Table of Contents

CHAPTER 1: INTRODUCTION ............................................................................................. 2

3.2 1.1 Top Glove Corporation Berhad Background and Overview ......................... 2
CHAPTER 2: INDUSTRY AND COMPATITIVE POSITION............................................. 3
3.3 2.1 Poster’s Five Forces ........................................................................................... 3
2.1.1 Threat of New Entrants .......................................................................................... 3
2.1.2 Threat of substitutes ............................................................................................... 3
2.1.3 Bargaining power of buyer .................................................................................... 3
2.1.4 Bargaining power of suppliers ............................................................................... 3
2.1.5 Competitive Rivalry ............................................................................................... 3
3.4 2.2 SWOT Analysis .................................................................................................. 4
2.2.1 Strength .................................................................................................................. 4
2.2.2 Weakness ............................................................................................................... 4
2.2.3 Opportunity ............................................................................................................ 5
2.2.4 Threat ..................................................................................................................... 5
CHAPTER 3: FINANCIAL ANALYSIS ................................................................................. 6
3.5 3.1 Various Financial Analysis................................................................................ 6
3.1.1 ROE........................................................................................................................ 6
3.1.2 ROA ....................................................................................................................... 6
3.1.3 PE ratio................................................................................................................... 7
3.1.3 Liquidity Ratio ....................................................................................................... 7
3.1.4 Activity Ratio ......................................................................................................... 8
3.1.5 Profitability Ratio................................................................................................... 9
3.1.6 Debt Ratio .............................................................................................................. 9
3.1.7 Market Ratio ........................................................................................................ 10
3.6 Cash Flow Statement Answer ............................................................................... 11
3.2.1 How much did the firm generate from its operations? ........................................ 11
3.2.2 How much did the firm invest in plants and equipment? .................................... 11
3.2.3 Did the firm raise additional funds, and if so, how much and from what source?
11
3.2.4 Is the firm able to generate positive cash flows? (Note: This section should be
presented to show your understanding of the financial ratios from the previous
accounting class). ............................................................................................................. 11
CHAPTER 4: DEBT MANAGEMENT ANALYSIS (4 pages) ............................................ 13
4.1 Debt management and liabilities .......................................................................... 13
4.1.1 Current and non-current liability ......................................................................... 13
4.1.2 Gearing Ratio ....................................................................................................... 13
4.1.3 Debt/ Equity (D/E) Ratio ........................................................................................ 14
CHAPTER 5: PROJECTION OF FUTURE PERFORMANCE ........................................... 0
5.2. Proforma Financial Statement (10 years) ................................................................... 0
CHAPTER 6: RECOMMENDATION AND CONCLUSION .............................................. 0
6.1 Recommendation...................................................................................................... 0
6.1.1 Enhance capacity to fulfil demand ............................................................................ 0
 6.1.2. Broaden product portfolio to adjacent and other non-glove products ..................... 0
6.1.3. Spreads Top Glove presence in strategic markets ................................................... 1
6.1.4. Effective financial management .............................................................................. 1
6.2 Conclusion ................................................................................................................ 1
REFERENCES ......................................................................................................................... 2

1
 CHAPTER 1:INTRODUCTION

3.2 1.1 Top Glove Corporation Berhad Background and Overview

Top Glove Corporation Berhad (Top Glove), biggest manufacturer of rubber gloves, as well as
face masks, dental dams, and other products in Malaysia. Top Glove Corporation Berhad,
headquartered in Malaysia, founded in 1991 by Tan Sri Dr Lim Wee Chai and presently is the
world's largest manufacturer of gloves with the domination of 26% of global market.

What began as a small local business with only single production line with 100 manpower, Top
Gloves currently possess and running 50 manufacturing plants covering 812 production lines
worldwide mainly in Malaysia, Thailand, China, and Vietnam with 22,000 employees. On top
of that, their marketing offices were scattered across the globe including United States,
Vietnam and Brazil.

In August 2001, Top Glove was listed on the Second Board of Kuala Lumpur Stock Exchange
(now Bursa Malaysia) before being promoted to Main Board on May 16, 2002. Following that,
It is also secured 9th place on Singapore Exchange's Main Board on June 28, 2016.

