Global Connections Public Company Limited Q1/2013 Performance Announcement Presentation May 2013 1
Today Content Company Overview Plastic and Petrochemical Industry Q1/2013 Performance IR report & Investment Highlight Q&A 2
Company Overview MB 4000 3500 3000 2500 Total Revenue 3,272 Listed to SET 6 th Dec.2005 2,665 3,793 3,710 GC has been founded since 1994 by 5 experienced management GC is the distributor of 32 leading producers of plastics and petrochemical raw materials from around the world. 2000 1500 1000 500 0 76 801 Most of these producers are among the top 3 in the world in that product in terms of technology & production capacity. GC Revenue During 1995 2013 Sales growth in Q1/2013 YoY QoQ Value -27.20% 6.59% Quantity -34.87% 3.49% Year GC is not an ordinary distributor. On top of ordinary distribution role, GC provide technical advice and useful information to customers since GC position itself to be Your best partner for solution and service in Industrial raw material supply. 3
GC s role and positioning in the market Leads the differentiation Economy of Scale to Suppliers Suppliers S1 S2 S3 S4 S5 Sn ) Global Connections Public Co., Ltd. Provided Logistic : Warehousing, small delivery, and repacking Sales & Marketing : Closely contact to end markets/customers Technical Services : Troubleshooting / Product and Market Development Financing & structuring solution : Extending our expertise to customer Customers C1 C2 C3 C4 C5 Cn Economy of Scope to Customers 4
Where we are in the value chain of Thai Petrochemical Industry Petrochemical and plastic producers Upstream Intermediate Downstream Compounders End users Olefin&Aromatic Producers Monomer producers (MEG, VCM) Polymer producers (PP, PE, PVC) Global Connections Compounders Master batch producers Converters 5
Organization Chart 6
Major Shareholders Free Float Overview As of 19-04-13 Minor Shareholders (Free float) 989 % Shares in Minor Shareholders (% Free float) 31.06% Overview As of 19-04-13 Total Shareholders 1,066 Rank Major Shareholders as of 24/08/2012 # Shares % Shares 1 Mr. Somchai Kulimakin 44,499,900 22.25 2 Mr. Aikachai Sirijantanan 28,470,730 14.24 3 Mr. Sumruay Tichachol 27,125,000 13.56 4 Mr. Bhiya Jriyasetapong 26,125,000 13.06 5 Mr. Somkiat Terdtultaveedey 9,200,000 4.60 6 Mr. Siri Thirawattanawong 8,226,000 4.11 Sub total 143,646,630 71.82 7
Corporate Value Ethics Integrity Professional & Focus Partnership Strive for better 8
1996 Distributing agent of SCG Plastics Co., ltd. and Eastman Chemical, which was the start of specialty product distribution. 1994 GC was established by 5 founders with initial registered capital of 2 MB. 1998 Distributing agent of OCV Reinforcement Co., Ltd 1997 Distributing agent of DuPont Performance Polymers and Chi Mei Corporation Company History 1994-1999 2000-2005 2006 - Current Start business with commodity plastic Diversify company portfolio from commodity to specialty plastic 2004 Distributing agent of ExxonMobil and Rio Tinto Mineral Asia Pte., Ltd. 2006 Distributing agent of Nanocor Inc. 1999 Distributing agent of Siam Polystyrene (Thailand) Co., ltd. and Cabot Plastic Hong Kong Ltd. 2005 Listed company and paid-up capital to 200 MB More Product from Exxon : Butyl & Vistamaxx Create sustainable growth being the best partner for solution and service in industrial raw material supply 2008 Distributing agent of DIC Exxon Product : PE PP 2010 Distributing agent of BST Elastomers Co., Ltd. 2009 Exxon Product : Vistamaxx for Film 1994 1996 1998 2000 2004 2006 2008 2010 2012 2011 Distributing agent of Miliken Chemical, Imerys Meneral, Timcal Ltd. Exxon Product : ENABLE, EXCEED 2012 Change Distributing agent of SCG to PTTPM. Exxon Product : Special Compound
