gunkul engineering plc - listed...

Strictly Private & Confidential

Opportunity Day

Gunkul Engineering PLC

March 4th , 2011


1

Today’s Agenda

1. Gunkul Business

Conventional Business

Renewable Energy Business

2. Gunkul Performance Year 2010

3. Gunkul Backlog Year 2011 (as of Feb 28, 2011)

4. Q&A


2

1. Gunkul Business


3

Conventional Business


4

G.K. Assembly

Co., Ltd. (“GKA”)

(Manufacturer)

G.K. Power Product

Co., Ltd. (“GKP

(Manufacturer)

K.N.P. Supply

Co., Ltd. (“KNP”)

(Distributor)

99.99%

Gunkul Power Gen

Co., Ltd. (“GPG”)

(Power Producer)

99.99%

99.99%

99.99%

Gunkul Engineering Plc.

(“GUNKUL”)

GUNKUL is a marketing and trading arm of the group. GUNKUL sources products from manufacturers both outside and inside the

group and then caters to its customers which consist of foreign, private (general customers, contractors, factories and end-users) and

government entities.

Similar to GUNKUL, KNP is a marketing and trading arm. However, KNP will mainly focus at government agencies such as the

Metropolitan Electricity Authority (MEA) and the Provincial Electricity Authority (PEA).

GKA and GKP are manufacturing arms and supply their products to GUNKUL and KNP.

GKA’s main products are street lighting and accessory used in electric power transmission system under the group brands--“GUNKUL”, “GK”,

“ZIMLUG”, “PIGMAN”, “TOPWELD” and “ZIMTAP”.

GKP’s main products are protective and control equipment used in electric power transmission system such as insulator, fuse under “GUNKUL”

and “GK” brands.

KNPGKA

GKP

Manufacturers

ElectricalManufacturers

GUNKUL

Government

Private

Foreign

Distributors Customers

Group’s Structure Group’s Product and Service FlowSubsidiaries

GPG

Power Producer

GUNKUL’s Organization Structure

GPS

G.Power Sources

(“GPS”)

(Power Producer)

98.98%


5

Electricity plants:

• Wind turbine components

A

Distribution lines:

• Cables and accessories

• Capacitors

• Fuse and switches

• Grounding

• Hardware and connectors

• Insulators

• Lightning protection

• Live part covers

• Maintenance equipment

• Meters

• Preformed

• Tools and instruments

• Transformers

D

Transmission lines:

• Cable and accessories

• Fuse and switches


• Insulators




B

Substation:

• Battery and chargers

• Capacitors

• Grounding


• Meters


• Transformers

C

Low voltage lines:

• Capacitors

• Explosion proof products

• Fuses and switches

• Grounding


• Insulators


• Meters

• Preformed

• Street lighting and control

• Telephone hardware

E

From the upstream to the downstream, GUNKUL offers full range of products and services

(as many as 5,000 electricity items)

GUNKUL’s Current Business


6

GUNKUL’s Products: Electrical and Renewable Energy Equipment Business

Under its conventional business, products are mainly classified into 5 categories according to their usage:

1. Protective and control equipment

2. Cables andaccessories

3. Equipment and tools

4. Street lighting

5. Renewable energy

Owned Brands / Imported BrandsProducts in General Usage in Electricity Stream

A

DB C E

DB E

DB C E

E

Note: Electricity generation & plant Transmission lines Substation Distribution lines Low voltage lines A B C D E

GUNKUL, PIGMAN, Topweld,

ALCAD, GE, SEECO and

Thermoweld

GUNKUL, PIGMAN, GK

ZIMLUG,ZIMTAP and TYCO

IZUMI, DILO and Sensor LINK

GUNKUL and GK


7

Strong Business Platform

Central Bidding

Individual

Purchasing Order

Customers’ Characteristics

Barrier to entry GUNKUL

• High qualification

requirements i.e. requiring

the product to meet 3

industrial standards

• Continuously order for replacement & expansion

• “High” barrier to entry

• Product meeting industrial standard

(TISI)

• Expensive type test for each product

• Difficulty to be a vendor list

• Limitation for 1st order, only 20% of total order for some product (that could have a

significant impact to the electric system)

