Yesterday, The Star published an extensive interview with Top Glove's founder Tan Sri Dr. Lim Wee Chai. You can read the full article here.

In the interview, Tan Sri Lim reiterated once again that the main goal of the company is to make the Fortune 500 list by 2030. According to him, to achieve that, Top Glove would need to grow 10 times from its current size. Let's try and figure out how things would need to work out in order for that to happen.

Companies are ranked in the Fortune 500 list by their annual revenues. For the past many years, the list has been topped by the American giant retailer - Walmart. Walmart reported over US$523 billion in revenue in 2020, almost twice more than the second-placed Amazon (US$280 billion). However, the most profitable companies were actually Berkshire Hathaway (6th in the list) - by a significant margin, Apple (4th in the list), and Microsoft (21st in the list). Thus, profitability is not the main factor in the rankings, although there is some correlation. For instance, the first company out of top 100 by revenue to show up in the list ranked by profits is Visa - 20th by profit, 134th by revenue.

The last company to make the list in 2020 was the financial institution Huntington Bancshares. The company reported revenue of US$5.655 billion, or approximately RM22.75 billion. I believe Top Glove will come very close to this target even this year (see my detailed explanation on why I think so here and here). Additionally, companies listed in the Fortune 500 list must be incorporated in the United States, and in the same interview Tan Sri Lim mentions that company's operations expansion is focused mostly on Asia. That is why I believe he actually means the Fortune Global 500 list.

The last company to make the Global 500 list last year was China's Shanxi Jincheng Anthracite Coal Mining Group. It reported revenue for the year of US$25.386 billion, or approximately RM102.1 billion. Ten years earlier, in 2010, the last company to make the list was Japan's Dai Nippon Printing Co., Ltd., reporting revenue for the year of US$17.053 billion. Thus, for 10 years, the minimum revenue for the year in order for a company to make the list, increased by 48.9%.

If we assume the growth trend will persist, in 2030 the minimum revenue required will be approximately US$38.7 billion or approximately RM151.2 billion (if we assume exchange rate of US$1 = RM4). This is the target of Top Glove. Let's assume they achieve it in 2030. If we assume Top Glove will operate at a net profit margin of 8% (median profit margin for the last 10 years is 9.23%), the company should be making in 2030 approximately RM12.1 billion annual net profit.

That is a very ambitions endeavour. If I am healthy and alive, I will be observing closely and with a lot of interest if Top Glove would be able to achieve that remarkable goal.

Important disclaimer: Any views expressed are for informational and discussion purposes only. None of this information is intended as, and must not be understood as, a source of advice. It is imperative that you always do your own research and that you make any decisions based on your personal situation and your own personal understanding.