kunda presentation revised 16 july 2008 5.35pm.ppt this presentation nor any of its contents may be...
TRANSCRIPT
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CHINA KUNDA TECHNOLOGY HOLDINGS LIMITED中国群達科技控股有限公司中国群達科技控股有限公司中国群達科技控股有限公司中国群達科技控股有限公司24 Raffles Place, #25-03 Clifford Centre, Singapore 048621
Tel: (65) 6534 3567 Fax:(65) 6534 3566
www.chinakunda.com
Important NoticeThis presentation does not constitute, or form any part of any offer for sale or subscription of, or solicitation of any offer
to buy or subscribe for, any securities nor shall it or any part of it form the basis of, or be relied on in connection with,
any contract or commitment whatsoever.
No person shall be bound to enter into any contract or binding legal commitment and no monies or other form of
consideration is to be accepted on the basis of this presentation.
Any offer of securities will be made in or accompanied by a copy of the prospectus or profile statement. Anyone
wishing to acquire securities will need to make an application in the manner set out in the prospectus or profile
statement.
This presentation was prepared exclusively for institutional investors, relevant persons as defined in section 275(2) of
the Securities and Futures Act (“SFA”) and/or persons to whom an offer referred to in section 275(1A) is to be made
before a prospectus or profile statement is registered by the Monetary Authority of Singapore. Neither this presentation
nor any of its contents may be used without the prior written consent of CHINA KUNDA TECHNOLOGY HOLDINGS
LIMITED (the “Company”).
Information contained in this presentation document does not constitute a part of the prospectus.
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Agenda
1 Corporate & Business Overview
2 Competitive Strengths
3 Financial Highlights
4 Industry Outlook
5 Business Strategies & Future Plans
Corporate & Business Overview
Note: The above properties are owned by Shenzhen Precision
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We are a provider of precision Moulds, Plastic Injection Parts and IMD products to theelectronics, electrical, automobile and specialised devices industries.
Our plastic engineering solutions include design, research and development of PlasticInjection and IMD Technologies.
Our Business
High precision automobile MouldIMD Product
China Kunda(SG)
Yick Kwan Tat
(HKSAR)
KundaMould
(HKSAR)
KundaIndustrial
(BVI)
100 % 100 %100 %
Group Structure
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Milestones
1998
2000
2002 2005
2006
2007
Proposed Initial Public
Offering
Establishment of Yick Kwan Tat
Establishment of Yick Kwan Tat
Establishment of Processing
Enterprise in Shenzhen
Establishment of Processing
Enterprise in Shenzhen
Commenced product and market research
on Moulds and IMD Technology
Commenced product and market research
on Moulds and IMD Technology
Shifted into higher value added precision Moulds and IMD products
Shifted into higher value added precision Moulds and IMD products
R&D collaborationthrough Shenzhen
Precision with Shenzhen Huazhong University of
Technology Research Institute, which is a
National Key Laboratory for Plastic Injection
Simulation and Moulding Technology
R&D collaborationthrough Shenzhen
Precision with Shenzhen Huazhong University of
Technology Research Institute, which is a
National Key Laboratory for Plastic Injection
Simulation and Moulding Technology
Set up a joint post doctoral scientific research base through Shenzhen Precision with South China University of Technology
Set up a joint post doctoral scientific research base through Shenzhen Precision with South China University of Technology
Collaboration with Shenzhen Precision
Provision of technical services for PRC sales
Outsourcing of Mould and IMD product
Competitive Strengths
Strong R&D capabilities
Well-established business relationships with customers
Quality products and services
Experienced management
Processing Enterprise
Manufacturing base for Plastic Injection Parts in
the PRC
R&D collaboration
Business Model
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i) Sale of the following –• High-precision Moulds for Plastic Injection• Plastic Injection Parts• Plastic In-mould Decoration (IMD) products ii) Provision of technical servicesiii) Trading of chemical products and metal parts used in Plastic Injection (“Others”)
Industry
Income from Technical Fee Agreement for 9M2008 is HK$28.0 m
Our Principal Activities
� In 9M2008, automobile Moulds account for 46.1% of our total Moulds revenue
� Our automobile Moulds customers include Magna International Group and Venture Group, etc.
