A.J. Plast Public Company Limited · 2018-02-26 · This presentation is not intended to substitute...
Transcript of A.J. Plast Public Company Limited · 2018-02-26 · This presentation is not intended to substitute...
March 2017
A.J. Plast Public Company Limited
March 2017
A.J. Plast Public Company Limited
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Disclaimer
The information contained in this presentation is intended solely for your personal reference only. If you
are not an intended recipient, you must not read, disclose, copy, circulate, retain, distribute or take any
action in reliance upon this material.
The information contained in this presentation does not constitute or form any part of any offer or
invitation to purchase any securities and neither the issue of the information nor anything contained
herein shall form the basis of, or be relied upon in connection with, any contract or commitment on the
part of any person to proceed with any transaction.
This presentation is not intended to substitute your own analysis and investigation, and should not be
considered a recommendation to any recipient of this presentation. Some information contains
projections and forward-looking statements that reflect the company’s current views with respect to
future events and financial performance. These views are based on current assumptions which are
subject to various risks and which may change over time. No assurance can be given that future events
will occur, that projections will be achieved, or that the company’s assumptions are correct. Actual
results may differ materially from those projected.
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AJ snapshot: One-stop BO (biaxially-oriented) film manufacturer
Business description
Top 10 Shareholders
• AJ is a BO (biaxially-oriented) film manufacturer, offering one-stop service for BO film
used primarily in flexible packaging
• Expanded into CPP film and off-line chemical coating film to enhance product
portfolio and add value to existing products
• AJ is capable of producing full range of flexible packaging films which are:
• AJ is founded in 1987 and listed on the SET in 1990
• SET Ticker - AJ
• Bloomberg Code - AJ:TB
Value chain
Upstream
petrochem.
industry
Resin
producer
e.g. IVL,
PTTCH,
UBE,
TPC
BO film
producer
Product
manuf.
e.g. food
processor
(CPF, TUF)
Converter
/ PrinterConsumer
Plastic
resin
Plastic
film
Packaging Finished
goods
นาย กิตติภตั สุทธิสมัพทัน์ 24.31%
นาย ภูมิพนัฉตัร สุทธิสมัพทัน์ 11.62%
นาย ณรงค ์สุทธิสมัพทัน์ 7.48%
น.ส. อจลา สุทธิสมัพทัน์ 6.54%
น.ส. วรัญญา ฉตัรพิริยะพนัธ์ 2.81%
บริษทั ไทยเอน็วีดีอาร์ จ ากดั 2.29%
นาย กิตติภตั สุทธิสมัพทัน์ 2.16%
น.ส. ดารณี ฉตัรพิริยะพนัธ์ 1.78%
น.ส. โสพิศ ภูสนาคม 1.58%
นาง นงนิภา สุทธิสมัพทัน์ 1.4%
Financial highlight
(as of 1Q2017)
Product BOPP BOPET BOPA CPP
Capacity (MT/yr) 132,000 62,000 18,000 16,000
0
20000
40000
60000
80000
100000
120000
140000
Production Capacity
Unit: MB 2016 2015 2014 2013 2012
Revenue 7,032 6,259 6,545 5,452 5,287
Net profit 121 4 -248 -98 190
Total
assets8,495 8,244 8,243 7,542 6,108
D/E ratio 1 .62 1.6 1.62 1.22 0.72
P/E 47.11 - - 54.69 36.65
Market
cap.5,386 2,397 3,535 3,695 6,000
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Schematic of BO Film Industry
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AJ snapshot: An overview of BO film production process
Ev alene EvaleneEvalene
EvaleneEvalene
EvaleneEvalene
EvaleneEvalene
Evalene
Evalene
EvaleneEvalene
EvaleneEvalenemain
extruder co- ex 1 co- ex 2
Raw Material FeedingExtrusion
(Extruder)
Casting(Casting Section)
Longitudinal Stretching(Machine Direction Orienter)
Transversal Stretching(Transverse Direction Orienter)
Flame/Corona Treating(Pull Roll Section)
AGEING(Ageing Rack)
Slitting(Main Slitter Machine)
Secondary Slitting(Secondary Slitter Machine)
Weighing / Packing Loading Delivery
Winding(Winding Section)
Storage
BOPP PROCESSFLOW DIAGRAM
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Equipped with engine to achieve growth: Leader in Southeast Asia
Well-planned capacity expansion Additional capacity towards leadership
SEA’s largest BO film producer in all
segments since 2014
Year BOPP BOPET BOPA CPPVALUE
ADDED LINE
1987 • 1st BOPP
1995 • 2nd BOPP • 1st BOPET
2001 • 1st Metallizer
2003 • 3rd BOPP • 2nd BOPET • 2nd Metallizer
2006 • 1st BOPA
2008 • 4th BOPP
2010 • 3rd Metallizer
2011 • 3rd BOPET • 2nd BOPA
2013 • 5th BOPP • 4th BOPET
2014 • 6th BOPP • 1st CPP• 4th & 5th
Metallizer
2015 • 6th Metallizer
2016 • 1st Coater
(Unit: MT)
2010 2011 2012 2013 2014
BOPP
BOPET
BOPA (Nylon)
105,000 115,000 155,000 242,000 Total capacity
New Machine
8,000 18,000 18,000
18,000
18,000
31,000 31,000 31,000
31,000
62,000
66,000 66,000 66,000
106,000
146,000
115,000
16,000 CPP
2014-Present
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• Protect the product from chemical /
biological exposure
Health
• Minimum use of resources
• Easy to empty / recycle
Environment
• Easy to handle, store & transport
Logistics
Recent structural changes of packaging industry: Catalyst for BO film demand
22%
18%
17%
17%
3%
11%
12%
U.S. packaging industry (2009)
Corrugated
Flexible
Misc rigid plastics
& bottles
Paperboard
Metal cans
Glass
Others
?
