Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

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<ul>
<li>
Rubber glove manufacturers and distributors Top Glove Corporation, Riverstone Holdings and UG Healthcare Corp have all seen triple digit percentage gains in the 2020 year to date, with average daily turnover up close to 30-Fold from 2019 levels.  
	 </li>
	<li>
The largest of the trio, Top Glove Corporation, has seen its turnover ranking surge in 2020, from being ranked within the top 500 stocks by turnover in 2019, to just outside the top 100 stocks by turnover in the 2020 YTD. 
	 </li>
	<li>The trio of rubber glove makers expects increased glove demand in the coming quarters on the back of COVID-19, with all three manufacturers progressively boosting production lines and capacity to meet the surge in sales.</li>
</ul>
 
 SGX lists three Rubber glove manufacturers and distributors Top – Top Glove Corporation Bhd (“Top Glove Corp”), Riverstone Holdings and UG Healthcare Corp – which have a combined market cap of S$14 billion.  Together the trio have averaged 223% total returns in the 2020 year to 3 June. 
 

<table class="table table-striped"><tbody>
<tr>
<td>
			Stock
			</td>
			<td>
			Code
			</td>
			<td>
			Mkt Cap S$M
			</td>
			<td>
			Total Return 2020 YTD
			</td>
			<td>
			Average Daily Turnover in 2019 S$
			</td>
			<td colspan="2">
			Average Daily Turnover in 2020 YTD S$
			</td>
		</tr>
<tr>
<td>
			RIVERSTONE HOLDINGS
			</td>
			<td>
			AP4
			</td>
			<td>
			1,593
			</td>
			<td>
			132
			</td>
			<td>
			163,916
			</td>
			<td>
			2,830,032
			</td>
			<td>
			 
			</td>
		</tr>
<tr>
<td>
			UG HEALTHCARE CORP
			</td>
			<td>
			41A
			</td>
			<td>
			120
			</td>
			<td>
			336
			</td>
			<td>
			11,882
			</td>
			<td>
			2,278,287
			</td>
			<td>
			 
			</td>
		</tr>
<tr>
<td>
			TOP GLOVE CORP BHD
			</td>
			<td>
			BVA
			</td>
			<td>
			12,380
			</td>
			<td>
			202
			</td>
			<td>
			26,717
			</td>
			<td>
			813,689
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
 Source: SGX StockFacts, Thomson Reuters, Bloomberg (Data as of 3 June 2020) 
Recently, Top Glove unveiled its results for the quarter and half year ended 29 Feb 2020, while Riverstone and UG Healthcare – which have opted to report their results on a half-yearly basis – last month provided business updates for the quarter ended 31 March 2020. 
 

<ul>
<li>
<a href="http://www.topglove.com/">Top Glove</a>: The world’s largest manufacturer of gloves is primary-listed on the Bursa Malaysia, with a secondary listing on SGX. It produces 73.4 billion gloves annually for more than 2,000 customers worldwide and exports to more than 195 countries.</li>
	<li>
<a href="http://www.riverstone.com.my/">Riverstone</a>: With an annual production capacity of about 9.0 billion gloves, it makes premium nitrile gloves used in the healthcare industry, as well as nitrile and natural rubber clean room gloves.</li>
	<li>
<a href="http://www.ughealthcarecorporation.com/">UG Healthcare</a>: Manufactures and sells disposable gloves under its proprietary “Unigloves” brand through an established global downstream distribution network. It also distributes other medical disposables, such as surgical gloves, vinyl and cleanroom disposable gloves, and face masks.</li>
</ul>
 

Bright Prospects Ahead 
 

Global demand for gloves is expected to increase as countries step up efforts to contain the spread of COVID-19. The <a href="https://www.margma.com.my/">Malaysian Rubber Glove Manufacturers Association</a> (MARGMA) has forecast global glove demand to grow to 345 billion pieces in 2020, from 298 billion pieces in 2019. Malaysia accounts for more than 60% of global medical glove output. Top Glove