• Approval for vender list

• Offers approx. 300 owned

product items to this segment,

• GUNKUL’s manufacturing

facilities have put the company at

advantage

• Expertise in sourcing quality

products to fulfill remaining categories

• Wholesalers and

contractors might come in a

form of project based

needs, therefore, they may

require diverse kinds of

products with certain quality at a time

• “Moderate to high” barrier to entry

• For those contractors awarded turnkey

projects from government, they will also

be required to meet the government’s

quality specifications. Accordingly,

suppliers such as GUNKUL will face the

same circumstances as selling to government segment

• Stay in good position and easy to

access this segment due to:

• GUNKUL is in an approved

vender list from state enterprise

• It offers more than 5,000 product items to this segment

• Myanmar Electric

Power Enterprise

(MEPE), Yangon

Electricity Supply

Board (YESB),

Electricite Du Laos (EL)

• Might come in a form of

project based needs,

therefore, this segment

may require diverse kinds of products at a time

• “High” barrier to entry

• Accessible and knowledgeable this type

of customers

• Funding capability

• Long established relationship and

network

• Fully understand characteristic of

customers

• Well recognized and supported

from financial institutional

1. G

overn

men

t2. P

rivate

3. F

ore

ign

GUNKUL’s capability to serve all needs


8

Renewable Energy Business


9

GPG Solar Business

PPA 30.9 MW


10

GUNKUL’s Products: Solar Power Generation Business

To fulfill its group’s potential, GUNKUL expands into Solar Business which is going to be a new

source for growth and cash flow

Schedule for COD of Solar Power Projects (MW)

3.0

3.0

7.4

15.4

19.9

30.9

3.0

4.4

8.0

4.5

8.0

0

5

10

15

20

25

30

35

Dec 2010 Jul 2011 May 2012 Jul 2012 Aug 2012

Project I Project I Project II Project III Project IV Project V

Already

CODJan 1, 2011

Expected

to CODAug 1, 2011


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Summary of Power Purchasing Agreement of Gunkul Powergen

Project I Project II Project III Project IV Project V

Capacity 3.0 MW 4.4 MW 8.0 MW 4.5 MW 8.0 MW 3.0 MW

Location Petchaboon Pichit Nakorn Nayok Pathum Thani

PPA Signing Date 28 June 2010 16 July 2010

Expected COD Date Dec 2010 July 2011 By May 2012 By July 2012 By August 2012

Investment THB 340 MB ~ THB 110 MB per MW

Technology Solar Frontier’s Thin Film CIS modules without cadmium, Schneider electrical equipment system

Selling price ~ THB 3.0 per kWh

Adder THB 8.0 per kWh for 10 years since start of COD

BOI Tax Exemption Year 1st - 8st : 100%, 9th – 13th : 50%



12

Summary of Contractual Agreements for the first 3 MW Project

Electricity

Technology

Debt Funding

• Total financing of THB 315

MB with special interest

rate

• Collateral: Land and

equipment of project

• Guaranteed by GUNKUL

• Key Covenant: GUNKUL

maintain stake at least 75%

VSPP Non-firm PPA

with PEA

EPC ContractSolar Module

Purchase Agreement

Loan Agreement

• Thin Film CIS Solar Module

Technology

• 25 Years Guarantee

• Schneider will provide all

other equipment other

than the solar modules

• Guarantee efficiency of

equipment for 5 years

and will issue Credit

Agricole Corp. and

Investment Bank

guarantee for 10% of

contract size

• Tenor 5 years with automatic

extension of 5 years, which

can only be terminated by

seller, GPG

• COD within 2 years of signing

of PPA, which in practice can

be extended if the seller can

prove that they are committed

to investing in the project

• Non – firm contract because

seller cannot control sun light

therefore cannot determine

when to generate electricity to

grid



13

3.0 MW Solar Power Plant Phase I Chon-Dan

January 4th, 2011 : Gunkul’s First Solar Power Plant has started commercial operation


14

Grand Opening of 3 MW Chon-Dan, Petchaboon : January 4th, 2011



15


3.0 MW Solar Power Plant


16


Inverter Building: Inverter and Monitoring System


17

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Electricity Output Jan – Feb 2011Output KW(h)