Corporate Strategy Maintain existing strong market positioning Become solid partner with supplier and customer Offer total professional solution Be leader in advanced technology product Grow towards the growing industries Develop new application/market from initial stage 10
2013 Corporate Strategy VALUE V : Versatile Staff A : Aggressive Move L : Lean and Learning Organization U : Unique Differentiation E : Eligible Payoff 11
GC Business Unit BU1 COMMODITY POLYMER BU2 SPECIALTY & ENGINEERING POLYMER BU3 SPECIALTY CHEMICALS & INTERMEDIATE 1. Polyolefin 2. PET & PVC 3. Specialty Polyolefin 1. Engineering Plastics 2. Industrial Products 1. Additives & Adhesives 2. Petro Chemicals & Intermediate - Automotive parts Car & Motorcycle : Interior and exterior parts Console, Bumper, Door trim, Body side Engine covered, Muffler covered, Trunk tray, Liner, etc. - Electronic and Appliance Parts Washing machine, Refrigerator, Air-Con, Fan - Transparency packaging - Cosmetic packaging - Office equipment - Compounding &color Master batch - Resin Producers - Refinery plant - Industrial product - Packaging Product - Adhesive Product (Solvent based, HMA) - Tire & Rubber House - Ink - Flexible Hose/Tube - Woven bag, Film - Toys, Furniture Plastic Pallet - House ware - Road Marking Paint - Industrial product -Tape & Label PSA
Marketing Structure GC Business Unit BU1 COMMODITY POLYMER Polyolefins PE: HDPE, LDPE, LLDPE (C4,C8) PP: Homo, Block Copo, Random PVC PET PU BU2 SPECIALTY & ENGINEERING POLYMER Nylon, POM, PBT, TEEE, PCT, LCP, PC Black/White MB EPDM, Butyl EO, EB Plastomer, PP-Plastomer TPVs, TPU PETG/PCTG, CA PS, HIPS, ABS, SAN, SBC TPE, FR, Reinforcement compound Talc, Zinc Borate FR, Nano-Clay Glass Fiber EVA for HMA, Hydrocarbon Resin BU3 SPECIALTY CHEMICALS & INTERMEDIATE Plastic Additive Intermediate chemical
Automotive E&E Appliance Packaging Toys & Stationery Personal Care Products Industrial Market furniture, construction, shoes, adhesive, Road marking
Plastic and Petrochemicals Industry 15
Crude Oil Price Chart
Economic Growth Rate by The National Economic and Social Development Board 18.0% 16.0% 16.4% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 11.0% 6.4% 3.8% 5.0% 3.2% 3.2% 0.1% 3.0% 2011 2012 2013e GDP Export Inflation As of Feb 18, 2013 Source : Office of The National Economic and Social Development Board http://www.nesdb.go.th/ 17
MPI and CAPU CAPU 2013 Q1/13=66.8 2012=65.2 Q1/12=62.6, Q2/12=64.3, Q3/12=66.1 Q4/12=67.0 Source: THE OFFICE OF INDUSTRIAL ECONOMICS 18
Key Strategic Market Automotive E&E Appliance Packaging Toys & Stationery Personal Care Products Industrial Market furniture, construction, shoes, adhesive, Road marking
Thailand Auto Production 2013 (E) 2013 (Q1) 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 721,460 1,457,795 1,645,304 999,378 1,391,728 1,301,149 1,193,885 1,125,316 960,371 750,512 564,392 454,797 405,761 2,550,000 2,428,181 Production (Unit) Q4/2013 Q3/2013 Q2/2013 Q1/2013 Total 721,460 721,460 Q4/2012 Q3/2012 Q2/2012 Q1/2012 Total 730,099 648,165 550,270 499,647 2,428,181 Car Production Forecast for the year 2013 around 2.55 mil. Unit or around 4% growth. This figure target to 3 million in 2017. Production in Feb 2013 is equal 229,204 units or around 36.35% YOY increase due to the vehicle manufacturers accelerate production for the first car project Source : Thailand Automotive Institute
Thailand Auto Monthly Production Source: THE OFFICE OF INDUSTRIAL ECONOMICS 21
Electronic Appliances Industry MPI of Electrical and Electronics Source: THE OFFICE OF INDUSTRIAL ECONOMICS 22
Q1/2013 Performance 23