Top Glove has acquired Aspion Sdn Bhd, the leading surgical maker in April 2018. This largest
merges and acquisitions recorded to date has positioned Top Glove as the world's largest
medical glove manufacturer in the world.

Upon the company announcement to produce face masks in April 2020, Top Glove’s profit has
tremendously spikes to 400% by mid-December 2020, with 20-fold increase in quarterly net
profit to RM 2.4 billion (US$590 million), as a result of rising demand of the gear to contain
Covid-19 pandemic from spreading. Top Glove holds RM7.4 billion shareholder fund and its
annual turnover is at RM16.4 billion as of 31st August 2021.

Top Glove senior management team is shown in Figure 1 below.

Figure 1: Senior Management of Top Glove Corporation Berhad

2
 CHAPTER 2: INDUSTRY AND COMPATITIVE POSITION

3.3 2.1 Poster’s Five Forces

Being the anchor conglomerate in the industry, Top Glove still facing competition from other
rivalry which among others, consist of Torrington Brush Works, AXG Industries, Barber
Healthcare and Shieldtex.

2.1.1 Threat of New Entrants

With the new Standard Operating Procedures (SOP) enforced, facemasks, rubber gloves and
some other Top Glove’s product has become a necessity. It also welcomed new entrants to the
industries that mostly trying to imitate Top Gloves products. But these entrants will not be able
to compete with Top Glove current position as they could not fill in the barriers such as copy
rights and patents, not to mentioned the capital requirement that is very high as they need to
invest more on the technology and equipment that Top Glove has established long ago. Other
than that, new entrants will have difficulties to access suppliers and distributors because the
order quantity would be at the lowest.

2.1.2 Threat of substitutes

Top Glove products were distinguished in the market for its quality and standard and the threat
of its substitutes is considered very low. For example for face masks, the business grown
incredibly fast as a consequences of Covid-19 and some substitutes can be found in the market
to cater people’s need such as cloth face masks and other brands facial masks. However, these
substitute can’t really beat Top Glove in term of quality and price, since Top Glove products
are already worth the price. However, it could not be denied that huge numbers of cheap
facemasks are in the market and have be a substitutes for their lowest cost offering.

2.1.3 Bargaining power of buyer

Most of Top Glove’s product eventually become an essential goods during pandemic. Thus,
piles of other brands can be chosen in the market. This has increase buyer’s bargaining power
since they have other options that offers a good bargain.

2.1.4 Bargaining power of suppliers

Top Glove main material is natural rubber, and there are limited suppliers for natural rubber
across the world. This cause a high bargaining power of suppliers as they could easily sell their
raw material to other buyers, especially in the time of crisis like Covid 19 which the production
of rubber gloves for medical purposes are high in demand.

2.1.5 Competitive Rivalry

Even though Top Glove holds a solid ground in global market, it still face threats from rivalry
in the same industries. With the open opportunity to seize in the industry due to the pandemic,
local competitors are assertively filling the gap of demand by adding new capacity.
Neighbouring countries are also competing in the industry as they obtained cheaper cost in
labour and raw material.

3
3.4 2.2 SWOT Analysis

2.2.1 Strength

2.2.1.1 Global industry lead

Top Glove has conquered 26% of the industrial market globally and is still going strong. Top
Glove does not have to worry much on competition as they already have acquisition and
mergers in its future plan to strengthen their position. The corporation benefits from economies
of scale by producing in huge quantities on 812 manufacturing lines.

Furthermore, Top Glove was recognised and awarded The World's Best Brands in 2008 by The
Asia Pacific Brands Foundation in the area of The Best Brand in Manufacturing Rubber Glove.
Furthermore, Top Glove got the Frost & Sullivan Development Excellent Award in 2009 for
its outstanding growth.

2.2.1.2 Variety of product offers

The company manufactures more than 13 different kind of gloves, ranging from medical to
industrial use, and from rubber to synthetic gloves. Top Glove has emerged to other hygienic
product range as PPE, face masks and condoms to add on the present list of their products as
well.

2.2.1.3 Big scale in economic

Top Glove manufactures an assortment of gloves on a large scale. As a result, it benefits from
economy scale. "Our ability to develop our sales has helped offer us the requisite volume to
reach economies of scale, thereby decreasing our expenses and permitting us to sell our
products competitively," Tan Sri Lim Wee Chai remarked.

