Daibochi Plastic & Packaging Industry Berhad · 2019-01-17 · Operations Highlights Financial...

Daibochi Plastic & Packaging

Industry Berhad

2Q15

Financial Results & Corporate Update

13 August 2015

IR Adviser

AQUILAS

2Q15 Operational Highlights

Boosted by higher exports and product mix…

Operations Highlights Financial Review Investment Merits Corporate Profile

3

Benefitted from higher exports and favorable product mix in 2Q15… also expecting new product line to commence in 3Q15

OPERATIONS REVIEW

• 2Q15 PBT rose faster than revenue y-o-y

» 2Q15 revenue rose 3.1% y-o-y to RM89.7m (2Q14:

RM87.0m) due to higher export sales

- Export sales made up 52% of 2Q15 group revenue

(2Q14: 49%)

- Delivered new orders of sterilisable pouch to Australia

(FMCG sector)

» 2Q15 PBT rose 14.3% y-o-y to RM9.5m (2Q14: RM8.4m)

- Attributed to favourable product mix

- Benefitted from the weaker MYR vs USD

• 2Q15 revenue and PBT also improved q-o-q

» 4.1% revenue growth q-o-q (1Q15: RM86.2m) led by

stronger export sales

- Exports grew 16.2% in absolute value (made up 52% of

2Q15 revenue; 1Q15: 47%)

- Local sales dampened slightly due to GST

implementation

» 2Q15 PBT rose 17.1% q-o-q to RM9.5m (1Q15: RM8.1m)

due to favourable product mix and weaker MYR

• Overall utilization rate currently at 70% with adequate

room for larger orders in future

Growth Strategies

Capturing regional growth opportunities…


5

Commercialization of product innovations in 2015… to benefit from replication of ongoing MNC exports to regional markets

GROWTH STRATEGIES

exis

tin

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Pro

du

cts

/ B

ran

ds n

ew

existing new

Customers / Geographical Markets

New innovations to have multiplier effect in existing and new markets, 1 new product line for Asia Pacific market targeted to commence in 3Q15

Innovations

• High Speed Sealing

• Sterilisable film

1 new product line commenced in 2Q15 for Australia FMCG industry

Existing customer base to sustain growth pace and expose new markets

• In discussions with a leading MNC for new export orders for its F&B product line in Australia

• Expected commencement in mid-2016 to boost top and bottom line

2Q15 Financial Review

Delivering steady performance…


7

Improved earnings Q-o-Q due to higher export sales and better product mix… also benefitting from weaker MYR

INCOME STATEMENT

2Q15 to

30.06.15

1Q15 to

31.03.15

Change vs

preceding qtr RM'mil

1H15 to

30.06.15

1H14 to

30.06.14

Change vs

prev period

89.67 86.16 4.1% Revenue 175.83 177.37 (0.9%)

12.51 10.71 16.8% EBITDA 23.23 23.28 (0.2%)

9.61 7.80 23.2% Operating Profit 17.40 17.99 (3.2%)

0.45 0.86 (48.0%) Share of Associate Results 1.31 0.15 805.5%

9.54 8.15 17.1% Pre-tax Profit 17.69 17.24 2.6%

7.19 6.19 16.2% Net Profit to Shareholders 13.38 12.82 4.3%

6.33 5.45 16.1% Basic EPS (sen) 11.78 11.26 4.6%

14.0% 12.4% 1.6 pt EBITDA margin 13.2% 13.1% 0.1 pt

10.6% 9.5% 1.1 pt PBT margin 10.1% 9.7% 0.4 pt

8.0% 7.2% 0.8 pt Net margin 7.6% 7.2% 0.4 pt

68.8

70.6

65.7

73.8

73.4

69.5

87.3

80.2

90.4

87.0

83.1

84.0

86.2

89.7

Quarterly Group Revenue FY2011-2015 (RM ’mil)

5.1

6.4

6.9

6.2

7.1

6.0

7.4

6.9

6.6

6.2

5.0

5.9

6.2

7.2

Quarterly Group PAT FY2011-2015 (RM ’mil)

+3.1% +15.7%

• 1H15 topline largely

maintained despite lower

export sales orders in 1Q15,

and deferred orders for new

product lines to 3Q15

• Net profit higher on the back

of favourable product mix

and weaker MYR


8

Healthy balance sheet supporting enlarged operations… net gearing remaining within comfortable level of 0.5x

BALANCE SHEET HIGHLIGHTS

As at 30.6.2015

(Unaudited)

As at 31.12.2014

(Audited)

Remarks

Fixed Assets (excl associate investment,

land held for development & deferred tax)

125.32 123.23

Associate Investment 24.00 22.69

Current Assets 154.37 148.06 Due to higher inventories and trade receivables, in

line with larger production capacity and increased

orders

Current Liabilities 107.10 101.84 Increase in short term bank borrowings to fund

working capital requirements

Shareholders’ Equity 174.77 168.33 Due to increased retained earnings

Total Borrowings 64.54 59.52 Increase in short term bank borrowings to fund

working capital requirements

Cash & Bank Balances 2.87 7.69 To fund purchase of machinery and repayment of

bank borrowings

Net Gearing 0.35 x 0.31 x In line with higher borrowings; still within

manageable level

Return on Average Shareholders’ Equity 15.6% * 14.4%

Return on Average Total Assets 9.0% * 8.3%

FY12 FY13 FY14

NP 27.462 23.743

SE 150.42 162.086 168.331

TA 235.225 280.604 294.046

ROA 10.6% 8.3%

ROE 17.6% 14.4%

* Annualized


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2nd interim single-tier dividend of 4 sen / share payable on 29 Sept ’15 (to shareholders on 3 Sept ’15 ROD)…

DIVIDEND HISTORY

11.7 9.4 10.1 15.2 17.1 14.8 8.5

51.3% 51.6% 50.3% 61.5% 61.3% 62.2% 63.8%

0.0 %

25. 0%

50. 0%

75. 0%

100 .0%

0.0 0

6.0 0

12. 00

18. 00

2009 2010 2011 2012 2013 2014 1H15

Dividend Payout

Dividend Payout (RM 'mil) Payout Ratio

10.4 8.4 9.0 13.3 15.0 13.0 7.5

2009 2010 2011 2012 2013 2014 1H15

Net Dividend Per Share (sen)*

• Dividends in respect of FY2015

• Paid 1st interim single-tier dividend of 3.5 sen per

share amounting to RM4.0 million payout

(paid on 19 June 2015)

• Declared 2nd interim single-tier dividend of 4.0 sen

per share amounting to RM4.55 million payout

(Ex date 3 Sept 2015, payable 29 Sept 2015)

• Daibochi has a dividend policy to distribute

60% of net profits to shareholders *Adjusted for 1-for-2 Bonus Issue, effective 10 September 2012

Stock charts (5-Year & 1-Year)

5YR outperformance:

90.5%

1YR outperformance:

8.5%

08 Aug ‘14 KLCI: 1839.87 DPP:MK: 4.42

10 Aug ’15 KLCI: 1654.37 DPP:MK: 4.35

10 Aug ’10 KLCI: 1359.71 DPP:MK: 2.05*

10 Aug ’15 KLCI: 1654.37 DPP:MK: 4.35

Investment Merits

Proxy to region’s growing appetite…


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Poised for growth via expanding MNC clientele and order size... product innovation to enhance product mix

PROSPECTS AND PLANS

To continuously increase MNC customer base

Poised to support regional clients’ growing production demands

Positive headway in trials for 2-layer film and adoption of high-speed film; To result in favorable product mix going forward

Newly expanded manufacturing capacity to optimize utilization rate CPP film and metallizing utilization rate at 70% currently;

adequate capacity to meet anticipated growth


12

Valuations to be compressed with earnings expansion…

VALUATIONS

Share Price @ 10-August 2015 RM4.35*

Market Cap @ 10-August 2015 RM495.3 mil

Trailing PE 20.4 x

Trailing EV/EBITDA 12.9 x

FY14 Dividend Yield 3.0%

* cum 2nd interim single-tier dividend of 4.0 sen to be paid on 29 September 2015

IR Contacts

Mr. Low Jin Wei

E: [email protected]

T: 06-231 9779

Ms. Julia Pong

E: [email protected]

T: 012-390 9258

THANK YOU

Bursa: DAIBOCI/8125 Bloomberg: DPP:MK Reuters: DPPM.KL

mailto:[email protected]

mailto:[email protected]

Corporate Profile


15

Market cap of approximately 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 RM113.9 mil (113.9 mil shares of RM1 each)

Market Capitalization RM495.3 mil (RM4.35 as at 10 August 2015)


16

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’s Chiang Mai plant for potato chips

manufacturing


17

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


18

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 capabilities for quality assurance and constant improvement at key stages

To build high barriers Polypropylene sealing films


19

Leading flexible packaging solutions provider, with enviable reputation exceeding 40 years…

CORPORATE TIMELINE

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

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

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 Shareholders Watchdog Group


20

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


21

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) (30.6.2015)

Percentage *

Low Chan Tian, ED 10.10 8.9%

Apollo Asia Fund Ltd 10.66 9.4%

Lim Koy Peng 8.62 7.6%

Datuk Wira Wong Soon Lim, ED 6.57 5.8%

Halley Sicav – Halley Asian Prosperity 6.27 5.5%

Teh Kim Hong 6.18 5.4%

* Excluding 299,200 shares bought back by the Company and retained as treasury shares as at 30-June 2015


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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

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