Corporate Presentation 2Q17 Corporate Update & Financial Results 22 March 2017

Transcription

1 (Company No.: 7867-P) Corporate Presentation 2Q17 Corporate Update & Financial Results 22 March 2017 Powered by Twin Engines IR Adviser

2 Powered by Twin Engines CONTENTS Operations Review & Growth Plans 2Q17 Financial Review Investment Merits Corporate Profile 2

3 Powered by Twin Engines OPERATIONS REVIEW & GROWTH PLANS

4 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix 2Q17 performance rebounded from 1Q17 particularly for consumer packaging FY2017 tonnage to ramp up in line with newly expanded capacities Stretch Film PP Strapping Band Raffia Industrial Packaging Prod. Output: 120,000 MT p.a. Location: Pulau Indah Prod. Output: 18,000 MT p.a. Location: Melaka Prod. Output: 10,000 MT p.a. Location: Vietnam PE Film Products: Base film Functional films BOPP Film CPP Film Adhesive Consumer Packaging Prod. Output: 72,000 MT p.a. Location: Rawang & Ipoh Prod. Output: 60,000 MT p.a. Location: Rawang & Pulau Indah Prod. Output: 12,000 MT p.a. Location: Melaka Output: 6,000 MT p.a. Location: Shah Alam & Indonesia Average monthly sales tonnage (MT 000) Industrial Packaging -4.5% yoy FY14 FY15 FY16 1H16 1H17 FY17^ FY18* Consumer Packaging +9.3% yoy Total average monthly sales tonnage FY14 FY15 FY16 1H16 1H17 FY17^ FY18* ^Internal estimates *Estimation based on full output Operations Review: Manufacturing 4

5 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix Increasing contribution from consumer packaging segment with growing CPP and BOPP sales Segment Revenue (RM mil) 1H17 manufacturing revenue marginally unchanged at at RM791.6 mil (1H16: RM794.0 mil) Industrial Packaging Industrial Consumer 53% -3.2% 51% yoy 47% +3.0% 49% yoy 1H16 1H17 Industrial Consumer Total H17 revenue dipped 3.2% yoy to RM406.1 mil (1H16: RM419.7 mil) on lower exports due to weaker APAC activity in the first half of FY17 2Q17 revenue increased to RM212.5 mil, rising 0.4% yoy (2Q16: RM211.8 mil) and 9.8% qoq (1Q17: RM193.6 mil) on stronger exports Consumer Packaging 1H17 revenue grew 3.0% yoy to RM385.5 mil (1H16: RM374.3 mil) with new contribution from CPP and BOPP lines Exports made up 56.4% of 1H17 consumer packaging revenue (1H16: 52.4%) 2Q17 revenue rose to RM199.4 mil, rising 4.8% yoy (2Q16: RM190.2mil) and 7.1% qoq (1Q17: RM186.1 mil) on higher BOPP and CPP contribution Operations Review: Manufacturing 5

6 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix Consumer packaging expansions to fully complete in end-2017 to focus on ramping upcapacity utilisation 30,000MT Per Annum 24,000 MT PE 6,000 MT BOPP Consumer packaging expansion plan New CPP production line in Melaka 5X 2014 Growth ,000MT Per Annum 84,000 MT PE 60,000 MT BOPP 12,000 MT CPP New BOPP plant in Pulau Indah 2017 Completion Commenced Dec 2016 Commenced Jan 2016 CPP Noting strong pickup qoq especially from export markets BOPP Positive initial sales to local and export markets, undergoing quality certification for Futamura and others Commissioned 2 nd line in December 2016; bringing total BOPP capacity to 60,000 MT p.a. Currently 35% utilised; target to fill up capacity in two years PE Overall production output to increase from 60,000 MT p.a. to 84,000 MT p.a. in 2017 Rawang plant o CAPEX of RM21 mil; expansion completed in end-2016 with production output increased to 60,000 MT. p.a. SGW Ipoh o CAPEX of RM50 mil; on track to increase production output to 24,000 MT p.a. in second half of 2017 Growth Plans: Manufacturing 6

