Jinpan International Limited - JST: Cast Resin...
Transcript of Jinpan International Limited - JST: Cast Resin...
(NASDAQ Symbol “JST”)
April 2010
Jinpan International Limited
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DisclaimerForward-Looking StatementsThis presentation and oral statements made in conjunction with it may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among other things the information concerning our possible or assumed future results of operations, businessstrategies, financing plans, competitive position, potential growth opportunities and the effects of future regulation and competition.These statements are only our current expectations. They are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements involve risks, uncertainties and assumptions. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Actual results may differ materially from those expressed in these forward-looking statements due to a number of uncertainties and risks, in the documents incorporated by reference into the prospectus supplement and in the accompanying prospectus and other unforeseen risks, including:
our ability to successfully implement our business strategy; uncertainties about the future growth in electricity consumption and infrastructure development in the markets in which we
operate; inability to attract and retain qualified management and personnel; increases in the costs of our raw materials; the impact of existing and new competitors in the markets in which we compete, including competitors that may offer less
expensive products and services, more desirable or innovative products or technological substitutes, or have more extensive resources or better financing;
the effects of rapid technological changes and vigorous competition in the markets in which we operate; changes in competition and the pricing environments in the countries in which we operate; the failure to keep pace with technological changes in our industry; potential product liability claims; the effects of the higher degree of regulation in the markets in which we operate; general economic and political conditions in the countries in which we operate or other countries which have an impact on our
business activities or investments; inability to successfully adapt our internal controls over financial reporting to changes in circumstance; the monetary and interest rate policies of the countries in which we operate; and exchange rates.
You should not rely on any forward-looking statements. We undertake no obligation to publicly update or revise any forward-lookingstatements, whether as a result of new information, future events or otherwise, after we distribute this presentation, except as otherwiserequired by law.
Use of Non-GAAP Financial MeasuresThis presentation contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and ExchangeCommission. Refer to the Appendix for a discussion of these numbers and a reconciliation to their nearest equivalent financial measurescalculated in accordance with GAAP.
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Management Presenters
Albert ShengVice President of Investor Relations
Jinpan International (USA) Ltd.
Michael Yan (严林清)General Manager
Jinpan Electric Group (Shanghai) Co. Ltd.
Company Overview
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Company Highlights Designs, manufactures, sells electrical equipment for power distribution. One of China’s leading producers of cast resin transformers.
Solid Performance Record
Three state of the art manufacturing facilities in China (Haikou, Wuhan and Shanghai).
Listed by Forbes Asia as among the best 200 companies under US$ 1 billion for three years in a row (2007, 2008, and 2009).
Well positioned to capitalize on strong economic and infrastructure growth in China and alternative energy growth worldwide.
$3.5 $4.5
$7.5
$16.4
$19.8
$29.0
$3.3
$0
$5
$10
$15
$20
$25
$30
2003 2004 2005 2006 2007 2008 2009
Net Sales
$33.5$42.3
$53.6
$82.3
$119.6
$154.0 $159.0
$0
$30
$60
$90
$120
$150
$180
2003 2004 2005 2006 2007 2008 2009
Net Income
($Millions)
55
Company MilestonesYear Milestone 1993 Jinpan’s predecessor entity founded as Haikou Jinpan
1997 Company established as a JV between Haikou Jinpan and Jinpan International
ISO 9001 Certification
1998 IPO – Listed on AMEX
2000 ISO 14001 Certification
2002 Top ranked transformer company by China National Standards Bureau
2004 Selected as Best New Supplier by leading OEM customer
2006 Successfully raised $25.7 million of capital through PIPE for new facility
2007 Achieved UL Listing
Began construction of new facility in Wuhan, China
2008 Successfully developed transformers for future generation wind towers
Completion of the Wuhan facility (June)
Announcement of new facility near Shanghai (August)
Switched listing from AMEX to Nasdaq (September)
2009 Completion of the Phase I of the Shanghai Facility (September)
Products
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Current Product LinesConventional Power Distribution Solutions
Cast Resin Transformers Integrated Assemblies
Standard Customized Switch-gears
Unit Substations
Alternative Energy Distribution Solutions
Cast Resin Transformers
(Wind)
Reactors (Wind)
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Cast Resin Transformers Description:
Transformer change the voltage of electricity, through induction, to facilitate its transmission and distribution.
Electrical induction produces heat. Transformers are differentiated by the medium used to cool the induction coils.
Cast Resin Transformer is a type of transformer designed to use air to cool inductor coils. Invented in Germany in the 1960s and became widely used in the 1980s.
Key Application:
Electrical power distribution for both conventional and wind energy applications.
Jinpan offers a range of medium voltage cast resin power transformers
Transforming Capacity: 500KVA to 20,000KVA
Primarily used to lower high voltage electricity to usable levels.