2.2.2 Weakness

2.2.2.1 Employee’s wellbeing is still in discussion

Top Glove product’s nature involving lots of chemical exposures which would risk the health
of Top Glove’s employee. The concern of employee’s wellbeing and health has been the main
issues for Top Glove and it should be addressed accordingly as it would affect Top Glove’s
market shares if it’s become a controversy.

2.2.2.2 Exposed to currency changes

Production costs are denominated in Malaysian Ringgit, but sales transactions are denominated
in US dollars. This cause the inaccurate of the profit report. The rise in value of the Malaysian
ringgit versus the US dollar has resulted in a drop in Top Glove's profit since the cost of
manufacturing has increased whilst revenue (sales price) has decreased.

2.2.2.3 A straight line production

In comparison to the U-shaped work cell design, Top Glove employs a far more complex
straight line work cell arrangement to distribute work fairly among its employees. Employee
performance levels may decline as a result of poorly dispersed labour due to inequitable
burden at a fixed salary. Workers that work extra hours will be dissatisfied and will perform
badly during the workday. Work engagement are crucial in order to increase production
output. A large firm, such as Top Glove Corporation, unquestionably employs a large number

4
of people. With 11000 employees working at a plant, managing human relations must be
tough due to a restricted number of supervisors.

2.2.3 Opportunity

2.2.3.1 Minimal operation cost upon natural gas’s subsidies

Malaysia's rubber glove business has had ongoing government assistance, since the
industry are regarded as major economic bases and are one of Malaysia's 12 National Key
Economic Areas (NKEAs).

Subsidized gas prices are one example of such assistance provided to stimulate upstream
rubber activities. Natural gas accounts for 10 to 15% of the overall overhead expenses of
rubber factories. Furthermore, the Rubber Industry Smallholders Development Authority, a
federal government organisation in charge of the smallholder sector, spends extensively in
replanting projects.

2.2.3.2 Strong support from government

Since Top Glove has become the main contributor to Malaysia rubber industry, the government
and its agencies has given a lot of support in Top Glove continuous performance. For example,
other that the natural gas subsidies, Rubber Industry Smallholders Development Authority
(RISDA) invests extensively on rubber plant and regeneration programmes in the industry.
Malaysia Rubber Board (MRB) has also measures to develop sustainable public-private R&D
collaboration in ongoing technical upgrading in the form of enhanced sinking lines and great
quality management systems. Malaysia has also reduced import taxes on all kinds of natural
rubber – raw and processed – in order to promote supply chain.

2.2.4 Threat
2.2.4.1 Raw material fluctuate pricing
The main material used to produce Top Glove product is rubber and it is well known that the
commodity has its fluctuate pricing in market. Top Glove has to cater to this problem to retain
a good profit margin by getting alternatives for its raw material supplies and not depending to
only one vendor. The price risk of raw material also will give impact to productions ability if
the commodity price and offering is restricted.

2.2.4.2 Low price offer from rivalry

With the rise of Personal Protection Equipment (PPE) due to Covid19 crisis, it is no secret that
other rivalry of Top Gloves is also taking advantage of the current situation to boost their
profits. The product price has become a war among the market player to ensure that they could
win the customer’s buying power since the need of the product increased tremendously. Most
of the rivalry is trying to offer better price to the market to beat Top Glove.

5
 CHAPTER 3:FINANCIAL ANALYSIS

3.5 3.1 Various Financial Analysis

3.1.1 ROE
Return on equity is a metric that calculates the return that a company earns on its total equity
value. Return on equity for Top Gloves is as per Table1 below. ROE for Top Glove is
constantly on a good track as acceptable ROE is between 0.14 to 0.20. 2019 has shown a slight
decreased in ROE, mainly because of the hit of Covid-19, but Top Glove picked up in 2020
and the ROE spikes as their products has become a necessity in combating the pandemic.