Estimated Accumulated Electricity Output

Electricity Output (Plant Meter)

3 MW Solar Power Plant Phase I Chon-Dan

Average(Jan’11) = 16,331.47 KW(h) / Day

Average(FEB’11) = 15,542.11 KW(h) / Day

Standard = 13,972 KW(h) / Day

+14%

Actual Accumulated Electricity Output


18

0.00

2,000,000.00

4,000,000.00

6,000,000.00

8,000,000.00

10,000,000.00

12,000,000.00

Revenue Generated Jan – Feb 2011Volume (BAHT)

Average(JAN’11) = 183,804.47 BAHT/ DAY

Average(FEB’11) = 174,126.59 BAHT/ DAY

Standard= 157,107 BAHT/ DAY

Estimated Accumulated Revenue

Revenue Generated (Plant Meter)

3 MW Solar Power Plant Phase I Chon-Dan

+21,858

BAHT/DAY (13.91%)

Actual Accumulated Revenue


19

4.4 MW Solar Power Plant Phase II Chon-Dan

Project Information

COD: August 2011

Module: SunTech (c-Si)

Inverter: Schneider Electric

Financial Support: KTB

Investment: 460 MTHB

4.4 MW Solar Power Plant Phase II Chon-Dan


20

GPS Solar Business

PPA 26.0 MW


21

26 MW Solar Power Plant

Project-Timeline : 26 MW Solar Power Plant

Data-Room

Board & AGM

Meeting

Joint Venture &

Negotiation Process

Land Preparation

Equipments on Site

Piling & Foundation

Electrical

Connection

Commissioning &

Operation

Feb Mar Apr May Jun Jul

Board

Paid-Up Capital &

Project Financial

AGM

Aug Sep


22


Gunkul appointed KS (Kasikorn Securities PLC) as a Financial Advisor to find a Joint

Venture. This 26 MW Solar Power Plant is expected to COD on September 2011

Schedule for COD of Solar Power Projects (MW)

Project I Project II Project III Project IV

26

6.5

0

5

10

15

20

25

30

35

Tasang, Nokhon Sawan

TaKeed, Nokhon Sawan

Dongkorn,Chainat

Klongluang, Pratumtani

6.56.5

13.06.5

19.5

6.5

Note: 26 MW Solar Power Plant Project is on the process of considering strategic partner


23


Project I Project II Project III Project IV

Capacity 6.5 MW 6.5 MW 6.5 MW 6.5 MW

LocationTa-Sang, Nokhon

Sawan

Ta-Keed, Nokhon

SawanDongkorn, Chainat

Klongluang,

Pratumtani

SCOD 30 Sep. 2011 30 Sep. 2011 30 Sep. 2011 30 Sep. 2011

Technology C-Si and Central Inverter

Selling price ~ 3 THB/kWh

Adder THB 8.0 per kWh for 10 years since start of COD

BOITax Exemption: Year 1st - 8st : 100%, 9th – 13th : 50%

Import tax: 0%

Summary of Power Purchasing Agreement of GPS


24

26 MW Solar Power Plant

PV modules and

StructureArray boxes Inverters

Transformers and Cables

MV boardSelling point

and Civil Work

26 MW Solar Power Plant: Technology and Scope of Work


25


Over all Schedule for COD of Solar Power Projects of GPG & GPS (MW)

56.9

3.00

5

10

15

20

25

30

35

Dec 2010 Jul 2011 May 2012 Jul 2012 Aug 2012

40

45

50

55

60

Sep 2011

4.43.0

7.4

26

33.48.0

41.4 4.5

45.98.0

3.0

Project I Project I Project II Project III Project IV Project V Project VI


26

2. Gunkul Performance Year 2010


27

2010 Revenue Breakdown

Government and foreign segments have been taking turns as a major contributor to

GUNKUL’s revenue

Revenue Breakdown by Type of Customer

447 443719

451 448

347 391

285

249 240

310

704 362

164

600

0

200

400

600

800

1000

1200

1400

1600

1800

THB (MN)