Moulds
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1. Plastic air intake manifold Mould
� Superior in performance and estimated to improve fuel efficiency by 8% compared to traditional steel
parts
2. Automotive Low pressure Moulds
� Used mainly in the production of automobile interior parts
� In low pressure molding, the upholstery materials are directly molded onto the plastic interior trim
- eliminates the use of toxic adhesives to glue the upholstery to the Plastic Injection Parts
Moulds
� Used in electronics, electrical, automobile and specialised devices industries
� We provide an integrated manufacturing services
� Our parts are used in the products of KAZ, Whirlpool and Honeywell
Plastic Injection Parts
Design FabricationManufacture of Plastic Injection
Parts
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� In-mould decoration (“IMD”) products are technically challenging products to
manufacture requiring expertise from several fields and stringent production
and quality control
� Unlike traditional plastic injection parts, IMD product
i. Does not require further processing
ii. Is more durable
iii. Offers better aesthetics
iv. Is more environmentally-friendly as the decorative materials are enclosed
within the plastic part
� Used in products of
IMD Products
� We provide technical service on Moulds and IMD technology to Shenzhen
Precision
� Shenzhen Precision would principally sell to PRC customers while our Group
focuses on international customers
� The fees are calculated according to revenue of Shenzhen Precision
� W.e.f 1st Oct 2007, the fees are charged as follow:
% of revenue Moulds IMD products
Base fee 25.0% 25.0%
Additional fee* 0.6% of revenue for every percentage point of
gross margin above 35.0%
0.65% of revenue for every percentage point of
gross margin above 28.0%
* Additional fee is subject to Shenzhen Precision achieving a net profit margin of at least 3.0% on its
overall operations
Technical Service
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Competitive Strengths
Competitive Strengths
Strong product R&D
capabilities
Experienced management
team
Commitment to quality
products and services
Well-established
relationships with customers
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Experienced management teamExperienced management teamExperienced management teamExperienced management team
� Our Executive Directors and Executive Officers has an average of more
than 10 years of experience in their respective fields
� Our Chairman and CEO is the Technical Advisor to the PRC National Key
Laboratory of Material Forming and Mould Technology
Commitment to quality products and services
� Work closely with Shenzhen Precision to ensure consistent delivery of quality and reliable products
Competitive Strengths
� R&D team of more than 20 PRC nationals and expatriate engineers and
experts
� Collaboration, via Shenzhen Precision, with
1. Shenzhen Huazhong University of Technology Research Institute
(National Key Laboratory for Plastic Injection Simulation and Moulding Technology approved by Ministry of Science and Technology)
2. South China University of Technology
on postdoctoral scientific research
Competitive StrengthsStrong product R&D capabilities
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Low pressure moulding technology
� Awarded 粤港关键领域重点项目突破 “Guangdong and HKSAR Key Area
Important Project Breakthrough” by Science and Technology Bureau of
Guangdong Province
In-Mould Decoration Products
� Successfully developed 1st batch of IMD products in 2005
� In June 2007, a panel of 3 technical experts appointed by the Intellectual
Property Center of the Ministry of Science and Technology carried out a
technical review of 6 of our IMD technologies. They opined that the 6
technologies were not commonly known to engineers in this field and cannot
be obtained through the public domain
Competitive Strengths
High mid-end automobile engine air-intake manifold injection mould
� Recommended by 中国模具工业协会技术委员会 (Technical Committee of
PRC Mould Industry Association) to be enlisted in PRC “Important National
New Products Promotion Plan” in 2006
� The Committee was of the view that the technology has reached advanced
international standard and is a first in the PRC