RATIO YEAR
2017 2018 2019 2020 2021
Return on equity (ROE)
Return on equity (ROE) = Net
income / Shareholder's equity 0.16 0.18 0.14 0.29 1.08

Net income 328,436 443,206 367,546 1,788,830 7,823,992

Shareholder's equity 2,012,481 2,398,396 2,554,141 6,190,883 7,220,160

Table 1: Return on Equity for To Glove Corporation Berhad

3.1.2 ROA
Return on assets determine the profit the company generate against their assets. A ratio that
calculates the amount of net profit generated by a company per RM of assets owned. Top Glove
has a good ROA in 2017 before it decreased in 2018 and 2019. But the ration picked up in 2020
and 2021 with the rise of the company net income and total assets.

RATIO YEAR
2017 2018 2019 2020 2021
Return on assets (ROA)
Return on Asset (ROA) = Net
income / Total Assets 0.11 0.08 0.06 0.21 0.80
Net income
328,436 443,206 367,546 1,788,830 7,823,992
Total assets
2,936,253 5,297,350 5,688,205 8,705,964 9,782,424

Table 2 : Return on Equity for Top Glove Corporation Berhad

6
3.1.3 PE ratio
Price-to-earning (PE) ratio or also known as price multiple or earning multiple is meant to
determine the value of share against the earning. In this case, P/E Ratio for Top Gloves dropped
in 2021 after gradually increased from 2017 to 2020.

RATIO YEAR
2017 2018 2019 2020 2021
PE ratio
Price-to-earnings ratio = Market
value per share / Earnings per 21.54 32.18 33.01 39.79 4.09
share

Market value per share 0.94 1.86 1.58 8.76 4.00

Earnings per share 4.36 5.78 4.79 22.02 97.72

Table 3 : Price-to-earning (PE) ratio for Top Glove Corporation Berhad

3.1.3 Liquidity Ratio

A positive distribution of liquidity ratio can be seen in Top Glove Current Ratio, Cash Ratio
and Quick Ratio. This indicates that Top Glove is in a healthy financial situation, in which its
Current Assets are actually balance with the liabilities they holds. This shows that they are able
to liquidate their assets at any time should they need to pay off their short term debt.

RATIO YEAR
2017 2018 2019 2020 2021
Liquidity ratio
Current ratio = Current assets /
Current liabilities 1.57 1.11 0.97 2.01 1.98
Cash ratio = Cash and Cash
equivalents / Current Liabilities 0.30 0.11 0.10 0.57 0.40
Quick ratio = Current Assets -
Inventory / Current liabilities 1.18 0.76 0.57 1.76 1.46

Current assets 1,251,356 1,607,428 1,538,691 4,287,653 4,345,757

Cash and Cash equivalents 240,068 165,197 165,782 1,208,559 878,446

Inventory 315,775 505,862 629,896 530,729 1,144,705

Current liabilities 795,738 1,451,571 1,591,791 2,132,524 2,198,487

Table 4 : Liquidity ratio for Top Glove Corporation Berhad

7
3.1.4 Activity Ratio
Looking at the activity ratio for Top Gloves, it measures on how it has effectively leverage
their assets to generate more revenue and cash. Top Gloves maintained their activity ratio on a
positive rate and impressively make a comfortable stand in 2021.

RATIO YEAR
2017 2018 2019 2020 2021
Activity ratio

Accounts Receivable Turnover 30.23

Ratio = Sales / Accounts 8.67 6.83 8.53 9.39
Receivable
Inventory Turnover = Cost of 4.59
Goods Sold / Inventory 8.88 6.68 6.22 8.27

Fixed Assets Turnover Ratio = 3.01

Sales / Fixed Assets 2.02 1.14 1.16 1.64

Sales 3,409,176 4,220,742 4,801,139 7,237,427 16,361,443

Accounts Receivable 419,349 637,309 592,217 798,805 566,299

Inventory 315,775 3,689,922 4,149,514 4,418,311 5,436,667

Cost of goods sold 2,803,857 3,378,374 3,917,144 4,387,010 5,259,336

Fixed Assets 1,684,897 3,689,922 4,149,514 4,418,311 5,436,667

Table 5 : Activity ratio for Top Glove Corporation Berhad

8
3.1.5 Profitability Ratio
Top Glove profits has significantly increased in 2020 as we could see in Table 6 below. The
table shows that the ratio has decrease in 2019 before the number multiplied in 2020 with
drastic growth in 2021.

RATIO YEAR
2017 2018 2019 2020 2021
Profitability ratio
Gross profit margin = Gross 17.8% 20.0% 18.4% 39.4% 67.9%
profit / Sales
Net profit margin = Net profit / 9.6% 10.5% 7.7% 24.7% 47.8%
Sales

Gross profit 605,319 842,368 883,995 2,850,417 11,102,107

Sales 3,409,176 4,220,742 4,801,139 7,237,427 16,361,443

Net profit 328,436 443,206 367,546 1,788,830 7,823,992

Table 6 : Profitability ratio for Top Glove Corporation Berhad

3.1.6 Debt Ratio

Top Glove has faced a risky point in 2017 through 2019 in term of debt ratio. The debt ratio
in 2018 and 2019 indicates that Top Glove’s assets may be financed through debt. But a good
indicator of the debt ratio shows in 2021 with 0.35, which shows that their assets would be
financed by the company’s equity.

RATIO YEAR
2017 2018 2019 2020 2021
Debt ratio
Debt to equity = Total debt /
Total equity 0.46 1.21 1.23 0.41 0.35
Debt to assets = Total debt /
Total assets 0.31 0.55 0.55 0.29 0.26

Total debt 923,772 2,898,954 3,134,064 2,515,081 2,562,264

Total equity 2,012,481 2,398,396 2,554,141 6,190,883 7,220,160

Total assets 2,936,253 5,297,350 5,688,205 8,705,964 9,782,424

Table 7 : Debt Ratio for Top Glove Corporation Berhad

9
3.1.7 Market Ratio

Earnings per share (EPS) is a critical variable used to evaluate the public shareholder's share
of a company's profit. EPS measures up the profit allotment of each common share to the total
profit of the company. The term "ordinary shares" is being used to refer to ordinary shares.
EPS is important to defines the market ratio of the company whether it is worth to invest or
not base on the market value indicator. Based on Table 8 below, Top Glove market ratio is at
97.72 in 2021, which explained that their shares are at peak in profit sharing per share
compared to the previous four years.

RATIO YEAR
2017 2018 2019 2020 2021
Market ratio
Earnings Per Share (sen) = Net
profit / Total number of 4.36 5.78 4.79 22.02 97.72
outstanding shares

Net Profit 328,436 443,206 367,546 1,788,830 7,823,992

Number of Ordinary Shares 7,524,806 7,668,950 7,679,441 8,124,491 8,006,950

Table 8 : Market Ratio for Top Glove Corporation Berhad

10
3.6 Cash Flow Statement Answer

3.2.1 Total generations from Operations.

As per Table 9 shown below, Top Glove cash flows generated from its operation are increased
over time except for 2018 which it decreased by 5.45% before it grew more than 4 times every
year towards 2021.

2016 2017 2018 2019 2020 2021

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Cash flows generated 541,352 454,743 429,920 665,578 3,716,982 9,671,202
from operations
Table 9 : Total cash flow from operation for Top Glove Corporation Berhad

3.2.2 Investment in PPE

Table 10 below explains on Top Glove’s investment for their Property, Plant and Equipment
(PPE) over the span of 5 years. There is no significant spending on PPE over the years but the
investment increased gradually around 17%-30% for each year. Top Glove seems very careful
in investing on PPE, most probably to maintain its positive ratio.

2016 2017 2018 2019 2020 2021

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Purchase of (231,296) (479,252) (458,977) (568,143) (806,400) (1,334,018)
property, plant
and equipment
Table 10 : Property, plant and equipment for Top Glove Corporation Berhad

3.2.3 Additional Funds

Top Glove business nature are solely on latex products manufacturing. Their business is funded
by market shares, other interest income. It could be found in the Cash Flow Statement
(Appendix 2) that the funding is divided into investing and financing activities other that their
operating activities.

3.2.4 Cash flows position

According to cash flow statement for Top Glove, their cash flows are not always positive. As
shown in Table 11, the cash flows only increased in 2017 and 2020. This may cause by the
investment activities that the company has been doing. However, the increases were more than
sufficient to counter on the expenditure or lack of cashes in other years. On top of that, the total
cash and cash equivalents through the years shows positive figures.