Statements of Comprehensive Income Unit : Million Baht Actual Q1 2013 2012 Change Sales 792.19 1,088.15-27% COGS 730.49 1,022.75-29% Gross Profit 61.70 65.40-6% Selling & A dmin Expenses 29.43 28.70 3% Reduction of inventory to net realisable value (Reversal) 0.00 (2.00) -100% EBITDA 32.27 38.70-17% Depreciation 3.14 3.51-11% Interest Expenses 4.09 4.15-1% Profit Before Other Income 25.04 31.04-19% Other Income 5.65 1.16 387% Gain (Loss) on exchange rate 2.78 1.54 81% Profit before Tax 33.47 33.74-1% Tax 6.87 7.63-10% Deferred Tax Expenses (0.14) 0.27-152% Net Profit 26.74 25.84 3% 24
Sales Structure BU3 BU2 BU1 52.0 0.1 10.7 64.8 Sales Quantity 62.2 0.2 0.0 0.1 13.1 13.5 59.4 17.2 '000 T 70 60 50 40 BU3 BU2 BU1 Sales Quantity in Percentage 0% 0% 0% 0% 0% 21% 20% 22% 29% 41% 100% 80% 60% 41.2 51.5 48.7 42.1 11.9 0.0 4.9 7.0 30 20 10-79% 80% 78% 71% 59% 40% 20% 0% 2009 2010 2011 2012 Q1_2013 2009 2010 2011 2012 Q1_2013 BU3 BU2 BU1 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Sales Value-Million Baht 2,647 3,662 79 3,786 3,700 13 27 60 1,157 1,357 1,632 808 1,779 2,426 2,416 2,041 792 5 443 344 2009 2010 2011 2012 Q1_2013 BU3 BU2 BU1 100% 80% 60% 40% 20% 0% Sales Value in Percentage 2% 2% 0% 1% 1% 31% 32% 36% 44% 56% 67% 66% 64% 55% 43% 2009 2010 2011 2012 Q1_2013 2
300 250 200 150 100 50 - BU3 BU2 BU1 Gross Profit By BU 286 271 250 20 4 6 201 16 168 168 164 93 66 1 92 98 99 80 50 15 2009 2010 2011 2012 Q1_2013 Gross Profit Structure BU3 BU2 BU1 100% 80% 60% 40% 20% 0% Gross Profit in Percentage 8% 7% 1% 2% 2% 46% 59% 62% 66% 76% 46% 34% 37% 32% 22% 2009 2010 2011 2012 Q1_2013 35% 30% 25% 20% 15% 10% 5% 0% 26.2% 25.5% 11.5% 5.2% Gross Profit Margin by BU 14.6% 27.5% 12.4% 21.5% 22.3% 10.1% 11.3% 4.0% 4.1% 3.9% 4.2% 2009 2010 2011 2012 Q1_2013 BU3 BU2 BU1 26
Revenue (Million Baht) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 4000 3500 3000 2500 2000 1500 1000 Statements of Comprehensive Income Highlights 500 0 Profit 2,665 96 Revenue & Net Profit 3,678 3,793 3,710 124 80 76 Profitability Ratio 801 27 2009 2010 2011 2012 Q1_2013 Revenue 7.09 7.36 25.82 30.51 3.64 3.39 Net Profit 6.73 6.31 19.93 19.28 2.12 2.06 7.79 3.38 150 120 90 60 30-25.68 2009 2010 2011 2012 Q1_2013 Gross Profit Margin (%) Net Profit Margin (%) ROE (%) ROE 50 45 40 35 30 25 20 15 10 5 - Revenue and Net Profit In Q1/2013, Sales decreased from 2012 around 27% due to the dropping in sales value of BU 1 by 50% from the impact of changing in distributorship of it s main supplier with effective from mid of 2012 onwards. However, sales value of BU 2 was increased by 11% due to the success of development pipeline project. Profit Margin GC s gross profit margin of Q1/2013 has been increasing due to higher margin in BU2 as some product items had lower cost from big lot order. GC s net profit margin of Q1/2013 has been increasing due to higher gross profit margin and the gain on sales of investment properties and motor vehicles. 27
Statements of Financial Position Unit : Million Baht Asset 31-3-2013 31-12-2012 Change % Trade Receivables 558.89 480.88 78.01 16% Inventory 509.81 452.20 57.61 13% Net Fixed Assets 136.63 136.35 0.28 0% Total Assets 1,243.20 1,129.17 114.03 10% Liabilities Short Term Loan 525.00 505.00 20.00 4% Trade Payables 244.15 184.54 59.61 32% Total Liabilities 813.23 725.94 87.29 12% Equity Paid up Capital 200.00 200.00 0.00 0% Share Premium 56.03 56.03 0.00 0% Retained Earnings 173.93 147.20 26.73 18% Total Equity 429.97 403.23 26.74 7% 28
