Daibochi Plastic & Packaging Industry Berhad

Transcription

1 Daibochi Plastic & Packaging Industry Berhad 3Q16 Financial Results & Corporate Update 14 November 2016 IR Adviser AQUILAS

2 3Q16 Operational Highlights Growing regional sales

3 Healthy topline growth on larger orders PBT dampened due to forex differences and share of associate 3Q16 saw growth in sales yoy, but faced lower profitability» Revenue increased 9.4% yoy to RM94.1m (3Q15: RM86.0m) - Domestic sales rose 13% yoy to RM42.8m (3Q15: RM38.0m) - Export sales rose 7% yoy to RM51.2m (3Q15: RM48.0m); on larger orders to ASEAN and Australia» PBT declined 21.4% yoy to RM7.2m (3Q15: RM9.1m) on lower foreign exchange gain, associate loss, and higher labour costs on revised wage policy» Net profit dipped 11.1% yoy to RM6.0m (3Q15: RM6.8m) in line with PBT; aided by lower effective tax rate on reinvestment allowances 3Q16 qoq recorded marginal change in profitability» Revenue decreased 3.1% qoq (2Q16: RM97.0m) due to lower ASEAN exports; no loss of customer or contracts recorded» PBT declined 3.3% qoq (2Q16: RM7.4m) on higher repair and maintenance costs and in line with revenue performance» Net profit dipped marginally by 1.2% (2Q16: RM6.1m) OPERATIONS REVIEW 3

4 9M15 PBT Forex Gain Associate Gain Core 9M15 PBT Core 9M16 PBT Forex Gain Associate Loss Core 9M16 PBT 3Q15 PBT Forex Gain Associate Gain Core 3Q15 PBT Core 3Q16 PBT Forex Gain Associate Loss Core 3Q16 PBT Marginal reduction to Core PBT after adjusting for forex differences and associate performance Normalised PBT 3Q16 vs 3Q15 (RM mil) 3Q16: (5.2%) yoy (0.04) Q16 Core PBT 5.2% yoy Higher operating cost mainly due to revised wage policy in January 2016 Normalised PBT 9M16 vs 9M15 (RM mil) 9M16: (8.5%) yoy (0.15) M16 Core PBT 8.5% yoy Higher operating cost mainly due revised wage policy in January 2016 Exceptional expenses in 2Q16 o Air freight for new product launch o High repair and maintenance cost OPERATIONS REVIEW 4

5 Growth Strategies Enhancing efficiency & entering new markets

6 Gearing for record turnover Daibochi Plant 2 expansions to enhance operating efficiency Status of new contracts to ANZ s F&B and FMCG customers» ANZ F&B - Commenced F&B packaging supply to a new MNC customer with leading snack food brands in Australia; deliveries for first product line began in 3Q16, deliveries for the second product line to begin in 4Q16 - To supply an MNC with new structure packaging that improves consumer experience with targeted commencement in end-2016» ANZ FMCG: Currently supplying new innovation of four-side-seal bags that improve production efficiency (commenced April 2016) Daibochi Plant 2 expansions to complete in 4Q16» RM13m for second expansion phase of Daibochi Plastic Plant 2 (of which RM10 million invested in 9M16) - Construction on track to complete in 4Q16, built-up area to expand from 80,000 sq ft to approximately 140,000 sq ft for additional warehousing and production floor space - New blown film machine targeted to be commissioned by end-2016 to double in-house blown film capacity - Additional RM7 million for recurring CAPEX in Daibochi Plant 1 (of which RM4 million invested in 9M16)» To benefit from Special Reinvestment Allowance incentive applicable for investments from 2016 to 2018 Expecting improvements to ongoing labour-related challenges in FY2016» Government resumed accepting applications for hiring of foreign labour for the manufacturing industry; Group proceeded with applications and obtained regulatory approvals in November» To focus on skills training, talent retention, and motivation programmes to address labour sustainability in the long run FY2016 OUTLOOK 6