 Earnings Highlights

<ul>
<li>For the quarter ended 29 Feb 2020, Top Glove achieved revenue of RM1.2 billion, up 6% YoY, driven by robust sales</li>
	<li>The nitrile glove segment saw particularly strong growth, with a 14% YoY increase in volumes sold</li>
	<li>Margins were impacted by the 19% surge in natural rubber latex concentrate prices, which was not mitigated by higher average selling prices</li>
	<li>Profit after tax was RM116 million, up 8.7% YoY, as the Group continued to enjoy tax incentives from its ongoing expansion, as well as unutilised tax allowances from some of its subsidiaries 
	 </li>
</ul>
<table class="table table-striped"><tbody>
<tr>
<td> </td>
			<td>
			2QFY2020 (RM mln)
			</td>
			<td>
			2QFY2019 (RM mln)
			</td>
			<td>
			YoY Chg (%)
			</td>
		</tr>
<tr>
<td>
			Revenue
			</td>
			<td>
			1,230
			</td>
			<td>
			1,160
			</td>
			<td>
			6.0
			</td>
		</tr>
<tr>
<td>
			Profit from operations
			</td>
			<td>
			149.4
			</td>
			<td>
			145.3
			</td>
			<td>
			2.8
			</td>
		</tr>
<tr>
<td>
			Profit before tax
			</td>
			<td>
			130.4
			</td>
			<td>
			125.5
			</td>
			<td>
			3.9
			</td>
		</tr>
<tr>
<td>
			Profit net of tax
			</td>
			<td>
			116.0
			</td>
			<td>
			106.7
			</td>
			<td>
			8.8
			</td>
		</tr>
</tbody></table>
 Source: Company data Outlook 
 

<ul>
<li>Demand:</li>
	<li>The Group envisions very solid quarters ahead, having secured exceptionally large sales orders for the next few months</li>
	<li>Demand for gloves is expected to continue growing by at least 10% every year, as awareness and usage increases 
	 </li>
	<li>Capacity Expansion:</li>
	<li>With current utilisation levels above 90%, it is further ramping up production close to 100% to meet the surge in demand</li>
	<li>New capacity coming onstream will add a total of 24 lines, and a capacity of 3.2 billion pieces of gloves per annum, when fully operational</li>
	<li>More capacity expansion plans are in the pipeline as indicated below:</li>
</ul>
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<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-06/Capture_3.PNG' alt='capture' />
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<li>This will boost the number of production lines by 150 lines and capacity by 17.7 billion gloves per annum</li>
	<li>By Dec 2021, Top Glove is projected to have a total of 861 production lines and a capacity of 91.1 billion gloves per annum 
	 </li>
	<li>Debt Financing:</li>
	<li>On 27 Feb 2020, Top Glove issued RM1.3 billion perpetual Sukuk, which will be used to refinance existing borrowings as well as for capex</li>
	<li>With the restructuring of debts following the Sukuk issuance, and coupled with lower interest rates, interest costs in the coming quarters are expected to fall significantly</li>
	<li>Net gearing had reduced to 0.24 times as at 29 Feb 2020, following the take-up of the perpetual Sukuk as equity</li>
	<li>On 23 Jan 2020, Top Glove was assigned a corporate credit rating of AA by Malaysia Rating Corporation Bhd (MARC), the highest rating accorded to a Malaysian manufacturing company 
	 </li>
</ul>
 Click <a href="https://www.topglove.com/App_ClientFile/7ff8cb3f-fbf6-42e7-81da-6db6a0ab2ef4/Assets/Press%20release/TopGlove_1QFY20_Press%20Release.pdf?fireglass_rsn=true">here</a> for the full results statement. Riverstone Holdings 
Earnings Highlights

<ul>
<li>With cleanroom and healthcare glove segments continuing to record robust growth in sales volumes, revenue gained 16.2% YoY to RM279.4 million</li>
	<li>Due to declining prices of butadiene, a key raw material used in the production of its nitrile-based gloves, gross profit margin strengthened by 4.6 percentage points YoY to 24.0% during the quarter</li>
	<li>With cash and cash equivalents amounting to RM170.7 million as at 31 Mar 2020, up from RM130.4 million as at 31 Dec 2019, the Group remains well-positioned to carry out its expansion plans</li>
</ul>
<table class="table table-striped"><tbody>
<tr>
<td> </td>
			<td>
			1Q2020 (RM mln)
			</td>
			<td>
			1Q2019 (RM mln)
			</td>
			<td>
			YoY Chg (%)
			</td>
		</tr>
<tr>
<td>
			Revenue
			</td>
			<td>
			279.4
			</td>
			<td>
			240.5
			</td>
			<td>
			16.2
			</td>
		</tr>
<tr>
<td>
			Gross profit
			</td>
			<td>
			67.1
			</td>
			<td>
			46.6
			</td>
			<td>
			44.0
			</td>
		</tr>
<tr>
<td>
			Profit before tax
			</td>
			<td>
			58.0
			</td>
			<td>
			35.6
			</td>
			<td>
			62.9
			</td>
		</tr>
<tr>
<td>
			Net profit
			</td>
			<td>
			46.6
			</td>
			<td>
			30.2
			</td>
			<td>
			54.3
			</td>
		</tr>
</tbody></table>
 Source: Company data Outlook 
 

