AAPICO HITECH PLC [AH] Opportunity Day August 29, 2018

Transcription

1 AAPICO HITECH PLC [AH] Opportunity Day August 29, 2018

2 Today s Agenda 1. Company Information 2. Automotive Industry Updates 3. Financial Performance 4. Strategy & Direction 2

3 Company Information

4 AAPICO HITECH PLC [AH] AAPICO HITECH PUBLIC COMPANY LIMITED A leading OEM automotive parts manufacturer in Thailand with a global footprint through strategic partnerships in India, Portugal, USA, and China. Industry/Sector : Auto Current price : Baht 33.00* 52 weeks range : Baht Market Cap P/E (YTD) : 7.91* P/BV : 1.40* Dividend yield** : 3.64% TRIS / CG Rating : BBB+ / : Baht 10,645 million * Data as of August 24, 2018 ** Dividend yield is calculated based on current share price Core businesses: OEM Auto Parts, Jigs and Dies, Car Dealerships and Car Navigation. Main locations: Thailand, Malaysia and China. Registered and paid-up capital of Baht million, comprising of 322,583,844 ordinary shares at par value of Baht 1 each. Major shareholders are Yeap Swee Chuan and Family holding 45.46% of total capital. 4

5 AAPICO s Vision Where do we want to go? How do we want people to remember us? MANUFACTURING RESEARCH & DEVELOPMENT CAR RETAILING TO BECOME A LEAN, GREEN, HAPPY, DIGITAL WORLD-CLASS CORPORATION AAPICO Key Fundamental Values Happy Customers Happy Employees Happy Shareholders Happy Public S : Safety Q : Quality C : Cost D : Delivery E : Engineering M : Management (Focus Digital) Teamwork Look at problems as opportunities Love Family, Company and Country Loyalty and Honesty Mutual Respect Profitability Reasonable Dividend Corporate Social Responsibility 5

6 Core Pillars of AAPICO Business Auto Part Manufacture Car Dealerships Technology IOT Connectivity & Mobility Business 6

7 Business Segments Manufacture of Auto Parts (Thailand & China) Car Dealerships (Thailand & Malaysia) Technology (Thailand) Stamping & Assemblies Thailand Forging & Machining Plastic Malaysia Jigs and Dies ~63% of total revenue ~37% of total revenue <1% of total revenue 7

8 Countries of Operations Sales by Country CHINA Kunshan Production: Connecting rods and Copper Forging THAILAND Ayutthaya, Chonburi, Rayong, Samutprakarn Hitech Industrial Estate Production: Stamping parts and Stamping Dies & Jigs Amata Nakorn Industrial Estate Production: Stamping & Chassis Frames and Forging & Machining Parts Malaysia 23% China 5% Jan-Jun 2018 Thailand 72% Bangpli Industrial Estate Production: Plastic Parts Amata City Industrial Estate Production: Stamping Parts Plastic Washers & Fuel Tanks MALAYSIA Kajang & Petaling Jaya Car dealers: Honda car Mitsubishi Dealers Navanakorn & Ramindra Ford Dealers Samutprakarn & Ladprao 8

9 Major OEM Customers Top OEM Customer Profile GKN 3% TOYOTA 3% FORD 3% AAM 4% Others- Parts 26% Nissan 7% Jan-Jun 2018 [CATEGOR Y NAME]* [PERCENT AGE] Isuzu 40% *Auto Alliance (Thailand) Co., Ltd a JV between Ford and Mazda. 9

10 Our Partners Strategic Partner Joint Venture Technical Partner 10

11 Awards & Achievements AAPICO Group has been widely recognized for its excellence in product quality, efficiency in its production processes, and continuous improvements over the years. The Company has repeatedly received awards from its customers and partners in recognition for excellent quality and delivery and contribution to growth. 11

12 Thailand Automotive Industry

13 Thailand Car Production Volume Total Car Production by Quarter Jan-Jun Car Production 000 Units 700 Pick-Up/PPV Passenger Others Domestic Sales Export Sales +11.1% yoy +11.1% yoy , Q17 2Q17 3Q17 4Q17 1Q18 2Q18 6M17 6M18 Q2 car production volume grew by 11.1% yoy, driven by solid growth of domestic demands and increased export volume. Source: The Federation of Thai Industry (Automotive Industry) 13