7 Products / Brands existing new Driven by new innovations and expanding export orders in regional markets Myanmar joint venture to boost growth New innovations to have multiplier effect in existing and new markets New product line for APAC F&B market commenced in 3Q15 New product line commenced in 2Q15 for Australia FMCG industry Innovations High Speed Sealing Four-side seal pouch (commenced in 2Q16 to ANZ market for a MNC s FMCG product line) Sterilisable film Entry into Myanmar provides growth opportunities in one of Asia s most populous nations New export orders commenced in 3Q16 for Australia F&B industry to existing MNC customer existing New export orders commenced in 3Q16 for Australia F&B industry to new MNC customer new Existing customer base to sustain growth pace and expose new markets Customers / Geographical Markets GROWTH STRATEGIES 7

8 3Q16 Financial Review Navigating higher costs

9 Strong topline performance on regional sales expansion addressing profitability through better operating efficiency 3Q16 to Q16 to Change vs preceding qtr RM'mil 9M16 to M15 to Change vs prev period (3.1%) Revenue % (2.0%) EBITDA (3.8%) (2.5%) Operating Profit (6.9%) (0.04) (0.05) n/m Share of Associate Results (0.15) 1.75 n/m (3.3%) Pre-tax Profit (15.5%) (1.2%) Net Profit to Shareholders (7.7%) (0.9%) Basic EPS (sen)* (7.7%) 11.8% 11.7% 0.1 pt EBITDA margin 12.2% 13.6% (1.4 pt) 7.6% 7.7% (0.0 pt) PBT margin 8.1% 10.2% (2.2 pt) 6.4% 6.3% 0.1 pt Net margin 6.6% 7.7% (1.1 pt) *based on million shares after 1-to-2 share split and 1-for-5 bonus issue effective 22 Feb 2016 Revenue increased on higher sales to regional and domestic markets Operating profit lower on revised wage policy, higher repair and maintenance expenses, and air freight costs for new launch PBT level saw lower foreign exchange gain and loss in associate results Impact on net profit softened by reinvestment allowances for new machinery Quarterly Group Revenue FY2013-2Q16 (RM mil) Quarterly Group PAT FY2013-2Q16 (RM mil) +9.4% (11.2%) INCOME STATEMENT 9

10 Healthy balance sheet with manageable gearing Fixed Assets (excl associate investment & deferred tax) As at As at (Unaudited) (Audited) Remarks Associate Investment Current Assets Due to higher inventories in line with enlarged orders Current Liabilities In line with higher working capital requirements Shareholders Equity Total Borrowings In line with higher working capital requirements Cash & Bank Balances Net Gearing 0.22 x 0.14 x In line with higher working capital requirements Return on Average Shareholders Equity* 13.9% 15.3% Return on Average Total Assets* 8.3% 9.1% *based on net profit for the trailing twelve months BALANCE SHEET HIGHLIGHTS 10

11 % 75. 0% 50. 0% 25. 0% 0.0 % Third interim single-tier dividend of 1.32 sen per share payable on 22 December 2016 (Ex-date on 25 November 2016) Dividend Payout Dividend Payout (RM 'mil) Payout Ratio Net Dividend Per Share (sen)* 51.6% 50.3% 61.5% 61.3% 62.2% 60.0% 60.1% M M16 Dividends in respect of FY2016 Paid first interim single-tier dividend of 1.45 sen per share amounting to RM4.0 million payout (Paid: 10 June 2016) Paid second interim single-tier dividend of 1.33 sen per share amounting to RM3.6 million payout (Paid: 22 September 2016) Declared third interim single-tier dividend of 1.32 sen per share amounting to RM3.6 million payout (Ex-date: 25 November 2016; Payable: 22 December 2016) Daibochi has a dividend policy to distribute 60% of net profits to shareholders Stock charts (5-Year & 1-Year) 11 Nov 11 KLCI: 1, DPP:MK: 0.61* 7 Nov 16 KLCI: 1, DPP:MK: YR outperformance: 251.6% 9 Nov 15 KLCI: 1, DPP:MK: 1.93* 7 Nov 16 KLCI: 1, DPP:MK: 2.22* 1YR outperformance: 17.1% *Adjusted for 1-for-2 bonus issue, effective 10 Sep 2012; 1-to-2 share split and 1-for-5 bonus issue, effective 22 Feb 2016 DIVIDEND HISTORY 11