<ul>
<li>Due to surging worldwide demand, Riverstone has seen an uptick in orders from both new and existing customers</li>
	<li>The Group remains on track to lift capacity progressively by up to 1.4 billion gloves to a total of 10.4 billion gloves per annum by 4Q2020, under phase 6 of its expansion plan</li>
	<li>It is progressively commissioning new lines to satisfy urgent demands by customers for examination gloves</li>
</ul>
 Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/6PDW9CQ2ZY35G0TR/Riverstone%20-%20Voluntary%20Announcement%20-%201QFY2020.pdf">here</a> for the full business update. UG Healthcare Corp 
Outlook 
 

<ul>
<li>UG Healthcare has been striving to cope with increased orders from both existing and new customers since the COVID-19 outbreak</li>
	<li>The surge in demand for gloves and healthcare/medical disposables has led to higher average selling prices</li>
	<li>The Group is currently operating at its optimum production efficiency with the existing production capacity of 2.9 billion gloves per annum</li>
	<li>Planned additional annual capacity of 300 million gloves will be added in the financial year ending 30 June 2021; will announce plans for further expansion of its production capacity in due course</li>
	<li>The Group has continued to strengthen and entrench its proprietary “Unigloves” brand in all markets that it operates in 
	 </li>
</ul>
 Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/C1L7DTHACQ72NJQL/UG%20Healthcare_Annt_Business%20Update_19%20May%202020.pdf">here</a> for the full business update.
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Rubber glove manufacturers and distributors Top Glove Corporation, Riverstone Holdings and UG Healthcare Corp have all seen triple digit percentage gains in the 2020 year to date, with average daily turnover up close to 30-Fold from 2019 levels.  
	 
	
The largest of the trio, Top Glove Corporation, has seen its turnover ranking surge in 2020, from being ranked within the top 500 stocks by turnover in 2019, to just outside the top 100 stocks by turnover in the 2020 YTD. 
	 
	The trio of rubber glove makers expects increased glove demand in the coming quarters on the back of COVID-19, with all three manufacturers progressively boosting production lines and capacity to meet the surge in sales.

 
 SGX lists three Rubber glove manufacturers and distributors Top – Top Glove Corporation Bhd (“Top Glove Corp”), Riverstone Holdings and UG Healthcare Corp – which have a combined market cap of S$14 billion.  Together the trio have averaged 223% total returns in the 2020 year to 3 June. 
 




			Stock
			
			
			Code
			
			
			Mkt Cap S$M
			
			
			Total Return 2020 YTD
			
			
			Average Daily Turnover in 2019 S$
			
			
			Average Daily Turnover in 2020 YTD S$
			
		


			RIVERSTONE HOLDINGS
			
			
			AP4
			
			
			1,593
			
			
			132
			
			
			163,916
			
			
			2,830,032
			
			
			 
			
		


			UG HEALTHCARE CORP
			
			
			41A
			
			
			120
			
			
			336
			
			
			11,882
			
			
			2,278,287
			
			
			 
			
		


			TOP GLOVE CORP BHD
			
			
			BVA
			
			
			12,380
			
			
			202
			
			
			26,717
			
			
			813,689
			
			
			 
			
		

 Source: SGX StockFacts, Thomson Reuters, Bloomberg (Data as of 3 June 2020)  
Recently, Top Glove unveiled its results for the quarter and half year ended 29 Feb 2020, while Riverstone and UG Healthcare – which have opted to report their results on a half-yearly basis – last month provided business updates for the quarter ended 31 March 2020. 
 



Top Glove: The world’s largest manufacturer of gloves is primary-listed on the Bursa Malaysia, with a secondary listing on SGX. It produces 73.4 billion gloves annually for more than 2,000 customers worldwide and exports to more than 195 countries.
	
Riverstone: With an annual production capacity of about 9.0 billion gloves, it makes premium nitrile gloves used in the healthcare industry, as well as nitrile and natural rubber clean room gloves.
	
UG Healthcare: Manufactures and sells disposable gloves under its proprietary “Unigloves” brand through an established global downstream distribution network. It also distributes other medical disposables, such as surgical gloves, vinyl and cleanroom disposable gloves, and face masks.