Can also be used to raise voltage for transmission (e.g. wind power applications)
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Advantages of Cast Resin Transformers
Jinpan’s Cast Resin Transformers Oil-Filled Transformers
Underwriters Laboratories (“UL”) Listed
Highest Reliability
Lower Cost of Ownership
Safe and Fire Resistant
Environmentally Friendly
Sophisticated Technology
Jinpan’s cast resin transformers primarily compete with oil-filled transformers
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Other Product Offerings Switchgears Unit Substations Reactors
Description
Enables operators to switch system equipment in and out of networks
Mini power generation station comprised of switchgears, transformers, power meters and a power factor compensation device
Helps balance line voltages generated from wind towers. Reactors are installed in the hub of the wind tower.
Applications Electrical network configurations
Construction and upgrading of city power networks
Wind power
Markets and Growth Drivers
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Markets: Revenue by End Market
2009 Revenue by End Market Full year 2009 Revenue: US$ 159 Million
Jinpan’s products are used in a wide range of applications. End markets include -
Industrial (40 %)
• Factories, oil refineries, ship building facilities
Utilities and Infrastructure ( 50 %)
• Utilities: power plants, wind farms, and electrical distribution networks
• Infrastructure: airports, train/subway stations, and other municipal projects
Commercial and Residential ( 10 %)
• Office buildings, shopping malls, high rise apartments
Utilities and Infrastructure
Industrial
Residential and
Commercial
10%
40%
50%
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Markets: Revenue by Product / Region
2009 Revenue by Product Transformers (81.8%) Reactors (8.5%) Switchgears (5.5%) Unit Substations (4.2%)
2009 Revenue by Product
Reactors
Unit Substations
Switchgears
Transformers
Revenue by Region China (86.0 %) International (14.0 %)
2009 RevenueChina vs. International
International
China
14%
86%81.8%
4.5%5.5%
8.5%
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Markets: Revenue by Application
Custom
Standard
2009 RevenueConventional vs. Wind Energy
Applications
Wind
Coventional
2009 Revenue Standard VS. Customize
Transformers(Exclude Wind Energy Applications)
45%
55%82%
18%
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Growth Driver: Electricity Consumption and Fixed Asset Investment
Jinpan manufactures equipment for the distribution of electrical power. Demand for our products is driven by demand for electricity.
2009 Electricity Consumption: 3.643 Trillion KWH.*
Consumption by Industry: 3.185 Trillion KWH (5.14% over 2008)*
Consumption by Consumers: 0.457 Trillion KWH (11.87% over 2008)*
Sales of electrical equipment is also driven by infrastructure development.
China’s investment in fixed assets 2009: RMB 22,486 Billion (30.1% over 2008) **
• Secondary Industry: RMB 8,227.7 Billion (26.8% over 2008)**
• Real Estate Development: RMB 3,623.2 Billion (16.1% over 2008)**
Electricity Consumption In China*
1.82.1
2.4
2.8
3.2
3.63.4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2003 2004 2005 2006 2007 2008 2009
Trillion kWh
* Based on data published by the China Electricity Council.
** Data from the National Bureau of Statistics of China. See “Statistical Communiqué of the People’s Republic of China on 2009 National Economic and Social Development.” (February 25, 2010)
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Growth Driver: Wind Energy Wind is one of the fastest growing sources of alternative energy, because the
technology is clean, reliable and easy to install.
The Global Wind Energy Council announced that the world’s wind power capacity grew by 31% in 2009, adding 37.5 GW to bring total installations to 157.9GW.
Source: Global Wind Energy Council New Release March 2, 2010
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Source: Global Wind Energy Council New Release March 2, 2010
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Growth Driver: Wind Energy The main markets driving significant growth continue to be Asia, North
America, and Europe, each of which installed more than 10GW of new wind capacity in 2009.
China was the largest market for wind energy equipment in 2009. China added 13 GW of new capacity, nearly doubling its wind generation capacity from 12.1 GW in 2008 to 25.1 GW at the end of 2009.
Source: Global Wind Energy Council New Release March 2, 2010
19Source: Global Wind Energy Council New Release March 2, 2010
2020
Jinpan currently produce:
Reactors for use in 1.5MW and 2.5MW wind towers; and
Transformers for 2.5MW wind towers.
Executing a two pronged strategy on alternative energy:
Expand OEM customer base for existing products.
Work with OEM customers to develop new wind energy products for their wind power packages.
Growth Driver: Wind Energy
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Growth Driver: International Market International Market Strategy
Supply the international market through OEMs.
Leverage the marketing reach of large international OEMs and our expertise in manufacturing power distribution equipment to expand our presence in international markets.
North America
We continue to benefit from the successful UL listing of our cast resin transformers in 2007.
Currently, Jinpan is one of two manufacturers of UL certified cast resin transformers in the world.
Europe
Europe has become our top market for wind energy products.
