• Top Glove Corporation Berhad (Top Glove) in its latest sustainability goals (FY22) shared its FY25 Sustainability Blueprint Structure which focused on i) transition into a net zero carbon business ii) promoting inclusivity & respecting human rights iii) improving community livelihood, iv) strengthening good corporate governance & responsible business culture and v) emerging as a trusted company with a sustainable value chain.

• The latest sustainability goals highlighted include 14 materials topics aligned based on 17 Sustainable Development Goals (SDG) of the United Nations (UN).

• Our assessment on the evolution of Top Glove ESG initiatives started from FY19, taking into consideration pre COVID-19 ESG assessment until the latest available annual report (FY22).

• We have assigned Top Glove an overall ESG rating of 4.6 of 5 which falls in the rating band of “Excellent”.

• Maintain our SELL call on Top Glove however with unchanged TP of RM0.48. Our valuation is based on BV/share of RM0.83 and target P/BV of 0.58 (50% discount).

Moving Beyond Business as Usual

The recent labor issues faced by Top Glove have brought attention to the need for improving their sustainability journey. The Group has revamped their sustainability strategy to fulfill their commitment towards sustainable development and hence, introducing FY25 Sustainability Blueprint Structure in FY22 annual report. Top Glove FY25 Sustainability Blueprint is structured around three key themes - Environmental, Social, and Governance, supported by five sustainability goals as part of the company's mission. Notably, the birth of Sustainability Roadmap FY22 to FY25 is mapped out to measure medium term ESG targets and set a commitment for the Group to incorporate the important aspects such as daily operations and decision-making processes.

Top Glove’s ESG Evolution Journey

Top Glove is the world’s largest glove manufacturer in Malaysia. The company has a strong effort environmental, social, and governance (ESG) initiatives and has implemented several measures to promote sustainability initiatives over the past few years. Top Glove has made some improvement on FY19 sustainability efforts after taking into account few additional measures. Starting from FY19 onwards, the group level disclosure will be will be expanded from Malaysia to include operations in Thailand and China. Additionally, Top Glove has made significant strides in their ongoing journey towards improving their Environmental, Social, and Governance (ESG) practices by considering the company's requirements and objectives, with the aim to establish the point of sustainability framework.

Source: BIMB Securities Research - 5 May 2023