Source: U.S. Census Bureau data & Flexible
Packaging Association estimates
The market is overwhelmed by
various packaging alternatives
Key requirements for packaging
• Easy to manufacture & cost efficient
Economy
• Easy to open, hold & close
• Inform consumers about the product
Usability
• Contain, Inform, Protect, Transport &
Display
Basics
Flexible packaging has gradually
replaced conventional ones
Conventional
Flexible
Flexibility and functionality at competitive cost for producer and affordable price for consumer is key driver of
flexible packaging trend at present
What is the BEST one?
Flexible packaging provides many
consumer conveniences including
extended shelf life, easy storage,
microwaveability & resealability
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Flexible packaging: Significant value and benefits to the market
FLEXIBLE
PACKAGING (FP)
Resource
Recovery
Sustainability
Advantages
Light
Weighting
FP reduces
waste, energy
consumption &
greenhouse gas
emission
FP waste can be
reproduced into
new FP
FP waste may
be used as
feedstock to
produce
gaseous & liquid
fuel
The lightweight package produces “less waste at the first place”
Examples of light weighting between 2005 -2011:
• Barrier enhancement: resulted in 50% less material for the same barrier
• Material toughness: layers reduced up to 50%
• Coextrusion technologies: enable weight reduction of up to 33%
• Equipment innovation: allows some film thickness to be reduced to 50%
Beverage packaging example
Glass bottle
& metal capPlastic PET
bottle & capAluminum
canStand-up
flexible pouch
Product weight (g) 236 236 236 199
Packaging weight (g) 198.4 22.7 11.3 5.7
Product-to-Packaging Ratio
1:1 10:1 21:1 35:1
Packaging weight per 100 g product (g)
83.9 9.6 4.7 2.8
MSW/1 landfill per 100 g product (g)
54.5 6.0 2.4 2.8
Energy consumption (MJ/8 oz)
3.36 3.00 0.99 0.45
Emissions (Kg Co2e/8 oz)
0.29 0.18 0.08 0.02
1 2 3 4
Advantages of FP over alternative packaging
Remark: /1 MSW stands for municipal solid waste
Source: FPA (Flexible Packaging Association) Case Studies
• The flexible beverage pouch consumes ½
the amount of energy compared to the
closet alternative
• The flexible beverage pouch generates ¾
less emission than the closet alternative
• The flexible beverage pouch uses less space
in shipping than other alternatives, reducing
transportation emission while saving costs
Flexible packaging (FP) sustainability initiatives
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AJ Plast: Strategies
No.1 in Southeast Asia The lowest cost producer Sustainable growth
• Offer comprehensive range of film products
• Diversify business risk and mitigate volatile
profit
One-stop service
Premium market penetration
• High value-added product
• Target Japanese market
- Massive demand of 280k MT/yr
- Premium price opportunity
- High level of quality requirement
- Technical know-how improvement
• Global shift from traditional to flexible
packaging
• Flexible packaging mainly correlates with
food and consumer product sectors, thereby
indicating sustainable & resilient demand
Flexible packaging trend
• Invest in the state-of-the-art machinery
- Increase productivity
- Reduce energy consumption
- Reduce plastic waste
- Able to produce higher grade films
• Invest at the right timing
• Gain promotional privileges (esp. tax
incentives) from the Board of Investment
Right investment
• Realize greater level of economy of scale as
the company grows
• Deepen sourcing skills to obtain advantage
of material cost minimization
Efficiency improvement
• Continuous Expansion from 2010-2018
• Achieve the largest capacity in all BO film
segments in 2014
Capacity expansion
• Cautiously expand product portfolio to be
the industry leader:
BOPP since 1987, BOPET since 1995, Metallizer
since 2001, BOPA since 2006, CPP since 2016,
and Chemical Coated Film since 2017
Portfolio enlargement
• Fully dedicate to quality excellence at all
levels of production
Quality excellence
Ho
w t
o A
ch
iev
e t
he
Go
als
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AJ Plast: Unique Positioning
Complete Product Line Latest Production Fleet
• AJ Plast offers customers with complete product lines for
flexible packaging including BOPP, BOPET, BOPA, CPP and
metallized film.