7 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix USD25 mil investment in U.S. stretch film plant on track for completion in end Stretch film On 10 November 2016, Scientex announced CAPEX of USD25 mil to set up new stretch film manufacturing plant in Arizona, U.S. Newly established wholly-owned subsidiary Scientex Phoenix, LLC to undertake the venture New plant to house two stretch film lines with capacity of 30,000 MT p.a., expected to be operational in end-2017 Scientex to tap new growth opportunities in North, Central, and South Americas with estimated market size of about 1 mil MT Currently exporting small volume of stretch film to US; new Arizona plant positions Scientex close to market, allowing for better service and shorter delivery lead time To see synergistic benefits from Scientex s highly-efficient manufacturing operations with savings in logistics costs Expect to benefit from anticipated ample supply of shale gas-based resin Completed acquisition of factory building; operations targeted to commence in end rewinders to arrive in March 2017; to ship jumbo stretch film rolls to the U.S. for rewinding into smaller rolls for sale to U.S. customers Estimated lean workforce of <10 pax; to eventually reach about 50 pax at full operations 2 new extruder machines to arrive in Oct & Dec 2017 Growth Plans: Manufacturing 7

8 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix Launched RM190 mil worth of new properties in 2Q17 property unbilled sales of approximately RM600 mil 1H17 property revenue rose 9.0% to RM329.4 mil (1H16: RM302.0 mil) Group s development projects seeing stable sales and construction progress 2Q17 property revenue increased 21.5% to RM174.3 mil (2Q16: RM143.4 mil) Launched 9 new projects worth RM371.1 mil GDV in 1H17 Mainly for affordable residential properties and maiden launch in Ipoh Launched 5 projects in 2Q17 with RM190.3 mil GDV Unbilled sales amounted to approx. RM600.0 mil as at 31 January 2017 to be recognized over the next 2 to 3 years Operations Review: Property 8

9 Powered by Twin Engines 2Q17 FINANCIAL REVIEW

10 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix Achieved record quarterly revenue and net profit in2q Q17 2Q16 Change RM'mil 1H17 1H16 Change Remarks % Revenue 1, , % % EBITDA % 16.7% 16.9% (0.2 pt) EBITDA margin 16.2% 17.1% (0.9 pt) % PBT (7.7%) 14.0% 14.6% (0.7 pt) PBT margin 13.2% 14.7% (1.4 pt) % PATMI (6.6%) 11.1% 11.8% (0.7 pt) Net margin 10.5% 11.4% (1.0 pt) (1.4%) Basic EPS (sen) (8.5%) Marginal growth in 1H17 due to weaker contribution from manufacturing sector in 1Q17 Profitability dampened due to lower product margin and penetrative pricing strategy in manufacturing segment Achieved higher quarterly net profit in 2Q17 in line with higher revenue Quarterly Revenue (RM mil) Quarterly PBT (RM mil) Quarterly PATMI (RM mil) *4Q15 and FY15 PBT and PATMI includes RM12.6 million fair value gain on investment properties 2Q17 Income Statement Summary 10

11 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix Group EBITDA dipped slightly on weaker manufacturing contribution while property still riding on strong demand for affordable homes 1H16 Group Revenue: RM1,096.0 mil 1H17 Group Revenue: RM1,120.9 mil 27.6% +9.0% yoy 29.4% -0.3% yoy 72.4% 70.6% 1H16 Group EBITDA: RM187.5 mil 1H17 Group EBITDA: RM182.0 mil 45.4% 54.6% +15.9% yoy 54.2% 45.8% -18.6% yoy Manufacturing Property Manufacturing Property Revenue & EBITDA Segmentation 11

12 ,192 1,286 1, Operations Review Growth Strategies Financial Highlights Investment Merits Appendix Consumer packaging segment growing steadily Slightly dampened industrial packaging exports onweaker economy but recovery insight RM mil Manufacturing Revenue & Gross Margin 11.0% 11.1% 9.8% 11.0% 14.6% 15.6% 12.1% 1H17 manufacturing revenue remained stable; lower gross margin and penetrative pricing to gain market share RM mil Manufacturing Revenue (by Segment) Consumer packaging grew 3.0% on increasing contribution from newly commenced BOPP and CPP lines FY12 FY13 FY14 FY15 FY16 1H16 1H17 FY12 FY13 FY14 FY15 FY16 1H16 1H17 Revenue Gross Margin Industrial Packaging Consumer Packaging RM mil EBITDA & EBITDA Margin 9.1% 8.4% 9.0% 7.1% 11.4% 12.9% 10.5% 1H17 EBITDA declined 18.6% mainly due to lower product margin Industrial packaging revenue declined 3.2% due to slower orders in line with weaker export market in 1Q17; posting recovery in 2Q17 FY12 FY13 FY14 FY15* FY16 1H16 1H17 EBITDA EBITDA Margin *Includes RM27.2 mil foreign exchange translation differences Financial Review: Manufacturing 12