11
 2016 2017 2018 2019 2020 2021
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Net (914) 71,320 (74,077) (1,837) 1,043,959 (323,277)
(decrease)/increase
in cash and cash
equivalents
Effect of changes in 16,277 6,624 (5,718) 2,828 1,273 (6,472)
foreign exchange rate
Cash and cash 223,156 145,212 238,519 158,724 159,715 1,204,947
equivalents at 1
September
Cash and cash 238,519 223,156 158,724 159,715 1,204,947 875,198
equivalents at 31
August
Table 11 : Cash situation for Top Gloves Corporation Berhad

12
 CHAPTER 4: DEBT MANAGEMENT ANALYSIS (4 pages)

4.1 Debt management and liabilities

Top Glove have strategized their credit and capital management mainly to keep a distinctive
credit rate and a good ratio throughout their business operation and maximise shareholder
value.

4.1.1 Current and non-current liability

Current liabilities are debts or commitments owed to creditors required to pay within a year.
Noncurrent liabilities, also known as long-term liabilities, are commitments with maturities
greater than a year and are documented on the balance sheet. Noncurrent liabilities are being
used to evaluate a company's leverage in a wide range of debt-to-asset and debt-to-capital
ratios. Borrowing costs are retained until assets are assigned new obligations for their original
meant use or being sold out. Borrowing under current liability suggests that the firm obtains a
short-term loan in attempt to continue productions.

Table 12 shows current and non-current liability for Top Glove for the period of five years.
Top Glove maintain and adjust their capital structures in response to economic fluctuations and
the demands of significant expenses. Top Glove may tweak dividend pay-outs to shareholders,
return profits to investors, or new shares issuance to preserve or adapt the financial
performance. However, there is no changes in the company policy, processes or objectives for
the fiscal year ended August 31, 2021 and 2020.

2017 2018 2019 2020 2021

RM'000 RM'000 RM'000 RM'000 RM'000
Current liabilities 795,738 1,451,571 1,591,791 2,132,524 2,198,487
Non- current liabilities 128,034 1,447,383 1,542,273 382,557 363,777
Total Liabilities 923,772 2,898,954 3,134,064 2,515,081 2,562,264
Table 12 : Current and non-current liability for Top Glove Corporation Berhad

4.1.2 Gearing Ratio

Top Glove uses gearing ratio as shown in Table 13, to monitor their debt management , in
which the net debt over total capital plus net debt. Trade and other payables as well as loans
payables were gathered under net debt, while capital consists of equity attributable to the
parent's owners minus the market valuation modification reserve and the restricted statutory
reserve money

Gearing ratio is at peak in 2018 and 2019 which is at a very risky position especially during
economic downturns or higher interest rate, as it use loan mostly to cover their operational
costs. But the ratio has shown huge reductions in year 2020 and 2021, which indicates that Top
Glove are not relying on loan, but their own funds and shareholder’s equity to keep their

13
operation running. This low gearing ratio also determine that Top Glove has operated in
cyclical industry that responded to Covid19 impact by being more careful in their spending.

2016 2017 2018 2019 2020 2021

Gearing Ratio 23.16% 23.66% 52.39% 52.66% 17.43% 14.78%
Table 13 : Gearing Ratio for Top Glove Corporation Berhad

4.1.3 Debt/ Equity (D/E) Ratio

D/E ratio normally interchangeably used with Gearing Ratio. The only difference is that D/E
ratio calculate the debt or liabilities of the company against their equity. It is very useful to
know whether the company manages their debt well and also to see whether the company
depends heavily on loans or shares to keep their operations going.

Table 14 is the D/E ratio for Top Glove that expressed the pattern of the company dependability
of equity or loan financing. Similar to Gearing ratio, Top Glove D/E ratio is at peak in 2018
and 2019 but they managed to keep it at lowest point below 0.5 in 2020 and 2021. Generally,
Top Glove moves from depending on loan to depending on shareholder’s equity to finance
their operations.