14 Thailand Domestic Car Sales Volume Domestic Car Sales by Quarter Jan-Jun Domestic Sales 1-Ton Pick-Up/PPV Passenger cars Other vehicles 000 Units +26.3% yoy +19.3% yoy Q17 2Q17 3Q17 4Q17 1Q18 2Q18 6M17 6M18 Q2 domestic car sales grew by 26.3% yoy, driven mainly by the recovering economy, increased spending, as well as introduction of new models. Source: The Federation of Thai Industry (Automotive Industry) 14

15 Thailand Export Volume Export Volume by Quarter Jan-Jun Export Volume Export Volume 000 Units +5.8% yoy % yoy Q17 2Q17 3Q17 4Q17 1Q18 2Q18 6M17 6M18 Export volume increased year-on-year with increased demands in almost all markets. Source: The Federation of Thai Industry (Automotive Industry) 15

16 Thailand Total Industry Volume # Maker Q2 Jan-Jun % % 1 Toyota 53,574 77, % 112, , % 2 Isuzu 35,402 42, % 77,109 86, % 3 Honda 31,237 31, % 61,428 59, % 4 Mitsubishi 15,601 20, % 32,537 41, % 5 Mazda 12,331 17, % 23,893 33, % 6 Nissan 13,815 16, % 28,170 33, % 7 Ford 12,575 15, % 25,513 32, % 14 Hyundai 1,168 1, % 2,150 2, % Others 23,787 30, % 46,977 57, % Total 199, , % 409, , % Source: Toyota 16

17 Malaysia Total Industry Volume # Maker Q2 Jan-Jun % % 1 Perodua 49,410 61, % 99, , % 2 Honda 25,244 27, % 52,527 51, % 3 Toyota 17,220 19, % 33,723 31, % 4 Proton 20,017 14, % 39,393 27, % 5 Nissan 7,548 6, % 13,537 11, % 6 Mazda 2,689 3, % 4,771 6, % 7 Mercedes 3,046 3, % 6,034 6, % 14 BMW 2,678 2, % 4,816 5, % Others 15,769 16, % 29,984 31, % Total 143, , % 284, , % Source: MAA 17

18 Financial Performance January June 2018

19 Q2 Financial Highlights In Million Baht Q Q Q Key Financials Revenues Growth% Gross Profit GP Margin (%) 3, % % 4, % % SG&A Interest & Tax Core profit Profit Margin (%) % % Associate Net Profit NP Margin (%) % % D/E (x) Solid revenue growth, driven by increased sales across businesses and countries and higher interest income from loan to SGAH. Q included THB147 million gain on sale of investments. Gross profit improved, mainly driven by higher sales and improved efficiency. SG&A expenses decreased as last year included one-time expenses related to SGAH investment. Core profit from operations increased yoy, partly offset by lower share of profit from associates due to one-off accounting adjustments in SGAH. 19

20 AH Group: Revenue increased yoy Total Revenues by quarter Jan-Jun Revenue THB million 5,000 4,500 4,000 Sales Other income Interest income one-time gains 3,946 3,903 4, % yoy 4,509 4,496 4,283 7, % yoy 8,745 3,500 3,000 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q Revenue grew 9.7% yoy. Adjusted for the 147 million gain on sale of investment in Q2 17, revenue grew 14.0%, primarily driven by sales growth in core businesses and higher interest income from loan to SGAH. 6M17 Car dealers 37% echnolog 0% 6M18 6M18 Auto parts 63% 20

21 Auto Parts : Sales & EBIT increased Sales and EBIT by quarter Jan-Jun Sales & EBIT THB million 5, % Thailand China EBIT% 4.9% 3.5% 5.6% 7.8% 9.6% 6.6% +8.5% yoy 8.7% 4,000 3,000 2,286 2,473 4,756 5,158 2,000 1,000 - Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 6M17 6M18 Q Sales grew 8.2% yoy, driven by volume increases in both Thailand and China. EBIT margin improved from 4.9% to 9.6%, attributable to higher sales and improved efficiency. CN 7% 6M18 TH 93% 21

22 Car Dealers : Sales & EBIT improved THB million 3,000 Sales and EBIT by quarter Thailand Malaysia EBIT% 1.1% 1.3% 1.2% 1.3% 1.3% 1.5% Jan-Jun Sales & EBIT +15.3% yoy 1.2% 1.4% 2,000 1,340 1,528 2,695 3,106 1,000 - Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 6M17 6M18 Q Sales growth was driven mainly by higher car sales in Thailand and Malaysia, driven by increased demand. EBIT margin improved from 1.3% to 1.5% of sales. MY 62% 0% 6M18 TH 38% 22