Government Private Foreign

% Revenue Breakdown by Type of Customer

1,104

1,538

1,366

864

1,288 600

240

448

Foreign Private Government

(46.62%)(34.75%)

(18.61%)


28

Revenue from Trading and Manufacturing

GUNKUL’s own production facilities give competitive edges

Revenue vs. Overall Gross Margin Net Profit vs. Net Profit Margin


29

Our Financial Flexibility

Low D/E provides flexibility in doing business

GUNKUL ’s Liabilities

155

368

75 74153

144

121

276

140

250204

17

11

7

11

97159

66

131

0

100

200

300

400

500

600

700

200 200 200 200 2010

THB MN

AP ST-trade related liabilites LT-int.bearing Other liabilities

D/E Ratio

0

1

2

3

4

5

6

7

200 200 200 200 2010

6.2

2.4

0.7 0.70.58

GUNKUL

6


30

Growing up Balance Sheets

Balance Sheets

Unit : MB

Current Asset

Non

Current

Asset

Current

Liabilities

Non Current

Liabilities

Shareholders' Equity

Total Asset 856.99

619.6

As of Dec.31,2009

237.23

343.31

8.47

505.20

As of Dec.31,2010

754.48

1,035.23

651.46

6.04

1,132.21

Total Asset 1,789.71


31

Financial Ratio

Financial Ratio Analysis

RatioConsolidated Separate Financial

Statements

Dec.31,09 Dec.31,10 Dec.31,09 Dec.31,10

Current Ratio 1.81 1.59 1.12 1.99

Quick Ratio 0.98 1.06 0.72 1.57

Account Receivable Turnover 2.85 4.13 3.13 4.06

Inventory Turnover 2.81 3.03 3.73 5.99

Fixed Asset Turnover 4.53 2.55 37.75 64.34

Total Asset Turnover 1.01 0.72 1.08 0.87

Cash Flow Liabilities

Turnover 31.04% 32.67% 16.85% 48.94%

Debt Ratio 0.41 0.37 0.52 0.29

Gross Margin 25.45% 28.45% 18.14% 21.33%

Net Profit Margin 6.15% 9.47% 5.91% 6.35%

Return on Asset 5.62% 9.31% 6.59% 6.98%

Return on Equity 9.51% 15.05% 14.10% 11.22%

Profitability

Ratios

Asset

Management

Ratios

Liquidity Ratios


32

2007 2008 2009 2010

Revenue

• Foreign 703.79 362.10 163.87 600.36

• Local 834.15 1,004.10 700.20 688.40

Total Revenue 1,537.94 1,366.20 864.07 1,288.76

Account Receivable 339.43 371.79 226.52 311.30

Percentage of income 22% 27% 26% 24%

Account Receivable Turnover*Non Consolidated 3.80 2.85 4.13

Inventory 367.42 351.88 265.99 342.80

Percentage of income24% 26% 31% 27%

Inventory Turnover* Non Consolidated 3.95 2.81 3.03

Performance of Year 2007 - 2010

(THB : MB)Performance of Year 2007 - 2010


33

4.Gunkul Backlog & Sales Growth


34

Backlog as of February 28, 2011

Backlog to confirm GUNKUL’s Momentum

643 MB Revenue is secured for 2011 (Excluded Private Sales)

0

100

200

300

400

500

600

700

THB mn

Myanmar Goverment

533

100110

$ 9 Million US

Contract Expected to

Sign with MEPE, YESBwithin Q1’ 2011

Generally, revenue from government

sector during the past 5 years had

been recorded around 450 MB.


35

Sales Growth - 2011

ForecastEPC/

SOLAR

GPG GPS > 50%

Foreign Special

Project

Private

Contractor

Govern

mentTotal

3 MW

(4 Jan,11)

4.5 MW

(1 Aug,11)

26 MW

(1 Oct,11)

Year 2010

-Revenue - - - - 600 94 146 448 1,288

Year 2011

-Growth * 55 26 35 80% 100% 25% 10%

(THB : MB)Renewable Energy Business Conventional Business


36

Q & A


Opportunity Day

Gunkul Engineering PLC

March 4th , 2011

gunkul engineering plc - listed...

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