Statements of Financial Position Highlight 5.00 4.00 3.00 2.00 1.00 - Debt to Equity Ratio 4.35 2.00 1.70 1.58 1.20 1.10 1.43 1.87 1.80 1.89 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1_2013 D/E ratio is relatively lower. D/E ratio drop less than 2.0 which was decreased after IPO proceeds. However, the higher D/E ratio in 2011-Q1/2013 were resulting from the increase in short-term loan and dividend payout. 2.00 1.50 1.00 0.50 0.94 Current Ratio 1.28 1.46 1.37 1.48 1.58 1.46 1.37 1.38 1.38 Continuous increase in current ratio GC current ratio has been improving to higher than 1.0x since GC got more working capital from IPO proceed. This higher liquidity can reduce GC s financial costs. - 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1_2013 29
CASH FLOW STATEMENTS FOR THE THREE MONTH PERIODS ENDED 31 MARCH 2013 AND 2012 (Unit : Thousand Baht) 2013 2012 Cash flows from operating activities Profit before tax 33,471 33,738 Adjustments to reconcile profit before tax to net cash provided 2,171 6,496 by (paid from) operating activities : Profit from operating activities before changes in operating assets and liabilities 35,642 40,234 Operating assets (increase) decrease Trade and other receivables (77,712) (208,352) Inventories (57,604) (95,836) Other current assets (4,373) (7,656) Operating liabilities increase (decrease) Trade and other payables 60,029 111,070 Other current liabilities 835 (1,007) Cash flows used in operating activities (43,183) (161,547) Cash paid for interest expenses (3,961) (3,898) Cash paid for income tax (60) (11) Net cash flows used in operating activities (47,204) (165,456) 30
CASH FLOW STATEMENTS (continued) FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2013 AND 2012 (Unit : Thousand Baht) 2013 2012 Cash flows from investing activities Acquisition of equipment (2,353) (280) Acquisition of computer software (234) 0 Proceeds from sales of investment properties 7,830 0 Proceeds from sales of motor vehicles 2,477 0 Net cash flows from (used in) investing activities 7,720 (280) Cash flows from financing activities Increase in short-term loans from financial institutions 20,000 143,585 Cash paid for liabilities under finance lease agreements (652) (647) Net cash flows from (used in) financing activities 19,348 142,938 Net decrease in cash and cash equivalents (20,136) (22,798) Cash and cash equivalents at beginning of period 42,463 41,387 Cash and cash equivalents at end of period 22,327 18,589 31
120% 100% 80% 60% Dividend Payout Ratio 84% 83% 80% 99% 94% 2008 2009 2010 2011 2012 Dividend Payout To be top 50 dividend yield stock with continuous growth Positioning of GC Stock Dividend Payment Record Operation D iv id e n d Payment X-Date P ric e with X-D a te Dividend Yield Period (BPS.) Date before on x-date ( c a l. f r om be f or e X- D a t e P r i c e ) 31-D ec-12 0.19 30-A pr-13 12-A pr-13 5.00 4.84 3.80% 30-Jun-12 0.17 6-Sep-12 21-A ug-12 4.96 4.76 3.43% 31-D ec-11 0.16 30-A pr-12 12-A pr-12 4.96 4.86 3.23% 30-Jun-11 0.24 09-Sep-11 25-A ug-11 5.90 5.55 4.07% 31-D ec-10 0.26 29-A pr-11 18-A pr-11 5.80 5.50 4.48% 30-Jun-10 0.24 10-Sep-10 26-A ug-10 5.50 5.20 4.36% 31-D ec-09 0.26 30-A pr-10 16-A pr-10 4.72 4.22 5.51% 30-Jun-09 0.14 11-Sep-09 27-A ug-09 3.28 3.28 4.27% 31-D ec-08 0.12 30-A pr-09 16-A pr-09 2.40 2.40 5.00% 30-Jun-08 0.20 12-Sep-08 26-A ug-08 4.84 4.60 4.13% 32
Dividend Payment Record Operation Dividend Payment X-Date Price with X-Date Dividend Yield Period Ending (BPS.) Date before on x-date (cal. From before X-Date Price) 31-Dec-12 0.19 30-Apr-13 12-Apr-13 5.00 4.84 3.80% 30-Jun-12 0.17 06-Sep-12 21-Aug-12 4.96 4.76 3.43% 31-Dec-11 0.16 30-Apr-12 12-Apr-12 4.96 4.86 3.23% 30-Jun-11 0.24 09-Sep-11 25-Aug-11 5.90 5.55 4.07% 31-Dec-10 0.26 29-Apr-11 18-Apr-11 5.80 5.50 4.48% 30-Jun-10 0.24 10-Sep-10 26-Aug-10 5.50 5.20 4.36% 31-Dec-09 0.26 30-Apr-10 16-Apr-10 4.72 4.22 5.51% 30-Jun-09 0.14 11-Sep-09 27-Aug-09 3.28 3.28 4.27% 31-Dec-08 0.12 30-Apr-09 16-Apr-09 2.40 2.40 5.00% 30-Jun-08 0.20 12-Sep-08 26-Aug-08 4.84 4.60 4.13% 31-Dec-07 0.26 30-Apr-08 17-Mar-08 4.06 3.90 6.40% 30-Jun-07 0.14 7-Sep-07 21-Aug-07 3.46 3.32 4.05% 31-Dec-06 0.15 27-Apr-07 9-Mar-07 2.92 2.78 5.14% 30-Jun-06 0.10 8-Sep-06 22-Aug-06 2.64 2.64 3.79% 31-Dec-05 0.14 28-Apr-06 10-Mar-06 2.46 2.48 5.69% Regular Dividend payment with high yield. 33