23 AH Core EBITDA continually increased Unit: in Million Baht EBIT Depreciation EBIT Depreciation % yoy Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 6M17 6M18 Unit: as % of revenue 15% EBIT% EBITDA% EBIT% EBITDA% 10% 5% 8.1% 3.9% 11.6% 7.5% 7.9% 4.3% 8.8% 5.5% 10.3% 6.7% 11.9% 8.0% 9.8% 5.7% 11.1% 7.4% 0% Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 6M17 6M18 23

24 Net profit trend is on the upside Unit: in Million Baht Profit to equity holders from operations Associate income Operations Associate % yoy Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 6M17 6M18 Unit: as % of revenue 10% 5% 5.7% 8.1% 5.7% 8.3% 8.8% Net Profit % 7.1% 6.9% Net Profit % 8.0% 0% Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 6M17 6M18 24

25 Exclude one-off, core profit increased As reported One-off items Core operations In Million Baht Q Q Q2 Q2 Q (1) 2018 (2) 2017 Q %change Revenues Growth% 3, % 4, % 147 3, % 4, % +14% Gross Profit GP Margin (%) 6.3% 6.5% 6.3% 6.5% SG&A Interest & Tax Core profit Profit Margin (%) % % % % +97% Associate (59) Net Profit NP Margin (%) % % 112 (59) % % +79% included THB 147 m. gain on sale of investments in QI & AQI and THB 35 m. SGAH acquisition related expenses included THB 59 m. one-time adjustments related to goodwill and accounting adjustment related to SGAH. 25

26 Profitability continually improved Return on Equity (ROE) Interest Coverage Ratio (ICR) 30% 20% ROE (In the Quarter) 10.1% 13.0% ROE (Seasonally adjusted) 17.8% 18.9% 14.8% ICR (In the Quarter) ICR (Seasonally adjusted) % 4.0 0% Q1/17 Q2/17 Q3/17 Q4/17 Q2/ Q1/17 Q2/17 Q3/17 Q4/17 Q2/18 Return on Asset (ROA) Debt to EBITDA ROA (In the Quarter) ROA (Seasonally adjusted) Debt/EBITDA (In the Quarter) Debt/EBITDA (Seasonally adjusted) 15% % 5% 5.5% 6.3% 7.3% 9.1% 9.0% % Q1/17 Q2/17 Q3/17 Q4/17 Q2/ Q1/17 Q2/17 Q3/17 Q4/17 Q2/18 26

27 Net gearing in line with target Interest-bearing Debt LT Bond ST Loan 7% 12% Net interest-bearing debt to equity ratio as of Jun 2018 decreased to 0.56x, which was within the Company s target of less than 1.00x. Total liabilities net cash (Net debt) to equity ratio as end of Jun 2018 was 0.91x, which was in line with the financial covenant target of less than 2.00x. LT Loan 53% CPLTD 28% Interest-bearing debts as of Jun 2018 decreased to THB 4.3 billion, of which mainly related to SGAH investment. Unit: in THB Billion Debts Equity D/E (L-C)/E Q1/18 Q2/

28 Proposed Dividend at 0.70 for 1H 18 Dividend Policy The Company has set a policy to pay dividend of not less than 10% of net profit after taxes. However, the decision for dividend payment is subjected to future investment plans and other necessities as the Company deems History of Dividend Payment 1H Dividend 2H Dividend Dividend Yield* % 5.0% % 2.2% 2.0% % 5.0% 4.0% 4.0% [VALUE]** 3.0% 2.0% 1.0% 0.0% Jan-Jun 2018 appropriate. ** Interim dividend payment for the period between 1 Jan 2018 to 30 Jun * Dividend Yield is calculated based on average share price in the period. 28

29 Strategy & Direction

30 Thailand Automotive Outlook in 2018 Unit: Million 3.0 Production Forecast Domestic Export First car campaign % 2.0 Global Financial Crisis Flood Thailand production volume in 2018 is forecasted to reach 2.08 million units, driven by increases of both domestic demand and export markets. Source: The Federation of Thai Industry (Automotive Industry) 30

31 Stable sales volume with steady growth Unit: in thousand Sample of automotive parts sales orders for current and new models 500 Global Financial Crisis Flood First car campaign Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Y21 Y22 Y23 Y24 Y25 Y26 Y27 Y28 Previous model Current model New model 31

32 Global Business Opportunities Top 10 Motor Vehicle Production Country in Unit : Millions China # USA #2 Japan #3 Germany #4 India #5 S.Korea #6 Mexico #7 Spain #8 Brazil # Thailand Volume 2 Million Major OEM Brands in Thailand America 21% Europe 23% Africa 1% 2017 China 30% Japan 10% India 5% France #10 Thailand # Rest of Asia 8% Thailand 2% Indonesia #17 Source: OICA Global Production Volume was 97 million units 32