12 Investment Merits Proxy to region s growing appetite

13 To grow through expansion of MNC clientele and order size... new innovations to enhance product mix Share 7-Nov 2016 Market 7-Nov 2016 Trailing PE Trailing EV/EBITDA RM2.22* RM606.6 mil 24.1 x 13.7 x To continuously increase MNC customer base Poised to support regional clients growing production demands; joint venture in Myanmar to open up new growth opportunities in South East Asia among mass market buyers FY15 Dividend Yield 2.6% * cum third interim single-tier dividend of 1.32 sen to be paid on 22 December 2016 Collaborations with MNC customers for new product innovations To result in favorable product mix going forward New manufacturing capacity expansions to support future growth Expansion of Plant 2 (Phase 2) positions Group to capture future opportunities; CAPEX into Myanmar joint venture to scale up capacity and target new customers VALUATIONS AND PROSPECTS 13

14 THANK YOU Bursa: DAIBOCI/8125 Bloomberg: DPP:MK Reuters: DPPM.KL IR Contacts Mr. Low Jin Wei E: T: Ms. Julia Pong E: T:

15 Corporate Profile

16 Market cap of RM600 million DAIBOCHI PLASTIC & PACKAGING INDUSTRY BERHAD Exchange Main Market, Bursa Malaysia since 1990 (transferred from Second Board in 2003) Sector Codes Share Capital Industrial Products Bursa: 8125 / DAIBOCI Bloomberg: DPP:MK Reuters: DPPM.KL RM136.6 mil (273.2 mil shares of RM0.50 each) Market Capitalization RM606.6 mil (RM2.22 as at 7 November 2016) CORPORATE INFORMATION 16

17 Commendable track record in serving a wide number of MNC clientele in the F&B industry with stringent quality control The LARGEST SUPPLIER of Milo packaging in S.E.A The SOLE SUPPLIER to Nestle s Chembong confectionery factory in Malaysia» Daibochi is also the ONLY S.E.A company on Nestle s Regional Food Safety Committee The MAJOR SUPPLIER of Mondelez International s biscuits, snacks, and chocolate packaging in Malaysia MAJOR SUPPLIER of flexible packaging to PepsiCo Thailand plant for potato chips manufacturing REGIONAL PRESENCE 17

18 Internationally-certified production facilities that comply with all factory audits by MNC clientele strength in innovation Accredited and world-class production facilities» Attained ISO:9001 and ISO:14001 certifications» Obtained Food Safety System Certification (FSSC:22000) in May 2014 Well-equipped laboratory testing facilities» To ensure our products consistently exceed customers packaging barrier, retention and migration requirements» Recent breakthrough in producing 2-layer film to potentially replace conventional 4-layer film PRODUCTION FACILITIES 18

19 Integrated end-to-end packaging process equipped with specialized in-house capabilities The only player with in-house cylinder-making, and one of the few with metallizing and sealing films capabilities for quality assurance and constant improvement at key stages In-house capabilities Up to 9-colour 2-sided printing Solvent-based/free Capabilities incl Standing Pouch Prepress Cylinder Making Gravure Printing Lamination (Extrusion / Dry) Slitting / Bagging CPP Film Metallizer Polypropylene sealing films To build high barriers PRODUCTION FACILITIES (CONT D) 19