� In another technical attestation organized by 深圳市科技中介同业公司(Shenzhen City Technology Zhongjie Tongye Co., Ltd) and the panel opined
that our Mould had successfully resolved the technical difficulty of producing
plastic air intake manifold and filled a technology vacuum in PRC
� The panel added that our technology was comparable to advanced
international standard
Competitive Strengths
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� A specialised CAD/CAE software system used in Mould design
� A computerised control system which allow ordinary Plastic Injection machines to
perform low pressure plastic injection molding
� More moulds to produce automobile interior & exterior parts
� Moulds for aircraft interior parts
� Further development on IMD technology to produce IMD products with deep
cavities and uneven surface contours and apply these technologies to produce
larger and more complex products such as automobile and aircraft interior
trimmings and laptop covers
Competitive StrengthsR & D development
� Good track record and reputation in precision Moulds, Plastic Injection Parts
and IMD products
� Over 55 customers across 12 countries
� Established relationships with OEMs and ODMs for international automobiles
and electronics brand names such as KAZ, Honeywell, Whirlpool, Philips,
Sanyo, Walt Disney, Ford, Mitsubishi, BMW, VW, Audi
Competitive Strengths
Well-established relationships with customers
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FinancialsGross Profit breakdown by productsHK$’m
Gross Profit Margin breakdown by products
Financials
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Revenue breakdown by geographic marketsHK$’mHK$’mHK$’mHK$’m
Financials
Financials
HK$’m
Revenue breakdown by geographic markets
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Technical Fee BreakdownHK$’m
Financials
HK$’m FY2005 FY2006 FY2007 9M2007 9M2008
Revenue 33.0 58.0 120.1 83.1 76.6
Gross Profit 7.0 14.5 39.8 26.6 23.9
Technical fee 1.0 7.6 18.8 13.5 28.0
Selling and Admin exp (3.3) (4.7) (5.2) (3.5) (6.6)
Profit before tax 4.3 17.0 53.3 36.5 45.2
Gross profit margin (%) 21.2% 25.0% 33.1% 32.0% 31.2%
Net profit margin (%) 12.5% 24.9% 37.5% 37.1% 51.5%
Revenue growth rate - 75.6% 107.2% - (7.9%)
Technical fee growth rate - 650.6% 148.6% - 107.4%
Net profit growth rate - 247.9% 212.8% - 27.9%
EPS* (HK cents) 1.30 4.51 14.09 9.64 12.33
*Based on post-invitation share capital of 320m shares
Selected Financials
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HK$’m FY2005 FY2006 FY2007 9M2008
Debtor turnover days 63 48 32 71
Creditor turnover days 92 67 32 54
Net profit margin 12.5% 24.9% 37.5% 51.5%
Sales/Total assets 1.47 1.21 1.30 0.56
Total assets/shareholder equity
3.50 2.28 1.39 1.26
ROE 64.5% 68.6% 67.6% 36.4%
ROA 18.4% 30.1% 48.8% 28.9%
Ratios
Industry Outlook
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1) Automobile Industry
� PRC automobile sales in 2006 reached 7.22 million. In the first 5 months of 2007, sales of
automobile increased by 21.32% over the last comparative period. The China Automobile Industry
Association estimated that sales of automobile parts (inclusive of spare parts) market in PRC will
reach RMB180.0 billion by 2010 and 95.0% of these parts would be manufactured by Moulds.
� PRC automobile is dependent on imported precision automobile Moulds due to shortage of
domestic supply.
� Trend of automobile industry using Plastic Injection Parts to replace traditional steel parts to achieve
3 key objectives:
i) To reduce weight
ii) To improve fuel consumption
iii) To be more environmental friendly
� A PRC-made vehicle uses less plastic parts (approximately 78.0 kg) than that made in developed countries (approximately 120.0 kg). It is estimated that PRC’s consumption of plastic in the automobile industry will increase in the future.
We believe we have the track record and capabilities to develop and supply Moulds used to produce a
variety of automobile interior and exterior parts
Industry Outlook
We had developed the plastic automobile air
intake manifold injection Moulds and automotive
low pressure Moulds to take advantage of this
trend in the automobile industry
2) PRC Precision Mould Industry
� PRC is the world’s largest importer of Mould (import of US$2.47b in 2006).
