Corporate Presentation

Transcription

1 Corporate Presentation 1Q14 Financial Results & Corporate Updates 28 May 214 Presented by: Mr. Brandon Tay, Managing Director IR Adviser AQUILAS CORPORATE UPDATE

2 Industry Overview Cocoa ingredients prices and demand stabilize however, headwinds might come from supply of beans Cocoa bean supply still in deficit in 213/214, pointing to higher bean prices ICCO estimated a cocoa supply deficit of 115, MT and decreasing bean inventory level for 213/214. At the same time worldwide grinding continue to increase, driven by US & Europe chocolate demand recovery. Cocoa bean prices have risen on concerns that the El Nino weather phenomenon could hurt supply. Cocoa ingredients prices continue to stabilize in 1Q14 Butter ratio and demand firm up as advanced economies stage gradual recovery. Cocoa powder prices remain flat, but demand has shot up due to low level of stock-in-hand among users. 3 OPERATIONS HIGHLIGHTS & GROWTH PLANS

3 1Q14 Operations Highlight Higher overall sales tonnage butter ASP continues to increase while solids saw increased demand 5 Sales Tonnage: +19.4% yoy vs 1Q13; % qoq vs 4Q13; Capacity utilization rate for 1Q14 : 85% Powder 16.6% of 1Q14 Revenue Cake 1.9% of 1Q14 Revenue Butter 57.4% of 1Q14 Revenue Cocoa Solids Sales Tonnage: +22.4% yoy, +44.4% qoq ASP: -42.% yoy, -7.5% qoq Sales Tonnage: +6.7% yoy, +.6% qoq ASP: +89.% yoy, +25.8% qoq Production Volume ( MT) Q212 3Q212 1Q213 3Q213 1Q14 Pasir Gudang Batam Average Selling Prices Trend Liquor 2.3% of 1Q14 Revenue Sales Tonnage: -27.9% yoy, -.8% qoq ASP: +24.1% yoy, +12.5% qoq 1Q212 2Q212 3Q212 4Q212 1Q213 2Q213 3Q213 4Q213 1Q214 Butter Powder 5 Growth Plans Immediate plan to manage inventory level of cocoa solids market development and downstream expansion to continue as planned Immediate Plans Medium-term Plans Long-term Plans Enlarging cocoa powder clientele US Market Development Developing New Export Markets Downstream Expansion To reduce powder stock pile Wholly-owned Carlyle Cocoa Co LLC to expand customer base, as well as to offer wider product range to US Market Leveraging on brand name clients (like Nestle, Mars, Lotte, etc) to target new overseas clientele To have direct presence (like US market) in other emerging markets of China, Russia, and South America New industrial chocolate facility at PTP raising production capacity to 1.4k MT pa Targeting industrial chocolate to contribute 4% of group revenue within 5 years Update: To concentrate more on tolling services and combined ratio selling To expand market share worldwide by appointing more distributors and agents, as well as introducing new brands To optimize production capacity at both facilities when necessary Update: To strengthen our marketing & sales force team Expanding our distribution network in the US market Update: To explore opportunities in both European and US markets Update: Currently PTP Plant running at capacity of 1,5 MT per quarter. Industrial Chocolate plant, PTP Johor 6

4 FINANCIAL HIGHLIGHTS 1Q14 Income Statement Earnings rebounded from two consecutive quarters of losses due to stronger cocoa butter prices and higher sales volume... Remarks 1Q14 1Q13 Change RM'mil FY % higher sales volume and higher cocoa butter prices Margins affected by depressed prices of solids, and further write-down of inventory Due to slightly higher depreciation and amortisation Affected by higher finance costs Effective tax rate lower than statutory tax rate principally due to non-taxable income % Revenue 1, (43.7%) EBITDA % 8.1% (4.6pt) EBITDA margin 2.9% (55.3%) EBIT % 7.% (4.6pt) EBIT margin 1.5% (71.7%) PBT % 6.2% (4.9pt) PBT margin.6% (68.1%) PATMI % 4.5% (3.4pt) Net margin.3% In line with PATMI (68.%) Basic EPS (sen).72 8

5 Yield Trend EBITDA yield turning around 9 RM 2, 1,5 1, 5-5 1, , ,58.6 1, , ,338.5 EBITDA Yield (based on productiontonnage) (RM per MT) 1,96.5 1,39.2 1,45.2 1, , (47.) (119.) 1Q12Q13Q14Q11Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q Before provisions of inventory write-down MT Production Tonnage Q1 2Q1 3Q1 4Q1 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Balance Sheet Gearing is expected to come off in coming quarters Balance Sheet (RM ) As at As at Remarks PPE & Prepaid Lease Payments 416, ,641 - Inventories 755,45 849,96 11% reduction mainly due to decrease in raw materials, as well as finished goods. Other Current Assets 37,28 242,623 Mainly due to higher trade receivables, in line with business volume. Current Liabilities 1,13,54 1,52,374 Trade payables decreased while trade loans increased. Non-Current Liabilities 141, ,38 - Shareholders Equity 333, ,766 - Borrowings (ST + LT) 1,3, ,11 Cash & Cash Equivalents 24,56 27,442 Higher net borrowings due to increased working capital needs Gearing (net of cash) 2.94x 2.78x As above Net Tangible Assets / Share (RM)

6 Analysis of Borrowings Rise in short-term debts due to working capital requirements x 4. Net Gearing & Effective Interest Rate Net Gearing (LHS) EIR (RHS) 8 % Q14 Interest coverage 2.1 x 4.6 x 23.1 x 23.1 x 13.3 x 1.6 x 2.3x 11 Key Financial Ratios Recent increased sales of solids help in relieving working capital pressure Working Capital Management FY212 FY213 1Q14 Current Ratio Collection period (days) Payment Period (days) Inventory processing period (days) Cash Conversion Cycle (days)