Source : SET News on March 13, 2012 GC s ranking at 22 nd - Dividend Paid 80MB - Dividend Yield 8.03% 2012 s GC dividend - Dividend Paid 72 MB - Dividend Yield 7.23% 34
GC Dividend Yield 12.00% 10.00% 8.93% 10.45% 9.13% 9.78% 8.84% 8.00% 5.69% 7.30% 6.00% 4.00% 4.53% 4.67% 5.48% 3.28% 3.80% 7.23% 3.01% 2.00% 0.00% 1.72% 4.26% 2.80% 2.14% 2.56% 0.93% 1.00% -0.79% 2.40% 2.86% -2.00% Dividend Yield Average Inf. Rate* Average Int. Rate* Remark * Both of the rate are collected from Bank of Thailand (BOT) Average interest rate is a deposit interest rate for 12 months Annualize in 2012 35
Investor Relations Report 1,650 3 Month closing price perfomance 5.20 GC Average Petro Industrial 1,600 1,550 1,500 5.10 5.00 P/E Ratio 12.31 12.72 Dvd Yield 7.53 5.25 1,450 4.90 ROE 19.72 15.94 1,400 1,350 4.80 Source: SET s website as of Apr 30, 2013 1,300 4.70 Stock Price Unit : BPS Volume Trade (3 months) SET INDEX Closing Price Month Q1-13 Q1-12 Apr-13 High 5.20 5.20 5.00 Low 4.76 4.88 4.72 Average 4.87 5.01 4.88 720,000 630,000 540,000 450,000 360,000 270,000 180,000 90,000 0 667,900 shares on 12 Apr 13 Stock Volume Unit : Shares per day Month Q1-13 Q1-12 Apr-13 High 603,100 1,267,300 667,900 Low 19,700 1,600 36,200 Average 176,028 97,129 167,821 Total 10,913,746 6,022,000 3,188,600 Volume (share) 36
Investment Highlight A Leading and fast-growing with best solutions and service provider in Thai plastic and petrochemical Industry Exclusive distributorship from most of the world leading producers. Visionary, experienced, hands-on management team, Long term relation : Trade partner and also Financial Institute partner Diversified and well balanced sources of revenue from various industries Systematic risk control : Bad debt, foreign exchange exposure, price fluctuation No Fixed Cost ; due to all investment financing by long term loan (120 MB) already paid with in 4 years (2008) and no plan to investment in near term Regular Dividend payment with high yield. (Fully statutory reserve) Top 50 s dividend payment of SET Listing Companies Good Corporate Governance : with very good level in 2012 (Corporate Governance Report of Thai Listed Companies excellent 2009-2010) 37
Summary Performance Press Release Unit : MB Q1/2013 Q1/2012 Increase (Decrease) % Changed Reason Net Profit 26.7 25.8 0.9 3% Increase of gross profit margin and gain on sales of investment properties and motor vehicles. Sale 792.2 1,088.2 (296.0) -27% Due to the impact of changing in distributorship of Commodity polymer from mid of 2012 - BU1 (Commodity) decrease 49.78% - BU2 (Specialty&Engineering) increase 10.73% - BU3 (Specialty Chemical) increase 60.29% Other Income 8.4 2.7 5.7 213% The company sold the old office building and vehicles total amount THB 5.2 Million which do not have these items last year. The rest of other income come form foreign exchange and commission income. Gross Profit 61.7 65.4 (3.7) -6% Because of the decreasing in Commodity Plastic SG&A 32.6 30.2 2.4 8% This was due to a reversal of Allownace for diminution in value of inventory amounting to THB 2 Million in Q1/2012 Tax 6.7 7.9 (1.2) -15% The corporate income tax rate was decreased from 23% in 2012 to be 20% in 2013. This was in accordance with the Royal Degree regarding corportate income tax reduction 38
Thank you, Questions are welcome 39