Domestic supply of precision Mould in PRC is inadequate to meet demand
while supply of low end Mould exceeds demand. It is estimated that PRC is
only 50% self-sufficient in mid and high end Mould
� Production lead time of most PRC Mould manufacturers are longer than
international manufacturers but the useful live of the Moulds produced is only
half to one-tenth than that of international manufacturers
Sources: Research report of produce and sale and investment analysis on China die and mould
industry dated June 2007 by Forward Intelligence Co., Ltd and 2007 PRC Key Industries
Development Analysis and Strategy Advisory Report – Plastic Industry by China Garsum Consulting
We believe we have a strong technical lead over other PRC Mould
manufacturers. We are able to manufacture high precision Moulds that satisfy
the stringent requirements of well-known international brands
Industry Outlook
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Industry Outlook
3) PRC Electronics and Electrical Industries
� We believe PRC will remain an important outsourcing centre for OEMs and
ODMs of well-known international brands for electronics and household
appliances
� In 2006, PRC’s domestic consumption of small electrical household appliances
reached RMB85.3 billion. The China National Development Research Centre
estimated that growth will be maintained at 8% to 14% for the next 5 years from
2006
Sources: Research report of produce and sale and investment analysis on China die and mould
industry dated June 2007 by Forward Intelligence Co., Ltd and 2007 PRC Key Industries Development
Analysis and Strategy Advisory Report – Plastic Industry by China Garsum Consulting
� Consumer products are generally fast moving and require frequent model
updates/changes. This requires frequent changes of the necessary Moulds
4) IMD Technology
� IMD products have many inherent advantages over traditional Plastic Injection
Parts, including:
i) Better appearance and ability to incorporate complex design;
ii) Better durability; and
iii) Environmentally-friendly to user
� IMD is a technical intensive process and it is difficult to ensure consistent
production quality
� Technically difficult to incorporate more complex product shapes such as
uneven surface contours or deep cavities
We believe that we have a significant lead over our PRC competitors in the
IMD industry and are able to satisfy the stringent requirements of our
customers, extending to products with complex product shapes
Industry Outlook
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Business Strategies & Future Plan
We would be focusing on our R&D capabilities in the fabrication of
large-scale precision automobile Mould
1) Establish manufacturing capability
� Establish our own manufacturing capability for Plastic Injection Parts Mould and
IMD products
� Intend to acquire the Mould and IMD manufacturing equipments of Shenzhen
Precision as well as from other third parties
Business Strategies & Future Plans
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2) Enhance our R&D capabilities
� We would continue to focus on R&D, projects that we intend to focus on includes:
i. Mould R&D to develop more applications for the automobile industry
ii. More complex IMD technology to produce larger and more complex
products in particular automobile and aircraft interior trim and laptop covers
iii. More advance CAD/CAM software used in Mould design
iv. Computerised control system which allows ordinary Plastic Injection
machine to perform low pressure Plastic Injection moulding
Business Strategies & Future Plans
3) Expand our customer base and product range
� Expanding our product range for complex and high-end automobile and aircraft
interior parts Mould
� Develop more complex IMD technology for high-end electronics, medical and
telecommunication devices as well as automobile interior trim panels
4) Expand our sales and marketing network
� Expanding sales network in PRC and internationally
5) Expand our business through acquisitions, JVs or strategic alliances
� To strengthen our market position or add value to our existing business
Business Strategies & Future Plans
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Investment Merits
Our automobile Moulds and IMD products have good growth potential
Established relationship with OEMs and ODMs of owners of international automobile and electronic brands
Strong technical expertise in automobile mould and IMD technology
High gross margins due to the technical complexity of our products
Issue Statistics
Offer Shares
Offer Structure
Listing SGX Mainboard
Price Range
Historical PER
Market Capital
Issue Manager Provenance Capital Pte. Ltd.
Underwriter & Placement agent
DMG & Partners Securities Pte Ltd
Offer Period
Listing Date
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Use of Net Proceeds
Use of Proceeds S$’000
Acquisition of Shenzhen Precision assets/liabilities 200
Investment in additional plant, machineries and production facilities
7,000
Enhancement of R&D capabilities 1,000
Expansion of our sales and marketing network
General working capital and funding for acquisitions, joint ventures or strategic investments
2,858
Total 11,058
Thank You
Q & A
For more information please visit our corporate website at: www.chinakunda.com
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� Shenzhen Precision is 95% owned by Cai Kaoqun (Chairman and CEO)
and 5% owned by Cai Kaobing (Executive Director)
� The production of our Mould and IMD products are outsourced to
Shenzhen Precision
� Wef 1 Oct 07, the acquisition price of these Mould and IMD are fixed at
direct manufacturing cost of Shenzhen Precision (capped at 80% of our
gross selling price) plus 5% of our gross selling price
� In addition, we provide Technical Services relating to the manufacture
of Mould and IMD products to Shenzhen Precision (see earlier slide)
Shenzhen Precision
� We have an Option to acquire the business and certain assets and
liabilities of Shenzhen Precision relating to its sale and manufacture of
Moulds and IMD products
� The purchase consideration will be based on the net book value of
these business assets less liabilities or independent valuation as
required under PRC laws whichever is higher
� We intend to, upon the listing of our Company, to establish a PRC
subsidiary to acquire these business assets, liabilities and establish our
own manufacturing facilities
Shenzhen Precision