7 INVESTMENT MERITS Investment Highlights Cocoa industry gradually recovered from one-time market structural change in 213 New markets and downstream expansion to be next catalysts Grinding industry has seen the worst with cocoa solids prices and demand recovering while cocoa butter continued to see higher ratio Next growth impetus to come from industrial chocolates business Asia market still offers huge potential, evident from: Hershey s upcoming set-up in Iskandar Malaysia Cargill, Olam International Ltd, and Barry Callebaut setting up grinding facilities in Indonesia pushing overall capacity to about 6, MT. Customers of top chocolate and F&B product makers: Mars, Hershey, Lotte and Nestle still remain as growing customers 14

8 Dividend History Committed to 25% dividend payout policy Dividend History Dividend Payout (RM'mil) Payout Ratio (%) 394.2% Dividend Policy: 25% of Net Profit (effective FY211) 61.4% 58.8% 42.3% 17.7% 46.3% 27.6% 29.2% 34.8% FY25 FY26 FY27 FY28 FY29 FY21 FY211 FY212 FY213 Sen Net DPS FY25 FY26 FY27 FY28 FY29 FY21 FY211 FY212 FY Sen Adjusted Net DPS FY25# FY26# FY27# FY28# FY29# FY21# FY211# FY212# FY213 # Net DPS adjusted for 1-for-3 Bonus Issue in Feb 211 & 1-for-2 Bonus Issue in Sept THANK YOU IR Contact: Mr. Terence Loo : / terence@aquilas.com.my

9 APPENDIX CORPORATE PROFILE

10 Corporate Information The only pure cocoa player listed on Bursa Malaysia GUAN CHONG BERHAD s Main Shares Listed Main Market, Bursa Malaysia since 25 Sector Codes Share Capital Consumer Products Bursa: 512 / GCB Bloomberg: GUAN MK Reuters: GNCH.KL RM119.6 mil ( mil shares of RM.25 par) Market Capitalisation RM66.35 mil (RM1.38 as at 27 May 214) Codes Outstanding No. of Warrants Terms of Warrants GUAN CHONG BERHAD s Warrants 211/16 Bursa: 512WA / GCB-WA mil (as at 28 Feb 214) Expires 16 Feb 216; 1-for-1 Conversion; Exercise Price of RM2. Market Capitalisation RM47.8 mil (RM.4 as at 27 May 214) 19 Background Amongst the top 1 largest cocoa processors in the world.. Guan Chong Berhad (GCB) ventured into the cocoa business in Pasir Gudang, Johor, in 199 Began with a processing capacity of 6, MT/year Today, GCBis amongst the industry s global market leaders with total capacity of 2, MT/year Presence in Pasir Gudang, Malaysia (8, MT/year bean grinding, blending & mixing); Batam, Indonesia (12, MT/year bean grinding); and Delaware, USA (cake grinding) Cocoa products marketed under the Favorich brand GCB has a global distribution network of >7 distributors/agents and exports cocoa products to established clientele in >6 countries, including world-famous chocolate makers and leading cocoa ingredient traders 2

11 Revenue Trend 1Q14 earnings show signs of recovery Profitability Trend 1Q14 margins affected by increased competition in cocoa solids markets RM mil 2 EBITDA & Margin EBITDA EBITDA Margin Margins (%) 25% 16 2% RM mil % 3.4% % 17.6 PBT, PATMI & Margins PBT Net Profit PBT Margin Net Margin 9.6% 1.9% % % % 5.1% % % 1.7% % FY27 FY28 FY29 FY21 FY211 FY212 FY213 1Q213 1Q % 9.1% % FY27 FY28 FY29 FY21 FY211 FY212 FY213 1Q213 1Q214 12% % 3% 4.7.6%.3% % % 4.5% % % 1.1% 6.4 Margins (%) 16% % 1% 5% % 12% 8% 4% % 22

12 Production Facilities - Malaysia Comprehensive cocoa processing Guan Chong Cocoa Manufacturer S/B Bean processing at Pasir Gudang Annual capacity: 8, MT Enrich Mix S/B Sugar cocoa preparation at Pasir Gudang Annual capacity: 2, MT ISO:91 and HACCP certified GCB Specialty Chocolates S/B Industrial chocolate production (e.g. chocolate coating, sauce & cream, baking chips, etc) at Pasir Gudang Annual capacity: 1,4 MT at Tanjung Pelepas Plant GCB Foods S/B Producing own CacaoRich brand chocolate beverages, and OEM chocolate malt drinks for hypermarket house brands at Pasir Gudang Annual capacity: 2,4 MT 23 Production Facilities - Indonesia Batam plant benefiting from close-to-source and zero tariff PT Asia Cocoa Indonesia Incorporated in 21, and wholly owned by GCB Situated in Batam, the Group s second bean grinding factory started production in Feb 211 with initial annual capacity of 6, MT 2 nd line of 6, MT installed in June

13 Business Model Integrated operations from manufacturing to distribution Plantation Business Model Distribution Contribution to FY13 revenue Product Development Cocoa Ingredients Cocoa Preparation Manufacturing Local 6.8% Industrial Chocolates Branding & Marketing Export 93.2% Consumer Chocolates Distribution 25 Product Range Producing the finest cocoa ingredients for highly-discerning customers comprehensive product range 8% # 35% # 45% # # 1MT of cocoa beans typically yield.8mt of by products of cocoa butter (.35MT) and cocoa cake (.45MT) Cocoa Ingredients Cocoa Preparations Revenue Contribution (FY13) Cocoa Cocoa liquor cake 3% 11% Cocoa butter Cocoa powder 5% 26% Covertures & Confectioneries 5% 3% 26