Financial Ratios 2017 2018 2019 2020 2021

Debt to equity = Total debt /
Total equity 0.46 1.21 1.23 0.41 0.35

Table 14 : D/E Ratio for Top Glove Corporation Berhad

14
 CHAPTER 5:PROJECTION OF FUTURE PERFORMANCE

5.1 Altman Z Score

Top Glove has Atlman Z score of 6.52 which is more than 3, so it is in a safe area and far away
from being bankrupt. The factor of this score is as per Table 15 below. Top Glove has a solid
position in the industry that would strengthen it financial and revenue over the year. The latest
Z score in 2021 has proven Top Glove is in a safe and comfortable position.

YEAR 2021
Division Elements Formula
Answer
Working Capital
(Current Assets –Current Liabilities) /
A (Measure the 0.219502855
Total Assets
liquidity of the organisation)

Retained Earning
(measures Retained Earnings /
B 0.546118222
accumulated profits Total Assets
in comparison to assets)

Calculate profit generated Earnings BeforeInterest & Taxes

C 1.025698027
from assets of the organisation (EBIT) / Total Assets

Compares the
Share Capital / Total
D company’s value 0.71876044
Liabilities
versus its liabilities

Efficiency ratio
(Calculate
E the organisation’s assets Sales / Total Assets 1.67253464
production in
sales).

Table 15 : Altman Z factor for Top Glove Corporation Berhad

5.2. Proforma Financial Statement (10 years)

Top Glove Corporation Berhad’s future is predicted to be flourished and stable for the next 10
years, given that the situation remain the same. In another words, the company shall
continuously makes profit should Covid-19 will still be the world’s major issues.

The Proforma Financial Statement for Top Glove is as shown in Table 17, which the
assumption is made in Table 16. We assumed that the growth for Top Glove revenue will be
consistent at 46.48% base on the average percentage withdrew on it first 5 years of financial
statement.

Graph 1 showed the pattern of revenue growth for Top Glove in the next 10 years and Graph
2 is the profit before tax for Top Glove in the next 10 years. It can be seen that the pattern keep
increasing over time and shows a good future for Top Glove. But again, these prediction is
mainly on calculation basis and does not taking into account other external factors that may
affected the future revenues.
We take the average of the growth for the past 5 years revenue as a benchmark for the future
prediction on Top Glove financial situation as projected in table 16. The impact of Covid19
gave a big opportunity for Top Glove to continuously perform and maintain its position in the
market.

However, this projection may have a small error on calculation as it is only a prediction base
on the past 5 years Top Glove’s financial situation and it may not be 100% accurate.

The currency exchange has not taken into account on this calculation as it may be fluctuate
according to its present value of the year. Other factors should be considered before making
assumption to this prediction accurately.

Table 17 shows the figures we get from the percentage assumed that would be the final
prediction numbers for Top Glove.

Revenue
800,000,000

700,000,000

600,000,000

500,000,000

400,000,000

300,000,000

200,000,000

100,000,000

0
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Graph 1: Projection Revenue of Top Glove Corporation for the next 10 years

1
 Profit before tax
700,000,000

600,000,000

500,000,000

400,000,000

300,000,000

200,000,000

100,000,000

0
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Graph 2 : Profit before tax projection for the next 10 years

2
Table 16 : Assumptions for 10 years projections for Top Gloves

Table 16 : 10 Years Balance Sheet Projections for Top Glove

 CHAPTER 6: RECOMMENDATION AND CONCLUSION

6.1 Recommendation

Top Glove is well known for its prestigious position in latex/ rubber manufacturing industry
across the globe. It has stands tall in the industry as the main producer for latex related product
especially in medical and health sector. As every other company in the whole world, Top Glove
has been slapped with the economy downturns due to Covid19 pandemic which spreads in
2019. However, Top Glove get back on their feet and getting stronger by 2020, mainly because
their product was sought after as a preventive gears to combat the virus from spreading.
Although Top Glove position in the industry is anchored to the best position, there are a few
rooms of improvement that they may want to consider to retain their place and grow their
revenue in any economic situations.