20 Leading flexible packaging solutions provider, with enviable reputation exceeding 40 years 2014 Commenced operations of 2 nd manufacturing plant (Daibochi Plastic Plant 2) in Jasin, Melaka; acquired 2 nd metallizer and 1 st high speed CPP machine Supplier to leading homegrown instant beverage producer; Obtained Food Safety System Certification (FSSC:22000); Winner of the Top Overall Corporate-Governance Award 2014 in Mid-Cap Category by Minority Shareholder Watchdog Group 2011 Acquired high-speed printing machine; Acquired metallizer to produce ultra high barrier films; Accredited with ISO: Obtained Letter of Validation from USA for electronic packaging Acquired 9 th printing machine; Obtained HALAL Certification; Regional supplier for BAT 2013 Supplier to PepsiCo Thailand (Chiang Mai plant); Winner of the Top Overall Corporate-Governance Award 2013 in Mid-Cap Category by Minority Shareholders Watchdog Group 2008 Acquired wide web polypropylene film making machine 2015 Acquired high-speed extrusion lamination machine, high-speed printing machine; Winner of the Top Overall Corporate-Governance Award 2015 in Mid-Cap Category by Minority Shareholder Watchdog Group 2012 Set up Cleanroom for bagging process Received Gold Award for the Colorpak Packaging Export Award at Australian Packaging Awards 2004 Acquired M sia s 1 st 5-layer-blown film machine to produce transparent barrier films 2003 Transfer to Main Board (now Main Market); Accredited with HACCP 2001 Incorporated Australian subsidiary; Accredited with ISO: Supplier to Nestle M sia Moved to current Daibochi Plastic 1 premises with >325,000 sq ft built-up area 1994 Acquired fastest extrusion laminator in SEA 2002 Acquired metallizer with Plasma Tech to produce high-barrier films; Regional Supplier to Nestle in SEA 1990 Acquired metallizer to produce in-house metalized films; Listed on 2 nd Board of KLSE (Bursa M sia) 1987 Acquired polypropylene film-making machine to produce in-house films 1984 Started in-house printing cylinder making 1972 Established in Melaka with 10,000 sq ft plant; Moved to larger premises with 165,527 sq ft CORPORATE TIMELINE 20

21 Wide range of packaging solutions for various product functions Constantly innovating for changing requirements Film Type Applications / Use High Permeability Barrier / Performance Cost Effective Barrier Coffee, Nuts, Potato Chips Snacks, Biscuits, Wafer, Chocolate, Cakes General Packaging Outer Pack, Noodles, Biscuits, Wafers Specialty Application Labelling, Retort Packaging, Ice-cream, Frozen Food, Cereal Peel Seal, Seasoning Oil, Powder/Liquid Detergent, Shower Foam, Tobacco, Pet food PRODUCT APPLICATIONS 21

22 Experienced management with industry expertise Thomas Lim Soo Koon, Managing Director - Holds a degree in Bachelor of Science Industrial Engineering and Management from Oklahoma State University, & Master of Business Administration degree from Oklahoma State University. - Joined Daibochi in 1995, and was appointed as Managing Director in February Played a key role in building Group s MNC clientele. Datuk Wira Wong Soon Lim, Executive Director - An accountant by training and a member of the Malaysian Association of the Institute of Chartered Secretaries and Administrators. - Has an extensive experience and knowledge in the field of accounting, finance, consultancy, corporate finance, manufacturing and property development. Instrumental in listing of the Company. Low Chan Tian, Executive Director - Holds a degree in Bachelor of Engineering from the University of Western Australia. - Has wide experience in manufacturing, property development, business and finance. Low Jin Wei, Executive Director - Holds a degree in Bachelor of Commerce (Major in Finance & Marketing) from University of Sydney, NSW, Australia. - Prior to this, Mr. Low was the Managing Director / Project Director of GlassKote (Malaysia) Sdn Bhd from 2005 to September KEY MANAGEMENT 22

23 Institutional investors holding approximately 30%... No. of shares ( mil) ( ) Percentage * Low Chan Tian, ED % Apollo Asia Fund Ltd % Lim Koy Peng % Datuk Wira Wong Soon Lim, ED % Halley Sicav Halley Asian Prosperity % MAJOR SHAREHOLDERS 23

24 Growth in flexible packaging to be led by the Asian region penetration into new product categories to bring next wave Worldwide consumer flexible packaging market worth $92 bil in 2015 Estimated to grow 4% p.a. to reach $114 bil in 2020 Growth to be led by Asia Pacific & other emerging regions (e.g. South & Central America) Source: Smithers Pira The Global Flexible Packaging Market Trends and Forecasts Growth catalysts for Asia s flexible packaging market: Higher demand for cheaper and smaller pack sizes in line with affordability of general population (especially post economic slowdown) Increase in working mothers / dual-income households leading to preference for convenience packaging Development of multinational food retailers and manufacturers in the region; indicating the long-term growth potential in Asia Source: The Asia Pacific Flexible Packaging Market to 2016 by PCI Consulting Films Ltd INDUSTRY INSIGHT 24