Swot Top Glove
It already offers a wide range of products – from latex to synthetic gloves and from examination to industrial usage. Top Glove has 13 key products for both hospital and industrial use. • 25-40% annual expansion to drive earnings. Earnings will be fuelled by its capacity expansion of 25-40% p. a. in FY07-09. It plans a staggered expansion that will keep pace with market demand. Top Glove has a 3-pronged growth strategy – organic growth, growth via M&As and upstream diversification.
Established in 1991, the group was listed on Bursa Malaysia’s second board a decade later and, within 14 months of listing, graduated to the main board in May 02. It has also diversified overseas and set up four factories in Thailand and two in China, in addition to the 12 facilities it has in Malaysia. Figure 1: Corporate structure Top Glove Medical (Thailand) Great Glove (Thailand) TG Medical (USA) Inc Great Glove Sdn Bhd TOP GLOVE CORP Top Glove Sdn Bhd TG Medical Sdn Bhd Top Glove Engineering Top Glove International – M’sia Top Glove Technology – M’sia Top Glove (Zhangjiagang) Co.
Swot Top Glove Essay Example
Ltd Great Glove (Xinghua) Co. Ltd Top Glove Technology (Thailand) Co. Ltd TG Medical (Zhangjiagang) Incorporated B Tech industry Co Ltd: Thailand Source: Company A one-stop solution. Top Glove aims to become a one-stop shop for gloves. It already offers a wide range of products – from latex to synthetic gloves and from examination to industrial usage. The company has 13 key products (Figure 2) for the medical, industrial and food & services industries. 80% of their output is in the form of natural rubber gloves and the remaining 20% are synthetic gloves.
Synthetic gloves encompass vinyl, nitrile and polyethylene apron (P/E) gloves. Figure 2: Product range (i) Latex Latex examination powdered gloves Latex examination powder-free gloves Long length 12″ high risk gloves Coloured (blue/green) gloves Flavoured (mint) gloves Latex examination polymer-powder-free gloves Surgical gloves Household gloves Industrial gloves Cleanroom gloves Source: Company Non-latex Nitrile examination gloves Vinyl examination gloves PE gloves Figure 3: Product range (ii) Source: Company [ 2 ] Worldwide presence. Almost 100% of its products cater for the export market.
Thanks to its massive size and wide product range, the group exports to more than 750 customers in about 175 countries (Figure 4). Given the original equipment manufacturer (OEM) nature of its business, Top Glove manufactures for a wide range of customers. It is not dependent on any single customer as no customer contributes more than 5% of group sales. Figure 4: Export markets Rest of the w orld, 16% Australasia, 8% USA, 30% Latin America, 10% Middle East, 6% Europe, 30% Source: Company Huge production capacity. Top Glove has a total of 310 production lines which are able to manufacture 27. 0bn pieces of gloves a year (Figure 5).
Production capacity Countries Malaysia Thailand China Total Source: Company No. of factories 12 2 2 16 No. of glove lines 238 36 36 310 Capacity (bn pieces p. a. ) 20. 48 3. 38 3. 14 27. 0 Moving upstream. Due to its vast usage of latex, Top Glove expanded upstream through the acquisition of B Tech Industry, a manufacturer of concentrated latex in Thailand for RM26. 8m in May 06. B Tech has a plant in Haadyai which houses 29 latex centrifuge machines and has the capacity to supply up to 40,000 metric tonnes of centrifuged latex annually or about 30-40% of the group’s latex requirement of about 100,000 tonnes.
We are positive about its upstream expansion as it will give the group better control over the supply, timing and quality of part of its latex consumption. We understand that the expansion will lead to latex cost savings of up to 3%. While this does not appear material, we note that latex makes up 54% of Top Glove’s cost of production, followed by chemical products, overheads and other expenses and labour costs (Figure 6). In terms of quality, B Tech’s plant was awarded the ISO 9001:2000 certification in Jun 05.
It is also recognised by Thailand’s Environment Institute and Pollution Control Department since Jan 05. Its factory is considered a model factory for wastewater treatment in Haadyai. [ 3 ] Figure 6: Cost structure Ov erhead & Others, 10% Packaging, 7% Fuel, 9% Latex , 54% Chemical, 11% Labour, 9% Source: Company Outlook Recession-proof product. Glove is a commodity product and a necessity in the healthcare and food & services industries. This ensures continued demand even during recessions. Glove consumption now stands at about 120bn pieces p. a.
Industry players estimate that global demand for gloves is increasing at a rate of 1012% a year, driven by population growth, greater awareness of hygiene and emergence of diseases and health treats like SARS, bird flu and anthrax. Industry consolidation. On the local front, stringent quality requirements and rising latex costs over the years have led to the exit or takeover of many smaller manufacturers which are unable to comply with quality standards and do not enjoy economies of scale. We believe that this backdrop will create a vacuum for the bigger manufacturers like Top Glove to fill.
Outsourcing trend. Big US multinationals (MNCs) like Kimberly-Clark and Ansell are not expanding their glove production capacity but instead are outsourcing their production. Being an OEM manufacturer, Top Glove which is already a supplier to the MNCs will clearly benefit. Expansion programme Top Glove is embarking on various expansion programmes, which fall into three categories. Organic growth Putting in more lines. The group targets to put in an additional 52 lines (4. 87bn pieces p. a. ) in two of its factories in Malaysia and another 40 lines (3. 98bn pieces p. a. ) in its plant in China.
Both expansions are targeted to be completed by 1H08 and will push the group’s total capacity to 33. 8bn pieces a year (Figure 7). This will place Top Glove in a position to tap the strong demand for gloves and MNCs’ outsourcing. Targets 35% global market share by 2010. Based on the estimated global market of 123bn gloves and Top Glove’s capacity of 32. 8bn pieces by end-07, the company will be able to supply up to 25% of global glove requirements. It targets to increase its market share to 35% by 2010. To this end, it plans to set up about two factories per annum in stages after 2007.