6.1.1 Enhance capacity to fulfil demand

As mentioned, Top Glove products has become a necessity during this pandemic especially for
masks, rubber gloves and other medical instruments. The demand in these items increased over
the time and Top Glove has to find a way to meet the request all over the world. The only way
to do this is by increasing the production capacity by taking some consideration. Top Glove
could build a new plant in an identified country anywhere in the world that met the facilities
requirements. For example, Indonesia and Thailand may be the best options as it has a similar
tropical weather as Malaysia that suitable for rubber trees plantation, which is the main material
for Top Glove’s production. On top of that, the low labour cost could be one of the pulling
factor for Top Glove to consider. The existing facilities may have produced more than trillions
tonnes of goods to cater the market demand. Another options to consider is by adopting
acquisition strategy. Top Glove has more than enough monetary resources to acquire
companies in the same industry. Not only it will minimize the costs compared to building a
new plant, it will also elevates Top Glove’s ability to reach clients and production strength.
Not to mentioned, it also giving advantage to Top Glove in term of operation through synergy
strategy as they could retain the expertise and machinery. Top Glove should look into the need
to enhance or upgrade the existing facilities with latest technology in order to optimize
production capacity as a third option in enhancing their production capacity. This option would
require lesser costs but it may have some conflicts in term of manpower over supplied if most
of the job is replaced with robots or artificial intelligence.

6.1.2. Broaden product portfolio to adjacent and other non-glove products

Covid19 may be a traumatic experience for businesses all over the world. Top Glove have to
take this as a lesson for not depending solely on their existing products. Top Glove could
leverage the existing facilities and broaden their product portfolio to suit the current market
needs. By doing continuous assessment in market dynamic changes and customer demands
shifts after Covid19 pandemic, Top Glove may look into developing a premium gloves
products as well as other hygiene related material such as masks and sanitizer that highly
required by customers.
6.1.3. Spreads Top Glove presence in strategic markets
To anchor Top Glove position as No 1 rubber gloves manufacturer, there are key regions that
Top Glove need to explore in spreading their wings, such as China, India, Brazil and other part
in Latin America that offers large emerging market due to immensely underserved and
extremely low penetration of gloves usage in medical and non- medical sectors.

6.1.4. Effective financial management

Top Glove should maintain their current financial management to retain a high revenue in
future. However, Top Glove still need to carefully manage their ratios especially for Gearing
and D/E Ratio as it may affect the ability for Top Glove to secure loans and keep the
shareholders interest in investing to the company. The history of inconsistency may keep Top
Glove under the weather in keeping their financial stability.

6.2 Conclusion

Overall, Top Glove has already conquered the rubber gloves industry by holding the largest
market share by 25%. After a turmoil situation in 2018 and 2019, when Covid19 first strikes,
Top Gloves has made a comeback with enormous revenue within the span of 2 years (2020-
2021). Top Gloves struck it luck during pandemic when their product has made compulsory in
many countries in attempt to contain the spread of Covid19 virus. This moved has made Top
Glove’s product a necessity not only in medical sector, but also in people’s life to adapt to the
new normal.

Top Glove is expected to grow its revenue over the coming years should the new normal is still
in place and it is obvious that Top Glove will not face any financial issues at least for the next
10 years, as projected. However, this may change depending on the economic stability and the
uncertain occasions that may affect the industry.

Top Glove need to focus on retaining their position in the industry and also to avoid any
scandals and controversy that may affect the trust of their shareholders. Top Glove need to
keep in mind that the competition for the products that they produce may arise post Covid19
and this would change the investors’ perceptions from solely profit to other morality and human
rights options.

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 REFERENCES

M. E. Porter, Competitive Strategy(New York: Free Press, 1980)

O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975)
Bloomberg Markets. (2020). The Pandemic is a Bonanza for Malaysia’s Medical Glove
Industry. Retrieved August 5, 2021, from
https://www.bloomberg.com/news/articles/2020-04-21/the-pandemic-is-a-bonanza-for-
malaysia-s-medical-glove-industry
http://steveboese.squarespace.com/journal/2014/6/27/top-hr-data-play-kill-the-fte.html
Fred R. David & Forest R. David (2017). Strategic Management: A Competitive Advantage
Approach, Concepts and Cases (16th ed.). Pearson.
Wikipedia. (2021). Top Glove. Retrieved from https://en.wikipedia.org/wiki/Top_Glove
https://embapro.com/frontpage/swotcoanalysis/20296-top-glove-corp