Overall Equipment Effectiveness
• OEE – Overall Equipment Effectiveness is a total number percentage which is a combination multiple of Availability, Quality &Performance: OEE is a formidable benchmark whereby 85% is considered world class
• Culture of 5S & Kaizen at Hartalega will help to improve further the OEE• 5S Japanese concept & practice of setting up the workplace to be more efficient & organized• Kaizen Japanese concept of continuous improvement from the bottoms up - integral to innovation & long term sustainability of
the company• Hartalega invested substantially in organizing learning trips to Toyota Company in Tokyo to learn & experience these concepts
in practice
Availability% x Performance% x Quality% x Availability% x Per75%76%77%78%79%80%81%82%83%84%85%86%Availability% x Performance% x Quality% x Availability% x Per75%76%77%78%79%80%81%82%83%84%85%86%Availability% x Performance% x Quality% x Availability% x Per75%76%77%78%79%80%81%82%83%84%85%86%
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Growing Global
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Intensified competition
Own Brand Product Potential in China & India
Asia’s per capita consumption of gloves is significantly lower than US and EU
China’s ongoing healthcare reform is expected to drive up glove demand substantially
If China’s per capita glove consumption equaled that of EU, demand would be 135 billion pieces per
annum, almost equivalent to the current combined global consumption
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4.8
5.3
100
166
0 20 40 60 80 100 120 140 160 180
Asia
China
EU
USA
per capita glove usage (pcs)
Growing Global
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Hartalega NGC Status
An Entry Point Project (EPP) under the ETP
RM2.2 billion investment
112 acres site at Sepang
95 acres industrial land, 17 acres lake
High technology and integrated
Conducive work environment
6 high tech manufacturing plants
72 fastest production lines in the world
Designer built offices
Centre of excellence comprising training and R&D centre
Sports and recreation complex
Employees’ accommodation
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Growing Global
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NGC – total 72 production lines; average output per line is 45,000 pcs/hr
45,000 pcs/hr
12,000 pcs/hr
30,000 pcs/hr
45,000 pcs/hr
Bestari Jaya – total 45 production lines; average output per line is 28,000 pcs/hr
Hartalega NGC – Latest Technology
• NGC leverages on latest technology to drive up organisation wide productivity level
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Growing Global
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Quantum leap in productivity – workers per output
33% jump in productivity at NGC compared to Hartalega’s exisitng setup
Sets a new benchmark for the sector – NGC is 45% higher in productivity compared to other listed companies
Further automation and lean manufacturing practices will improve productivity at NGC by another 23%
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*unit measurement used is worker per million pieces of gloves produced per month*sector average and listed companies figures from news releases and company’s quarterly and annual reports
Hartalega NGC
Sector average
Average of listed glove companies in Malaysia (ex-Hartalega)
Hartalega’s existing setup
7.5
4.7
3.9
2.6
Hartalega NGC with further automation and lean manufacturing practices
2.0
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Growing Global
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Intensified competition
Capacity projection
Average capacity growth of 20% for the next 6 years
First production line at NGC is expected to begin operation in January 2015
Subsequent production capacity will come on stream progressively
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11,787 12,522
18,426
24,993 29,739
34,258 35,307
0
10,000
20,000
30,000
40,000
FY14 FY15 FY16 FY17 FY18 FY19 FY20
Projected output (mil pcs)
Growing Global
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MARKET OUTLOOK
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Growing Global
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Intensified competition
Market outlook
World demand for rubber gloves grow at an average of 8% per annum
Malaysia is the largest supplier of rubber gloves for the world – 62% market share
Demand of glove is inelastic
Nitrile is preferred choice for developed markets
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2.3 2.3 2.6 2.8 3.1 3.43.9
4.7 4.4
5.5
6.4 6.7 6.6 6.6
68
8492 94
102110
122 124
140150 148
160171
181
World's Import of Examination Gloves (US$ Bil)
World's Import of Examination Gloves (Bil pcs)
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• Malaysia Rubber Glove Export dominates at over 60% global share
• Export Quantity grew at CAGR average growth rate at 11.2%
• USD sales revenue flat in the last few years due to weak raw material cost
• Expect positive trend to continue due to organic global healthcare growth
• Untapped markets in emerging nations with low per capita consumption of rubber glove
Malaysian Rubber Glove Export Trend (2008-2014)
0
10
20
30
40
50
60
70
80
90
100
2008 2009 2010 2011 2012 2013 2014
5.9 7.3 8.5 9.4 9.7 10.4 10.4
50.4
65.3
74 70.7
81.488.5
95.3
Malaysian Rubber Glove Export Trend
Malaysian glove export (USD$b) Malaysian glove export (bil pcs)
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Growing Global
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Malaysia’s Export of Rubber Gloves - World
• Share of nitrile gloves of Malaysia’s total glove export increased from 46% to just 55% in 4 years
Nitrile, 46%NR,
54%Nitrile, 50%
NR, 50% Nitrile,
51%
NR, 49%
Year 2012 Year 2013 Year 2014 1H Year 2015
Nitrile, 55%
NR, 45%
Growing Global
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Intensified competition
Market outlook
Developed markets had improved growth in import of natural rubber gloves due to latex price collapse
Emerging markets like South America and China registered strong growth in both types of rubber gloves albeit
from a low base. Note that many emerging markets exhibited high double digit nitrile glove growth
Malaysia’s export ratio of natural rubber to nitrile glove has reached 49:51 for 2014 & 45:55 for 1H2015
US latex:nitrile import ratio for year 2014 was 22:78; 1H2015 USA nitrile grew 20%
EU latex:nitrile import ratio for year 2014 was 43:57
Malaysian rubber glove exports (1H2014) 23,567 million pieces & (1H2015) 25,980 million pairs or 10.2% higher
1H2015 Nitrile glove export grew 20% & Latex glove export grew 0%
2012 (mil pairs) 2013 (mil pairs) 2014 (mil pairs)* % change (2013 to 2014)*
Destination Latex Nitrile Latex Nitrile Latex Nitrile Latex Nitrile
USA 3,446 9,649 3,346 10,801 3,158 11,525 (5.6%) 6.7%
EU 5,865 5,352 6,105 7,231 6,003 8,104 (1.67%) 12.07%
Japan 737 1,394 721 1,757 773 1,750 7.21% (0.39%)
South America 3,106 175 3,903 185 4,692 277 20.21% 49.72%
China 542 182 789 293 1,009 339 27.88% 15.69%
Table: Malaysia Export of Rubber Gloves (source: MREPC)
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Growing Global
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Market outlook
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Import ratio of natural rubber to nitrile glove for US and
EU is 22:78 and 43:57 respectively
EU import of nitrile is expected to grow further
Asia’s per capita consumption of glove is substantially
lower than US and EU (about 30 times lower)
Future demand growth will be driven by emerging
markets such as China and India
Hartalega is well positioned to tap into opportunities in
emerging markets with our branding strategy and NGC
All lines at NGC are interchangeable for production of
nitrile or natural rubber glove
Growing Global
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