Top Glove: Production Capacity to Grow to 208 Billion Pieces by 2024
Author: Ben Tan 
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A week ago, when I wrote an article on one example way of gauging Top Glove's enterprise value (see here), I used all the publicly available information we had at that time. We had a clear idea of the company's expansion plans through the end of 2022, and we also had the total capacity projection by end of 2025 (193 billion pieces of glove at that time). However, in its latest investor presentation from Friday (5 March), Top Glove shared their plans until the end of 2024! You can see the presentation here - the expansion plans are detailed on pages 10-11.
According to the new plan, the company, which is currently by far the biggest producer of medical gloves in the world, will expand its production capacity to 111 billion gloves by the end of this year (+19%), to 146 billion gloves by the end of 2022 (+32%), to 178 billion gloves by the end of 2023 (+22%), and to 208 billion gloves by the end of 2024 (+17%). The total capacity growth from the current capacity of 93 billion gloves will be 123% within a period of a little less than 4 years. A reminder that Top Glove's production capacity a year ago, before the full-blown pandemic kicked in, was 73.4 billion gloves per annum, or 35% of the projected capacity by the end of 2024 (source). New capacity over the next 4 years involves the building of 11 new factories - 9 in Malaysia and 2 in Thailand.
The expansion plan is almost entirely focused on the highest profit margin, most in-demand segment - nitrile gloves. However, Top Glove have made an important change compared to previous versions of their investor presentation. The company has signified that the new production lines will be able to produce nitrile or latex gloves, i.e. they will be interchangeable. This will allow the company to be able to switch production based on present time demand dynamics. For instance, this interchangeability of the production lines is one of the reasons for the decreased delivery time for nitrile gloves in the last few months. This allows the company to produce more of the required gloves at times when demand (and therefore price) is higher.
Top Glove plans to expand its production capacity by 53 billion gloves per annum by the end of 2022, and by another 62 billion gloves per annum by the end of 2024. To give you a better idea of the scale of the expansion plan, the current officially published expansion plans of all the new players in the glove business in Malaysia (including acquisitions, and including foreign players acquiring/developing production facilities in Malaysia) is 51.311 billion pieces by the end of 2022 across 19 players (reference).
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