daibochi plastic & packaging industry berhad · thomas lim soo koon, managing director - holds...
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Daibochi Plastic &
Packaging Industry
Berhad
Investors’ Briefing
1H10 Financial Results & Corporate Update
10 August 2010
IR Adviser
AQUILAS
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• 1H10 Performance Review
• Growth Strategies
• Investment Merits
2
1H10 Performance ReviewImpeded by external factors…
3
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2Q10 2Q09 Change RM’mil 1H10 1H09 Change
61.17 57.55 +6.3% Revenue 120.86 113.39 +6.6%
5.95 7.69 (22.7%) EBIT 12.56 13.79 (8.9%)
5.71 7.44 (23.3%) PBT 12.06 13.07 (7.7%)
4.19 5.76 (27.3%) PATMI 9.21 10.80 (14.7%)
5.59 7.59 (26.4%) EPS (sen) 12.28 14.22 (13.6%)
9.7% 13.4% (3.7 pt) EBIT margin 10.4% 12.2% (1.8 pt)
9.3% 12.9% (3.6 pt) PBT margin 10.0% 11.5% (1.5 pt)
6.8% 10.0% (3.2 pt) Net margin 7.6% 9.5% (1.9 pt)
4
1H
10 Incom
e S
tate
ment
Top line sees growth… profitability impacted by lag effect in
passing still-rising raw material prices & forex volatility
Higher sales from
local and
overseas markets
(1) Due to lag
effect in passing
still-rising raw
material prices
to customers;
and
(2) RM1.1mil forex
loss in 1H10
(vs RM1.5 mil
gain in 1H09)
USD
Payments
(Trade) (‘000)
USD
Collection
(‘000)
12 months
(to 30.6.10)
19,451 17,764
6 mths
(to 30.6.10)
11,441 9,365
• FOREX Analysis:
USD retains natural hedge, with 12-mth and 6-mth to 30.6.10 largely matched
Impact of forex volatility contained to approx RM1 mil in 1H10
Average gain/(loss): USD (12 mth to 30.6.10): (RM48K) Std dev: RM126K
AUD (12 mth to 30.6.10): (RM49K) Std dev: RM187K
Total forex: (RM97K) Std dev: RM185K
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FY10 revenue beginning on a higher plane…anticipated
breather in raw material prices to stabilize bottom line
Quart
erl
y T
rend
50
.7
55
.8
54
.0
56
.7
55.8
57
.6
53
.8
54
.6
59
.7
61
.2
35.0
40.0
45.0
50.0
55.0
60.0
65.0
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
RM ‘mil Quarterly Revenue
1.7
2.7
1.5
2.3
5.0
5.8
5.9
6.1
5.0
4.2
0.0
2.0
4.0
6.0
8.0
10.0
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
RM ‘mil Quarterly PATMI
+6.3%+2.5%
(27.3%)
(16.5%)
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Top line indicating healthy growth…gross margins
compressed by rising input prices
Gro
up R
evenue
160.7 198.1 210.0 202.4 217.2 221.8 120.9
6.3% 6.0%
10.2%11.5%
10.0%
18.3%
15.3%
0%
5%
10%
15%
20%
25%
0.0
50.0
100.0
150.0
200.0
250.0
2004 2005 2006 2007 2008 2009 1H10
MarginRM ‘mil Group Revenue
Group Revenue Gross Margin
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Effects of price adjustments should be seen in 2H10…
0%
5%
10%
15%
20%
25%
30%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2004 2005 2006 2007 2008 2009 1H10
MarginRM ‘mil PBT & PATMI
PBT PATMI PBT margin PATMI margin
PBT
& P
AT
MI
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1H
10 B
ala
nce S
heet
(Hig
hli
ghts
)Increased borrowings for working capital… net gearing still
manageable
RM’ mil As at 30.6.10(Unaudited)
As at 31.12.09 (Audited)
Fixed assets (excl associate investment) 61.54 60.43
Associate investment 22.81 22.91
Current assets 117.10* 104.37
Current liabilities 65.50 52.53
Shareholders’ equity 124.60 123.26
Total borrowings 35.16 20.49
Trade and other payables 31.90 34.44
Net gearing 0.22 x 0.12 x
Return on Average Shareholders Equity 14.9%** 19.2%
Return on Average Total Assets 9.5%** 11.9%
* Current assets include assets classified as land held for sale of RM4.5 mil
** Based on annualized 1H10 net profit
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1.52 1.52 3.04 4.55 4.55 11.67 4.49
52.3%
73.8%
55.9% 52.4% 55.8%51.3% 48.8%
0.0%
25.0%
50.0%
75.0%
100.0%
0.00
3.00
6.00
9.00
12.00
2004 2005 2006 2007 2008 2009 1H10
%RM ‘mil Dividend Payout
Dividend Payout (RM 'mil) Payout Ratio
9
Div
idend H
isto
ryCommitted to quarterly dividend with 50% payout…
GROWTH STRATEGIESNew sectors to power Daibochi ahead…
10
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11
Gro
wth
Str