13 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix Property division benefitting from sturdy demand for affordable homes RM mil 44.2% 47.0% Revenue & Gross Margin +9.0% 44.4% 42.3% 38.5% 40.2% 40.4% Property segment revenue rose 9.0% due to stable sales and construction progress of Group s development projects FY12 FY13 FY14 FY15 FY16 1H16 1H17 Revenue Gross Margin RM mil 29.8% EBITDA & EBITDA Margin +15.9% 32.3% 30.7% 31.9% 29.2% 28.2% 29.9% Higher EBITDA consistent with revenue growth; margins maintained in the 28%-30% range FY12 FY13 FY14 FY15* FY16 1H16 1H17 EBITDA EBITDA Margin *Excluding RM12.6 million fair value gain from investment properties Financial Review: Property Development 13

14 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix Strong operational cashflow toreduce borrowings and fund future plans Balance Sheet (RM 000) As at As at Property, Plant & Equipment 965, ,519 Due to inves tments into new manufacturing machinery Inves tment Property & Other Inves tments 24,967 24,967 Land Held & Property Development Cos ts 698, ,752 In line with increas ed property development activity Investment in Jointly Controlled Entity & As s ociated Company 52,623 48,666 Inventories 164, ,010 In line with enlarged manufacturing operations Trade & Other Receivables 449, ,801 In line with above Cas h & Bank Balances 179, ,601 Deferred Tax As s ets 2,651 2,651 Intangible As s ets 12,134 12,134 TOTAL ASSETS 2,550,132 2,251,101 Trade & Other Payables 458, ,754 Borrowings (ST + LT) 691, ,608 Tax & Deferred Tax 57,903 55,077 To fund working capital requirements, machinery purchases, and landbanking Shareholders Equity 1,274,945 1,175,167 Due to enlarged s hare capital and retained earnings Minority Interes t 66,809 66,495 Net Tangible Assets / Share (RM) Remarks Net Gearing 0.40x 0.32x In line with higher borrowings 1 Based on share capital of mil shares Balance Sheet (Highlights) 14

15 Powered by Twin Engines INVESTMENT MERITS

16 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix A high-growth proposition all-round... attractive proxy to the burgeoning packaging sector and Southern Malaysia s affordable property market MANUFACTURING One of the world s largest stretch film producers Consumer packaging segment facilitates entry into burgeoning F&B and FMCG sectors Further integration and expansion initiatives position Group to cater to larger regional clientele and enhance competitiveness PROPERTY DEVELOPMENT Reputable developer in Southern Malaysia (Johor and Melaka); extended footprint to Northern Malaysia (Ipoh) Current projects of RM1.6 bil Pipeline GDV of RM6.0 bil on existing landbank to sustain another 8 to 10 years Future projects displaying higher GDV/acre Strong fundamentals with strong upside to profit and margin expansion Dividend policy of minimum 30% payout 30.7% dividend payout in FY2016 Valuations to be compressed with foreseeable earnings boost Trading at trailing 12-month PE of 14.8x and EV/EBITDA of 11.1x (as at 17 March 2017) Investment Merits 16

17 Operations Review Growth Strategies Financial Highlights Investment Merits Appendix Group has dividend policy of minimum 30% net profit payout RM mil 74.0% Dividend History 49.2% 48.0% 49.8% 52.1% 26.6% 36.6% 28.7% 36.1% 28.8% 32.1% 33.4% 35.9% 31.7% 31.4% 30.7% Net Dividend Payout Special Dividend Payout Ratio FY2015 Dividends (Total Dividend of 11* sen) : Paid interim dividend of 4.5* sen per share on 7 August 2015 Paid final dividend of 6.5* sen per share on 25 January 2016 FY2016 Dividend (Total Dividend of 16 sen): Paid interim dividend of 6* sen per share on 5 August 2016 Paid final dividend of 10 sen per share on 13 January 2017 Share Dividend Dividend Policy: Minimum 30% of Net Profit (effective FY2011) *adjusted based on 460,000,000 ordinary shares of RM0.50 each after 1:1 bonus issue completed on 15 August 2016 Dividend History 17

18 Powered by Twin Engines Thank You Contacts: Ms. Jocelyn Ng T: Ms. Julia Pong T: