Daibochi Plastic & Packaging Industry Berhad -...
Transcript of Daibochi Plastic & Packaging Industry Berhad -...
Daibochi Plastic & Packaging
Industry Berhad
1Q16
Financial Results & Corporate Update
5 May 2016
IR Adviser
AQUILAS
1Q16 Operational Highlights
Growing export businesses…
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Consistent topline growth on the back of growing exports… domestic sales posting firmer recovery post-GST
OPERATIONS REVIEW
• 1Q16 y-o-y performance driven by higher export sales
and tax incentives comprising reinvestment allowances
» Revenue increased 4.1% y-o-y to RM89.7m (1Q15:
RM86.2m) due to higher exports
- Domestic sales to MNC and non-MNC customers
declined 7.6% y-o-y to RM42.1m (1Q15: RM45.6m) on
post-GST slowdown
- Export sales rose 17.3% y-o-y to RM47.6m (1Q15:
RM40.6m); saw higher sales to Thailand market in line
with a key customer’s marketing campaign
» PBT stood at RM8.1m (-0.9% y-o-y) (1Q15: RM8.1m)
» Net profit advanced 5.2% y-o-y to RM6.5m (1Q15: RM6.2m)
due to lower taxes on the back of reinvestment reallowances
• 1Q16 q-o-q recorded minor decline in profitability due
temporary changes to product mix
» Revenue rose 7.9% q-o-q (4Q15: RM83.1m) on higher sales
to both local and export markets
- Export sales increased 4.7% q-o-q (4Q15: RM45.4m)
- Domestic sales grew 11.8% q-o-q, reflecting a firmer
recovery in local sentiment (4Q15: 0.9% decline q-o-q)
» PBT declined 9.3% q-o-q (4Q15: RM8.9m) due to change in
product mix and higher labour costs since 1 January 2016
» Net profit dipped marginally by 1.2% (4Q15: RM6.6m)
Growth Strategies
Accelerating topline expansion …
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Increasing export contracts from MNCs… also looking to enhance operational efficiency and workforce management
FY2016 OUTLOOK
• Commenced delivery of new contract to ANZ’s FMCG market in April 2016
» Supplying MNCs with new innovation of four-side-seal bags that improves production efficiency
• On track to commence new contract for ANZ’s F&B market in 3Q16
» To begin supply to an MNC for a new structure packaging that provides improved consumer experience
• Investing RM20m CAPEX in FY16 to expand production capacity
» RM13m for second expansion phase of Daibochi Plastic Plant 2 for machinery and other works
- To expand built-up area from existing 80,000 sq ft to approximately 140,000 sq ft
- New blown film machine expected to arrive in 3Q16, to improve operating efficiency
» RM7m for recurring CAPEX for Daibochi Plastic Plant 1
» To benefit from Special Reinvestment Allowance incentive applicable for investments from 2016 to 2018
• Cost and labour-related challenges to be mitigated through improved operational management
» Hike in foreign worker levy to RM1,850/worker (from RM1,250 previously) effective March 2016 to pose
estimated impact of RM150k/year
» Freeze in new foreign worker recruitment leading to uncertainties and lower morale among foreign workers may
lead to labour shortages in near term
» To focus on enhancing remuneration, talent retention, and motivation programmes to address labour
sustainability in the long run
» Set up working team in 3Q15 to enhance operational and production efficiency - targeting to achieve 10%
improvement in production speed and higher efficiency in wastage control
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Driven by new innovations and expanding export orders in regional markets…
GROWTH STRATEGIES
exis
tin
g
Pro
du
cts
/ B
ran
ds n
ew
existing new
Customers / Geographical Markets
New product line for APAC F&B market commenced in 3Q15
Innovations
• High Speed Sealing • Four-side seal pouch
(commencing in 2Q16 to ANZ market for a MNC’s FMCG product line)
• Sterilisable film
New product line commenced in 2Q15 for Australia FMCG industry
Existing customer base to sustain growth pace and expose new markets
• New export orders (commencing in 3Q16 to ANZ market for a MNC’s F&B product line)
New innovations to have multiplier effect in existing and new markets
1Q16 Financial Review
Improving financial performance…
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Larger exports boosting topline growth… benefitting from tax incentives following CAPEX investments
INCOME STATEMENT
1Q16 to
31.03.16
4Q15 to
31.12.15
Change vs
preceding qtr RM'mil
1Q16 to
31.03.16
1Q15 to
31.03.15
Change vs
prev qtr
89.70 83.13 7.9% Revenue 89.70 86.16 4.1%
11.87 12.88 (7.8%) EBITDA 11.87 10.71 10.8%
8.75 9.79 (10.7%) Operating Profit 8.75 7.80 12.2%
(0.07) (0.21) (69.0%) Share of Associate Results (0.07) 0.86 (107.6%)
8.07 8.90 (9.3%) Pre-tax Profit 8.07 8.15 (0.9%)
6.51 6.59 (1.2%) Net Profit to Shareholders 6.51 6.19 5.2%
2.38 2.41 (1.2%) Basic EPS (sen)* 2.38 2.27 4.8%
13.2% 15.5% (2.3 pt) EBITDA margin 13.2% 12.4% 0.8 pt
9.0% 10.7% (1.7 pt) PBT margin 9.0% 9.5% (0.5 pt)
7.3% 7.9% (0.6 pt) Net margin 7.3% 7.2% 0.1 pt
73.4
69.5
87.3
80.2
90.4
87.0
83.1
84.0
86.2
89.7
86.0
83.1
89.7
Quarterly Group Revenue FY2013-1Q16 (RM ’mil)
7.1
6.0
7.4
6.9
6.6
6.2
5.0
5.9
6.2
7.2
6.8
6.6
6.5
Quarterly Group PAT FY2013-1Q16 (RM ’mil)
+4.1% +5.2%
• Operating profit growth
surpassed revenue on better
product mix comprising
higher value export products
• PBT marginally changed
due to minor loss on
associate compared to gain
in previous quarter
• Net profit growth maintained
strong on reinvestment tax
allowances for machinery
*based on 273.2 million shares after 1-to-2 share split and 1-for-5 bonus issue effective 22 Feb 2016
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Healthy balance sheet with low gearing even with ongoing expansion of Daibochi Plastic Plant 2…
BALANCE SHEET HIGHLIGHTS
As at 31.03.2016 As at 31.12.2015
(Unaudited) (Audited)
Fixed Assets (excl associate investment &
deferred tax)132.85 133.67
Associate Investment 22.13 22.19
Current Assets 150.75 139.15 Due to higher inventories in line with enlarged orders
Current Liabilities 98.86 89.89In line with higher working capital requirements, and
dividends payable to shareholders
Shareholders’ Equity 184.04 181.47
Total Borrowings 47.28 43.92 In line with higher working capital requirements
Cash & Bank Balances 16.32 18.99
Net Gearing 0.17 x 0.14 x In line with higher working capital requirements
Return on Average Shareholders’ Equity* 15.2% 15.3%
Return on Average Total Assets* 9.0% 9.1%
Remarks
*based on net profit for the trailing twelve months
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Fist interim single-tier dividend of 1.45 sen per share payable on 10 June 2016 (Ex-date on 17 May 2016)…
DIVIDEND HISTORY
9.4 10.1 15.2 17.1 14.8 16.0 4.0
51.6% 50.3% 61.5% 61.3% 62.2% 60.0% 60.9%
0.0 %
25. 0%
50. 0%
75. 0%
100 .0%
0.0 00
6.0 00
12. 000
18. 000
2010 2011 2012 2013 2014 2015 1Q16
Dividend Payout
Dividend Payout (RM 'mil) Payout Ratio
4.3 3.7 5.5 6.2 5.4 5.9 1.5
2009 2011 2012 2013 2014 2015 1Q16
Net Dividend Per Share (sen)*
• Dividends in respect of FY2016 • Declared first interim single-tier dividend of 1.45 sen
per share amounting to RM4.0 million payout
(Ex-date 17 May 2016; payable on 10 June 2016)
• Dividends in respect of FY2015 • Paid four interim dividends amounting to 5.87* sen per
share or RM16.04 million in total payouts
• Daibochi has a dividend policy to distribute
60% of net profits to shareholders
*Adjusted for 1-for-2 bonus issue, effective 10 Sep 2012; 1-to-2
share split and 1-for-5 bonus issue, effective 22 Feb 2016
Stock charts (5-Year & 1-Year)
5YR outperformance:
156.4%
1YR outperformance:
23.6%
29 Apr ‘15 KLCI: 1842.93 DPP:MK: 1.81*
29 Apr ’16 KLCI: 1672.72 DPP:MK: 2.07
29 Apr ’11 KLCI: 1534.95 DPP:MK: 0.78*
29 Apr ’16 KLCI: 1672.72 DPP:MK: 2.07
Investment Merits
Proxy to region’s growing appetite…
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To grow through expansion of MNC clientele and order size... new innovations to enhance product mix
VALUATIONS AND PROSPECTS
To continuously increase MNC customer base
Poised to support regional clients’ growing production demands
Collaborations with MNC customers for new product innovations
To result in favorable product mix going forward
New manufacturing capacity expansions to support future growth
Expansion of Plant 2 (Phase 2) positions Group to capture future opportunities
Share Price @ 29-April 2016 RM2.07*
Market Cap @ 29-April 2016 RM565.6 mil
Trailing PE 20.9 x
Trailing EV/EBITDA 12.0 x
FY15 Dividend Yield 2.8%
* cum first interim single-tier dividend of 1.45 sen
to be paid on 10 June 2016
IR Contacts
Mr. Low Jin Wei
T: 06-231 9779
Ms. Julia Pong
T: 012-390 9258
THANK YOU
Bursa: DAIBOCI/8125 Bloomberg: DPP:MK Reuters: DPPM.KL
Corporate Profile
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Market cap of more than RM500 million…
CORPORATE INFORMATION
DAIBOCHI PLASTIC & PACKAGING INDUSTRY BERHAD
Exchange Main 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 RM136.6 mil (273.2 mil shares of RM0.50 each)
Market Capitalization RM565.6 mil (RM2.07 as at 29 Apr 2016)
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Commendable track record in serving a wide number of MNC clientele in the F&B industry with stringent quality control…
REGIONAL PRESENCE
• The LARGEST SUPPLIER of Milo packaging in S.E.A
• The SOLE SUPPLIER to Nestle’s Chembong confectionery factory in Malaysia
» Daibochi is also the ONLY S.E.A company on Nestle’s Regional Food Safety Committee
• Supplier of >90% of Cadbury’s flexible packaging in Malaysia
• The MAJOR SUPPLIER of Mondelez International’s biscuits and snacks packaging in
Malaysia
• MAJOR SUPPLIER of flexible packaging to PepsiCo Thailand plant for potato chips
manufacturing
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Internationally-certified production facilities that comply with all factory audits by MNC clientele…strength in innovation
PRODUCTION FACILITIES
• Accredited and world-class production facilities
» Attained ISO:9001 and ISO:14001 certifications
» Obtained Food Safety System Certification (FSSC:22000)
in May 2014
• Well-equipped laboratory testing facilities
» To ensure our products consistently exceed customers’
packaging barrier, retention and migration requirements
» Recent breakthrough in producing 2-layer film to
potentially replace conventional 4-layer film
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Integrated end-to-end packaging process… equipped with specialized in-house capabilities
PRODUCTION FACILITIES (CONT’D)
Prepress Cylinder Making
Gravure Printing
Lamination (Extrusion /
Dry)
Slitting / Bagging
CPP Film Metallizer
Up to 9-colour 2-sided printing In-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 films capabilities for quality assurance and constant improvement at key stages
To build high barriers Polypropylene sealing films
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1994 – Acquired fastest extrusion laminator in SEA
1996 - Moved to current Daibochi Plastic 1 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; Regional supplier for BAT
2010 – Obtained Letter of Validation from USA for electronic packaging
2011 – Acquired high-speed printing machine; Acquired metallizer to produce ultra high barrier films; Accredited with ISO:14001
2012 – Set up Cleanroom for bagging process
2013 – Supplier to PepsiCo Thailand (Chiang Mai plant);
Winner of the Top Overall Corporate-Governance Award 2013 in Mid-Cap Category by Minority Shareholders Watchdog Group
2014 – Commenced operations of 2nd manufacturing plant (Daibochi Plastic Plant 2) in Jasin, Melaka; acquired 2nd metallizer and 1st high speed CPP machine
Supplier to leading homegrown instant beverage producer; Obtained Food Safety System Certification (FSSC:22000);
Winner of the Top Overall Corporate-Governance Award 2014 in Mid-Cap Category by Minority Shareholder Watchdog Group
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Leading flexible packaging solutions provider, with enviable reputation exceeding 40 years…
CORPORATE TIMELINE
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
2015 – Acquired high-speed extrusion lamination machine, high-speed printing machine;
Winner of the Top Overall Corporate-Governance Award 2015 in Mid-Cap Category by Minority Shareholder Watchdog Group
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Wide range of packaging solutions for various product functions… Constantly innovating for changing requirements
PRODUCT APPLICATIONS
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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Experienced management with industry expertise…
KEY MANAGEMENT
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.
Datuk Wira 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.
Low Jin Wei, Executive Director
- Holds a degree in Bachelor of Commerce (Major in Finance & Marketing) from University of Sydney, NSW, Australia.
- Prior to this, Mr. Low was the Managing Director / Project Director of GlassKote (Malaysia) Sdn Bhd from 2005 to
September 2010.
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Institutional investors holding approximately 30%...
MAJOR SHAREHOLDERS
No. of shares (‘mil) (31.03.2016)
Percentage *
Low Chan Tian, ED 28.2 10.3%
Apollo Asia Fund Ltd 25.6 9.4%
Lim Koy Peng 23.1 8.5%
Datuk Wira Wong Soon Lim, ED 15.9 5.8%
Halley Sicav – Halley Asian Prosperity 15.1 5.5%
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Growth in flexible packaging to be led by the Asian region… penetration into new product categories to bring next wave
INDUSTRY INSIGHT
• Worldwide consumer flexible packaging market worth $92 bil in 2015 – Estimated to grow 4% p.a. to reach $114 bil in 2020
– Growth to be led by Asia Pacific & other emerging regions (e.g. South & Central America)
Source: Smithers’ Pira – The Global Flexible Packaging Market – Trends and Forecasts
• Growth catalysts for Asia’s flexible packaging market: – Higher demand for cheaper and smaller pack sizes in line with affordability of general
population (especially post economic slowdown)
– Increase in working mothers / dual-income households leading to preference for convenience
packaging
– Development of multinational food retailers and manufacturers in the region; indicating the
long-term growth potential in Asia
Source: The Asia Pacific Flexible Packaging Market to 2016 by PCI Consulting Films Ltd