33 Business Strategy To be Global EUROPE INDIA THAILAND MALAYSIA CHINA USA JAPAN 33

34 Key Milestones Taking steps toward globalization Listed on SET. Acquired a chassis frame factory from Dana Corporation. Expanded to China Established strategic global partnership with Sojitz Corp. Established JV with Mitsuike Corp. Acquired forging business from KPN Established JV with Minth Corporation. Established JV with Takagi Seiko. Completed construction of 3S showroom in Malaysia. New factory in Kunshan (China) started operation Established JV with; Lemtech (Taiwan) Edscha (Germany) Sumino (Japan) Sodecia (Portugal) Explored opportunity in the start-up business. Established AAPICO Training Center. Issued bond with a BBB+ credit rating. Achieved 4-star CG rating. Established strategic global partnership with Sakthi Group and invested US$100 million for 25.1% stake in Sakthi Global Auto Holding Limited (SGAH). Signed JV MOU with VINFAST to set up assembly plant in Haiphong, Vietnam for the first 2 models of VINFAST vehicles. 34

35 Current Global Footprints Detroit, USA New York, USA London, UK Germany Rushan, China Porto, Portugal Kunshan, China Taiwan Japan Durango, México Coimbatore/Erode, India Thailand Malaysia Singapore AAPICO Facilities Sakthi Facilities Other JV partners 35

36 Partnership with VINFAST AAPICO and VINFAST signed an MOU to set up an auto parts manufacturing plant in VINFAST Supplier Park, Hai Phong, Vietnam to set up a press shop and assembly facilities to produce Body in White (BIW) parts for VINFAST vehicles. From Left to Right: Mrs. Teo Lee Ngo (AAPICO Executive Director), Mr. Yeap Swee Chuan (AAPICO President & CEO), Mr. Trinh Van Ngan (VINFAST Vice President, Supplier Park), Mr. Vu Minh Thang (VINFAST Projects Director) 36

37 Expected Investment The first 2 VINFAST vehicles to be launched in Q % 51% Sedan JV MOU VINFAST will build a plant at VINFAST Supplier Park in Haiphong AAPICO will be responsible for overall management and will produce jigs and dies for VINFAST vehicles. SUV 37

38 Key focus points 1. Revenue and profit is on the upside. 2. Successful to win substantial orders starting end 2019 / early Major LOI received from Vietnam. Next investment destination. 4. Achieved the most prestigious awards from Isuzu Thailand for The Best in Quality-Cost-Delivery Award. 5. Paid good dividend at THB 1.20 per share for the year 2017 (the highest dividend in history) and propose to increase to THB 0.70 for 1H Solid improvement on core operations both revenue and profit. 7. Global expansion of AAPICO is on the roll. 8. New substantial order and expansion into Vietnam. 38

39 Disclaimer The information contained in this material has been prepared by AAPICO Hitech PLC ( AH or AAPICO ) solely for information purpose and does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to purchase or subscribe for shares in AAPICO. Some statements made in this material are forward-looking statements. These statements typically contain words such as expects and anticipates and words of similar import. Any statement in these materials that are not a statement of historical fact is a forward-looking statement that involves various risks and uncertainties. These include statements with respect to our corporate plans, strategies, and beliefs. These statements are based on our management assumptions and beliefs in light of the information currently available to us. These assumptions involve risks and uncertainties which may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. None of the future projections, expectations, estimates or prospects in this presentation should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct and exhaustive or, in the case of the assumptions, fully stated in the presentation. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of AAPICO or any of its shareholders, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of AAPICO nor any of its shareholders, directors, officers or employees accepts any liability (in negligence or otherwise) whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. Individual situations and local practices and standards may vary, so viewers and others utilizing information contained within a presentation are free to adopt differing standards and approaches as they see fit. Products and names mentioned in materials or presentations are the property of their respective owners and the mention of them does not constitute an endorsement by AAPICO. The information contained in this presentation is only current as of the date its date. In giving this presentation, neither AAPICO nor its respective advisers and/or agents undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent. You must make your own assessment of the relevance, accuracy, and adequacy of the information contained in this presentation and must make such independent investigation as you may consider necessary or appropriate for such purpose. The presentation should not be construed as legal, tax, investment or other advise. ir@aapico.com +66-(0)

40