Top Glove’s Commendable Track Record Of Growth
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.
One of things that I like to do when analysing a company is to study its track record. The past is no guarantee of the future. But historical information is the most reliable thing that we can use as our basis to forecast what lies ahead.
And this brings me to the main purpose of this article, which is to have a quick overview of Top Glove’s historical business growth.
Six years of growth
The table below is a snapshot of Top Glove’s important financial metrics from FY2012 (financial year ended 31 August 2012) to FY2017:
Source: Top Glove annual report
Here a few points worth highlighting:
1. Firstly, the company’s revenue has grown from RM 2.3 billion in FY2012 to RM 3.4 billion in FY2017. This translates to a CAGR (compound annual growth rate) of 8.1%.
2. Secondly, the CAGR for profit attributable to owners from FY2012 to FY2017 is 10.1%. The financial number has increased from RM 202.7 million to RM 328.6 million.
3. Thirdly, Top Glove has been keeping a strong balance sheet for the period under observation, given the positive net cash positions it has.
4. Fourthly, the gloves maker has either maintained or grown its annual dividend per share in that period. Moreover, its dividend has jumped by over 80% from FY2012 to FY2017.
5. Lastly, Top Glove’s total equity (also known as book value) has climbed by 9.0% per year, from RM 1.3 billion in FY2012 to RM 2.0 billion in FY2017. This comes on top of the dividends that the company has paid out in those years years. To put it simply, Top Glove has increased shareholders’ wealth by the sum of its equity growth, and its dividend yield.
A Foolish conclusion
When I put it all together, I think Top Glove has a commendable track record of business growth. The company has grown its revenue, profit, and dividends at decent rates, while maintaining a strong balance sheet.