MARC has assigned short and long term ratings of MARC-1ID and AA-ID respectively to Top Glove Corporation Bhd’s (“Top Glove”) proposed Islamic Commercial Papers (“CP”) Programme of up to nominal value RM100 million and Islamic Medium Term Notes (“MTN”) Programme of up to nominal value RM100 million. The ratings reflect the Group’s position as the world’s largest rubber glove manufacturer; its aggressive expansion capacity underpinned by increasing demand for rubber gloves; consistently strong financial profile characterized by stable operating margins and historically low debt leverage; and the Group’s prudent and strong management.

The Group’s principal activities are in the manufacturing, trading and exporting of various types of gloves. Top Glove is the world’s largest rubber manufacturer of gloves owing to its production capacity of 15.0 billion pieces of gloves per annum as at 31 August 2005. With 11 factories located in Malaysia, Thailand and China, its gloves are exported to more than 600 customers in more than 160 countries. Currently, it has a world market share of approximately 15% and intends to capture 25% of the global market share by December 2007 through aggressive expansion plans.
Operationally, Top Glove purchases forward the supply of latex, its main raw material to ensure adequate raw material for its production. Furthermore, the flexibility to pass on increases in the price of raw materials to its clients ensures that profit margins are somewhat protected.

Top Glove consistently demonstrated strong revenue and profitability growth over the past four years. FY2004 saw the Group’s revenue increased by 58% in tandem with the increase in production capacity as well as increase in global customer base. Operating margin has been robust and remained in double digits. Historically, the Group’s debt leverage position has been low despite higher borrowings over the last four years; reflecting the growing shareholders’ funds underlined by the increase in share capital as well as higher retained earnings. Top Glove’s pro-forma debt leverage based on the Group’s projected FY2006’s shareholders’ funds is estimated at 0.76x.

Moving forward, the double digit revenue growth is expected to be sustained with continued expansion. In tandem with the growth in revenue, operating profit margins are expected to remain robust.