ate
gie
sFocused on increasing premium clientele while managing
costs… coupled with additional capacity
(I) Cultivating stronghold F&B clients
• Maintained supply to Fonterra; received enquiries from Pepsico, Thailand
• Constant R&D to develop new applications
(II) Venturing into new sectors for wider customer base
• Recently obtained certification from USA to market new electronic
packaging solutions
» Target to commence supply to electronic manufacturers in FY2011
• Pursuing feedback on submissions for healthcare and tobacco packaging
(II) Expanding production capacity
• To build new warehouse in Melaka by end-2010
• To invest RM6.2 mil capex in FY2010 (RM10 mil previously)
INVESTMENT MERITSTowards gaining market share…
12
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Invest
ment
Meri
tsGrowth propelled by new ventures…
Broadening clientele in F&B and new sectors
Continuous innovation to attract new
premium customers
Valuation underscored by commendable
growth and dividend policy
Resilient customer sectors result in business stability
THANK YOUBursa: DAIBOCI/8125 Bloomberg: DPP:MK Reuters: DPPM.KL
14
IR Contacts:
Thomas Lim E: tomlim@daibochiplastic.com T: 06-231 9779
Julia Pong E: julia@aquilas.com.my T: 012-3909 258
APPENDIX
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The LARGEST supplier of packaging in SEA
16
Daibochi, a resilient investment case…T
rack R
ecord The SOLE supplier to Chembong Confectionery
Factory in M’sia
Supplier of >90% of ’s flexible packaging in M’sia
The SOLE supplier of Kraft / biscuits in M’sia
Other important customers: , London Biscuits
Listed since 1990, now on Main Market of Bursa M’sia
Market cap of RM236.1 mil (4.8.10)
Revenue’s 10-year CAGR:11.9% to RM221.8 mil (FY09)
Dividend policy of paying minimum 50% of net profit to shareholders
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Food Beverage FMCG Specialty
Cust
om
er
Base
Diversified clientele of leading global brands… 17
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DAIBOCHI PLASTIC & PACKAGING INDUSTRY BERHAD
ListedMain Market, Bursa Malaysia since 1990
(Transferred from Second Board in 2003)
Sector Industrial Products
Codes
Bursa: 8125 / DAIBOCI
Bloomberg: DPP:MK
Reuters: DPPM.KL
Share Capital RM75.9 mil (75.902 mil shares of RM1 each)
Market Capitalization RM233.8 mil (RM3.08 as at 6 August 2010)
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Listed since 1990…C
orp
ora
te Info
rmati
on
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Corp
ora
te P
rofi
le19
Leading flexible packaging solutions provider, with enviable
reputation exceeding 35 years…
1994 – Acquired fastest extrusion laminator in SEA
1996 - Moved to current premises with >325,000 sq ft built-up area
2001 – Incorporated Australian subsidiary; Accredited with ISO:9001
2009 - Acquired 9th printing machine; Obtained HALAL Certification;
1999 – Supplier to Nestle M’sia
2002 – Acquired metallizer with Plasma Tech to produce high-barrier films;
Regional Supplier to Nestle in SEA
2008 – Acquired wide web polypropylene film making machine
2007 - Received Gold Award for the Colorpak Packaging Export Award at Australian Packaging Awards
2004 – Acquired M’sia’s 1st 5-layer-blown film machine to produce transparent barrier films
2003 – Transfer to Main Board (now Main Market); Accredited with HACCP
1990 – Acquired metallizer to produce in-house metalized films; Listed on 2nd 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
Regional supplier for BAT
2010 – Obtained Letter of Validation from USA for electronic packaging
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Corp
ora
te P
rofi
le
• Accredited and world-class
production facilities
» Attained ISO:9001 certification
» Hazard Analysis Critical Control Points
(HACCP) compliant to ensure
adherence to food safety requirements
» Obtained HALAL certification
• Well-equipped laboratory testing
facilities
» To ensure our products exceed customers’
packaging barrier (MVTR ASTM F1249, O2TR
ASTM D3895-35), retention (GC with
Headspace) and migration (COF ASTM
D1894) requirements.