2.3
6.0
19.6
23.7
0.0
5.0
10.0
15.0
20.0
25.0
2006 2007 2008 2009
Millions (USD)
International Sales
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Facilities, Sales/Marketing, and People
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Advanced Manufacturing Facilities Haikou Wuhan Shanghai
Year Operational 1993 2008 Phase I (Completed September 2009)
Size (m2) 44,446 19,920 >35,000
Owned / Leased 40% Owned / 60% Leased
100% Owned 100% Owned
Products Lines Transformers (customized and wind)
Standard Transformers Reactors, Switchgears, new wind energy products (under development)
Transformer Manufacturing Capacity
Transformer: Approx. 7M KVA
Transformer: Approx. 3M KVA
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State of the Art Manufacturing Technology
Foil Winding
Epoxy Mixing
Core Assembly
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Geared for the development and manufacture of high margin wind energy products and integrated assemblies.
Phase I Construction: Renovation of existing buildings and installation of equipment for the manufacture of VPI reactors and transformers. Completed Sep 2009.
Phase II Construction: New buildings and equipment for the manufacture of new wind energy product and switchgear products. Estimated to be completed Q4 2010.
Ongoing Capacity Expansions at the Shanghai Facility
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Sales and Marketing
Direct sales network consisting 35 regional sales offices located in major cities with 59 direct sales employees.
International sales office in the U.S.
Diversified customer base Largest customer
approximately 19% of total sales
No other customer accounts for more than 10% of total sales
Jinpan’s extensive sales network is a significant barrier to entry for foreign and domestic competitors seeking to enter the China market.
Haikou Facility
Shanghai Facility
Wuhan Facility
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Experienced, Entrepreneurial Management Team
Name Age Position
Li Zhiyuan 55 Chairman of the Board of Directors, President, and Chief Executive Officer
Ling Xiangsheng 58 Vice Chairman of the Board of Directors and Vice President
Jing Yuqing 47 Corporate Secretary and President of U.S. Division
Richard Wolff, Jr. 54 Vice President of Business Development
Mark Du 49 Chief Financial Officer
Jinpan’s founders were the first to develop cast resin transformers in China
Current management team has built Jinpan into the leading transformer manufacturer in China
Staff of more than 169 engineers and technicians. Continued commitment from senior management, owning approximately
30% of outstanding equity
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Compelling Growth Strategy Continue to focus on China’s growing electrical infrastructure
market
Invest in new, state-of-the-art facilities to increase manufacturing capacity and efficiency
Promote and develop high margin products, particularly in wind energy
Leverage our relations with OEMs and UL certification to expand our global reach.
Financial Performance
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$4.5 $5.1$7.2
$10.5
$35.6
$24.8
$20.9
$0
$5
$10
$15
$20
$25
$30
$35
$40
2003 2004 2005 2006 2007 2008 2009
$3.3$4.5
$7.4
$16.4
$19.8
$29.0
$3.5
$0
$5
$10
$15
$20
$25
$30
2003 2004 2005 2006 2007 2008 2009
$33.5$42.3
$53.6
$82.3
$119.6
$154.0 $159.0
$0
$30
$60
$90
$120
$150
$180
2003 2004 2005 2006 2007 2008 2009
Financial Performance
Net Income & Margins
($Millions)
$14.4 $14.7 $17.2$22.9
$48.9
$67.2
$41.6
$0
$10
$20
$30
$40
$50
$60
$70
$80
2003 2004 2005 2006 2007 2008 2009
Gross Profit & MarginsNet Sales
EBITDA & Margins
(1)
(1)
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Financial Overview($Millions, except per share data) FYE December 31
2005 2006 2007 2008 2009
Net Sales 53.6 82.3 119.6 154 158.9
% Growth 26.9% 53.5% 45.4% 28.8% 3%
Gross Profit 17.2 22.9 41.6 48.9 67.2
% Margin 32.0% 27.8% 34.8% 31.7% 42.3%
EBITDA 7.2 10.5 20.9 24.8 35.6
% Margin 13.3% 12.8% 17.4% 16.1% 22.4%
EBIT 6.4 9.7 19.6 23.1 32.0
% Margin 11.9% 11.8% 16.4% 15.0% 20.1%
Net Income 4.5 7.4 16.4 19.8 28.9
% Margin 8.5% 9.0% 13.7% 12.9% 18.2%
Diluted Earnings per share 0.68 1.1 2.03 2.43 3.56
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Financial OverviewBalance Sheet ($ M) Statement of cash flow
31-Dec-09 31-Dec-09
Current assets 135.00 Net Cash Provided by operating
activities 28.00
Other assets 47.00 Net cash used in investing activities (8.00)
Total assets 182.00 Net cash used by financing activities (11.00)
Net increase in Cash 9.00
Current liabilities 44.50
L/T Liability 1.60
Equity 135.90
Total liabilities & equity 182.00
Thank You
Albert ShengVice President of Investor RelationsJinpan International (USA) Ltd.390 Veterans Blvd.Carlstadt, NJ 07072T: 201 460 8778 (x135)F: 201 460 8775 E: [email protected]