• Product ranges from high volume commodify products to high
value-added specialized products such as transparent barrier
films
• AJ Plast replaced old machines with smaller capacity, less
efficiency, higher production cost with new ones with larger
capacity, higher efficiency, and lower production cost at
appropriate periods.
• Currently, 70% of production capacity is coming our from
Production line with ages less than 6 years
Benefits Benefits
• One-stop supply for local and export customers
• Lower sales and administration costs per sales value
• Smoother business cycles with less volatility
• Enjoys more frequent product cycles compared with relying
on only one product cycles
• Becomes a lowest cost producer with better efficiency in both
raw material, energy consumption, and manpower
• Enhance competitiveness in local and global market
• Better quality - a ticket to enter and stay in premium market
• More flexibility to produce high value-added products
• Better spare part management – less cost and high machine
reliability
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0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2005 2010 2015 2016
Export Local
38,405
Diversified customer base: To decrease reliance on any particular economy
AJ sales quantity (MT)
81,520
98,689
121,263
AJ sales mix by proportion (%)
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Diversified customer base: To decrease reliance on any particular economy
AJ Customer Base
Reduce dependency and minimize particular country risk
Avoid anti-dumping measure enforcement
Individual country (except TH & JP) is targeted to contribute
no greater than 5% of AJ’s total sales
Taiwan
Vietnam
Japan
China
Malaysia
U.S.A. Hong Kong
Australia
Switzerland
Italy
Philippines
SingaporeIndonesia
Thailand
England
Germany
Nigeria
Mexico
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0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
Japan USA-Canada
Western China Near/FarEast
SouthAmerica
Eastern Africa
kg
/ y
ea
r
Po
pu
lati
on
in
th
ou
s.
Population in thous. Consump./year
BOPP film industry: Opportunity from sustained growth with recent limited expansion
The history confirms the unremitting expansion in world film demand
•Demand for BOPP production was growing stronger than expected (CAGR (1998-2014) of 8.6%
globally, 15% in China)
•Huge Market at more than 8 million MT per year
•Relatively limited capacity expansion expected in 2017-2018, leaving vulnerability in supply shortage
in the next couple years
BOPP film consumption by Region
Source: Industrial Source
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BOPP film industry: Sustained growth with recent limited expansion
Source: Industrial Source
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
To
ns p
er
Year
(tp
a)
Demand Production Demand Production
BOPP WORLD Demand / Production
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BOPET film industry: The worst has passed, but still need time to fully recover
•CAGR (1998 – 2014) of 7.5% for BOPET
•BOPET production capacity was increased drastically during 2011-2014,
especially in China and India causing serious global oversupply of BOPET film
•While investment in new machines was slow down since 2015, there will be at
least a couple years until the increasing demand can gradually absorb all the
production capacity
•Spread between BOPET film and PET resin will remain at low level, but will
eventually get better gradually in couple years
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BOPET film industry: The worst has passed, but still need time to fully recover
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
To
ns
Demand Production Demand Production
BOPET WORLD Demand / Production
Source: Industrial Source
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BOPA film industry: The Dawn of the New cycle
•In 2016, the demand of BOPA film in China was increased 15% while BOPA
production capacity expansion was not enough to serve the gradually increasing
demand
•At the same time, price of PA resin was down due to over-capacity situation of
Caprolactam which, in turn, widening the spread between BOPA film and PA
resin
•Moving to end of 2016, BOPA film was under shortage especially in China,
bumping the price up 25% in fourth quarter with lead time for delivery of 2.5-3
months.
•Lead time for new machinery including installation and commissioning is more
than 2 years with limited number of machines to be supplied by a single machine
supplier causing slow capacity expansion
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BOPA film is one of the main three package materials (another two are BOPP & BOPET). The resin PA6 comes from ring opening polymerization of CPL. Through melt extruded and bio-oriented stretched it will become BOPA film. BOPA film is named as “queen of film” as its high strength, good toughness, wide range of application temperature, good resistance to acid & alkali and excellent barrier to gas & order. It’s widely used in food package, cosmetic package, electron package & field of construction chemicals.The second half year of 2015 to 2016, the price of BOPA has gone up for several times, the deliver term of orders become longer and longer, while BOPA film is getting shorter and shorter.