20
Internationally-certified production facilities that comply
with all factory audits by our MNC clientele…
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Pro
ducti
on F
acil
itie
sIntegrated end-to-end packaging process… equipped with
specialized in-house capabilities
PrepressCylinder Making
Gravure Printing
Lamination (Extrusion /
Dry)
Slitting / Bagging
CPP Film Metallizer
Up to 9-colour 2-sided printingIn-house capabilities Solvent-based/free Capabilities incl Standing Pouch
The only player with in-house cylinder-making, and one of the few with metallizing and
sealing capabilities for quality assurance and constant improvement at key stages
To build high barriersPolypropylene sealing films
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22
Daib
ochi
Pro
ducts
Wide range of packaging solutions for various product
functions… Constantly innovating for changing requirements
Film Type Applications / Use
High Permeability Barrier / Performance Coffee, Nuts, Potato Chips
Cost Effective Barrier Snacks, Biscuits, Wafer, Chocolate,
Cakes
General Packaging Outer Pack, Noodles, Biscuits, Wafers
Specialty Application Labelling, Ice-cream, Frozen Food,
Cereal Peel Seal, Seasoning Oil,
Powder / Liquid Detergent,
Shower Foam, Tobacco, Pet food
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Key M
anagem
ent
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 2005.
- Played a key role in building Group’s MNC clientele.
Colin Yong Jaw Teck, Executive Director
- Was the Managing Director from 1972 to 1979, and from 1998 until his retirement in 2005.
- Holds a degree in Bachelor of Applied Science with Electronic Engineering from the Western Australian Institute
of Technology.
- Instrumental in making the Group a regional player.
Datuk 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.
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Majo
r Share
hold
ers
Growing institutional following… Free float retained at >50%
No. of shares (‘mil)(30.06.2010)
Percentage *
Low Chan Tian, ED 8.81 11.78%
Datuk Wong Soon Lim, ED 4.71 6.29%
* Excluding 1,120,800 shares bought back by the Company and retained as treasury shares
INDUSTRY INSIGHTFlexible Packaging Here To Stay
25
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• F&B constituted 70% of total packaging
market in 2005
• Flexibles typically constitute 40% - 70+% of
all food packaging in major markets
26
Indust
ry Insi
ght
Large market for flexible packaging, particularly in F&B
sector… other segments present ample growth opportunities
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• Environmental concerns allayed with flexible packaging» The ‘greener alternative’ compared to rigid packaging
• Flexible packaging market, worth $1.41 bil in 2008, estimated to
reach $2.22 bil in 2015*» Robust growth in food processing sector
» Rising demand for food exports, i.e. higher food safety concerns
» Increasing affluence of urban population who favour packaged food
• Evident trend of flexible packaging gradually replacing rigid
packaging» Similar functions achieved with lower cost and greater flexibility; e.g. Stand-up
pouches and re-closable packs offer merchandizing advantages to FMCG players
» Consumes ~17% less energy compared to rigid packaging, reducing transportation costs.
27
Indust
ry Insi
ght
(con’t
)Flexible packaging perceived as the environmentally-friendly
alternative… poised to tap into large market potential
* Source: “Southeast Asia Plastic Flexible Packaging Market for Food,” Frost & Sullivan, May 2009.
Countries covered were Thailand, Indonesia, Malaysia, the Philippines, and Singapore
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