 

Bright Prospects Ahead 
 

Global demand for gloves is expected to increase as countries step up efforts to contain the spread of COVID-19. The Malaysian Rubber Glove Manufacturers Association (MARGMA) has forecast global glove demand to grow to 345 billion pieces in 2020, from 298 billion pieces in 2019. Malaysia accounts for more than 60% of global medical glove output.   Top Glove

 Earnings Highlights


For the quarter ended 29 Feb 2020, Top Glove achieved revenue of RM1.2 billion, up 6% YoY, driven by robust sales
	The nitrile glove segment saw particularly strong growth, with a 14% YoY increase in volumes sold
	Margins were impacted by the 19% surge in natural rubber latex concentrate prices, which was not mitigated by higher average selling prices
	Profit after tax was RM116 million, up 8.7% YoY, as the Group continued to enjoy tax incentives from its ongoing expansion, as well as unutilised tax allowances from some of its subsidiaries 
	 



 
			
			2QFY2020 (RM mln)
			
			
			2QFY2019 (RM mln)
			
			
			YoY Chg (%)
			
		


			Revenue
			
			
			1,230
			
			
			1,160
			
			
			6.0
			
		


			Profit from operations
			
			
			149.4
			
			
			145.3
			
			
			2.8
			
		


			Profit before tax
			
			
			130.4
			
			
			125.5
			
			
			3.9
			
		


			Profit net of tax
			
			
			116.0
			
			
			106.7
			
			
			8.8
			
		

 Source: Company data  Outlook 
 


Demand:
	The Group envisions very solid quarters ahead, having secured exceptionally large sales orders for the next few months
	Demand for gloves is expected to continue growing by at least 10% every year, as awareness and usage increases 
	 
	Capacity Expansion:
	With current utilisation levels above 90%, it is further ramping up production close to 100% to meet the surge in demand
	New capacity coming onstream will add a total of 24 lines, and a capacity of 3.2 billion pieces of gloves per annum, when fully operational
	More capacity expansion plans are in the pipeline as indicated below:




      
    
    capture



This will boost the number of production lines by 150 lines and capacity by 17.7 billion gloves per annum
	By Dec 2021, Top Glove is projected to have a total of 861 production lines and a capacity of 91.1 billion gloves per annum 
	 
	Debt Financing:
	On 27 Feb 2020, Top Glove issued RM1.3 billion perpetual Sukuk, which will be used to refinance existing borrowings as well as for capex
	With the restructuring of debts following the Sukuk issuance, and coupled with lower interest rates, interest costs in the coming quarters are expected to fall significantly
	Net gearing had reduced to 0.24 times as at 29 Feb 2020, following the take-up of the perpetual Sukuk as equity
	On 23 Jan 2020, Top Glove was assigned a corporate credit rating of AA by Malaysia Rating Corporation Bhd (MARC), the highest rating accorded to a Malaysian manufacturing company 
	 

 Click here for the full results statement.  Riverstone Holdings  
Earnings Highlights


With cleanroom and healthcare glove segments continuing to record robust growth in sales volumes, revenue gained 16.2% YoY to RM279.4 million
	Due to declining prices of butadiene, a key raw material used in the production of its nitrile-based gloves, gross profit margin strengthened by 4.6 percentage points YoY to 24.0% during the quarter
	With cash and cash equivalents amounting to RM170.7 million as at 31 Mar 2020, up from RM130.4 million as at 31 Dec 2019, the Group remains well-positioned to carry out its expansion plans



 
			
			1Q2020 (RM mln)
			
			
			1Q2019 (RM mln)
			
			
			YoY Chg (%)
			
		


			Revenue
			
			
			279.4
			
			
			240.5
			
			
			16.2
			
		


			Gross profit
			
			
			67.1
			
			
			46.6
			
			
			44.0
			
		


			Profit before tax
			
			
			58.0
			
			
			35.6
			
			
			62.9
			
		


			Net profit
			
			
			46.6
			
			
			30.2
			
			
			54.3
			
		

 Source: Company data  Outlook 
 


Due to surging worldwide demand, Riverstone has seen an uptick in orders from both new and existing customers
	The Group remains on track to lift capacity progressively by up to 1.4 billion gloves to a total of 10.4 billion gloves per annum by 4Q2020, under phase 6 of its expansion plan
	It is progressively commissioning new lines to satisfy urgent demands by customers for examination gloves

 Click here for the full business update.  UG Healthcare Corp  
Outlook 
 


UG Healthcare has been striving to cope with increased orders from both existing and new customers since the COVID-19 outbreak
	The surge in demand for gloves and healthcare/medical disposables has led to higher average selling prices
	The Group is currently operating at its optimum production efficiency with the existing production capacity of 2.9 billion gloves per annum
	Planned additional annual capacity of 300 million gloves will be added in the financial year ending 30 June 2021; will announce plans for further expansion of its production capacity in due course
	The Group has continued to strengthen and entrench its proprietary “Unigloves” brand in all markets that it operates in 
	 

 Click here for the full business update.



Top Glove, Riverstone & UG Healthcare Report Quarterly Earnings