Why all these happened?
The direct reason is price of up steam resin going up.
The price of CPL has gone up all the way in 2016. Some analysis pointed out that it’s because of over sales of PA6, it became more and more serious to end of 2016. For example, the price of PA6 has increased 6,000-8,000 RMB/T during Nov. to Dec. 2016, price rise up to 40%.Although the price of resin going up a lot, it doesn’t affect the demand of BOPA. The price of CPL is high and short of demand, so as PA6, price of BOPA also follow to go up.
Increase demand of BOPA down steam is the important reason of BOPA price going up.
The value of gross output of the global packaging market is $ 839 billion by 2015, and is currently growing at average annual rate of nearly 5% . It is estimated that the global packaging industry will reach $ 998 billion by 2020. Global demand for plastic film is also growing at an average annual rate of 5%. Throughout the global BOPA film market, the world's largest supplier are concentrated in the Asia Pacific region, while China's annual production of BOPA has accounted for more than 30% of global production, has become the world's largest BOPA supply and demand. Demand of domestic BOPA market increased by 15% in 2016 than in 2015, growth rate is doubled compared to the previous year. The growth of BOPA demand is rapid in 2016, will continue to become main engine of global growth for BOPA film market in the future.
Japan's Unitika shuted down the factory and Foshan Plastic Group stopped the line for long term in 2015 reduced the supply of domestic BOPA in a certain extent; the world's population is increasing and it is expected to increase by 1 billion and city population by 1.1 billion in the next 10 years; living is more green, more environmentally friendly, packaging is more diversified. Independent packing is more and more popular. Except the application of traditional food packing and chemical packing, the application of lithium battery film and special nylon film will cause the increase demand of BOPA film. The increasing speed of output BOPA is slowing down, the increasing population, improve of living life and more application field are important reasons of short of BOPA.
Source: PFCHINA.COM.CN (http://www.pfchina.com.cn/00/0012/001201/2017/5379890460010.asp)
Why BOPA Film price in China are going up?
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BOPA film industry: The Dawn of the New cycle
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
To
ns
Demand Production Demand Production
BOPA WORLD Demand / Production
Source: Industrial Source
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BOPA and BOPET Cycles: The Differences
•There are many BOPET manufacturers
around the world which could make
investment immediately once market
indicates the start of product cycles
•BOPET does not require high expertise and
knowhow to run which attracts new comers
to enter the business
•There were two BOPET production line
manufacturers (Brueckner and Dornier)
competing head-to-head so that each aims
to take as much order as they can
•Some applications could be switched
between BOPP and BOPET (although taking
some time) if price is too high
•There are fewer BOPA manufacturers
compared with BOPET/BOPP
•BOPA requires expertise and knowhow to run
efficiently with high productivity and low
waste. New comers are aware that they
may not be able to compete with existing
players
•There is only single BOPA production line
manufacturer now (Brueckner). Capacity
expansion is slow and limited. Lead time for
machine delivery is long (more than two
years from contract date to start production)
•BOPA film applications requires special
properties that are not available in BOPET or
BOPP
BOPET BOPA
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Market Update: Spreads Insight 2015-2017
BOPP
• BOPP has been maintaining its spread in the last 2 years with
recent small surge in the beginning of 2017 due to market
demand/supply condition.
• In medium term, there is a positive trend in the spread as
there had been only some capacity expansion in 2015-2016
and still no known expansion plan in 2017 while global
demand keep increasing at 8.6% of 8 million metric tons per
year or approximately 680k MT (equivalent to 20 latest
generation BOPP machines)
BOPET
• BOPET still remains in difficulties as spread is still considered to be
lower than other films due to huge surge in production capacity
during/after the last BOPET cycle.
• Market still needs more time to absorb the additional capacity
which will take at least another couple years. Before that,
spread for BOPET film will still be under high pressure.
Source: Chinese Industrial Source
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0
500
1000
1500
2000
2500
3000
3500
Spread BOPA
Market Update: Spreads Insight 2015-2017
BOPA
•BOPA is a clear winner since 2H2015 – Present with continuously increasing spread trend
from USD940/mt in June 2015 to USD2750/mt in Jan 2017.
•The trend is continue to increase/maintain as there is no new capacity planned to be
coming out soon.
•There will be small capacity coming in second half of 2018 but will not be enough to serve
increasing demand in China.
Source: Chinese Industrial Source