Daibochi Plastic & Packaging Industry Berhad · Thomas Lim Soo Koon, Managing Director - Holds a...

Daibochi Plastic &

Packaging Industry

Berhad

Investors’ Briefing

1H10 Financial Results & Corporate Update

10 August 2010

IR Adviser

AQUILAS

More goodies in the pack...

• 1H10 Performance Review

• Growth Strategies

• Investment Merits

2

1H10 Performance ReviewImpeded by external factors…

3


2Q10 2Q09 Change RM’mil 1H10 1H09 Change

61.17 57.55 +6.3% Revenue 120.86 113.39 +6.6%

5.95 7.69 (22.7%) EBIT 12.56 13.79 (8.9%)

5.71 7.44 (23.3%) PBT 12.06 13.07 (7.7%)

4.19 5.76 (27.3%) PATMI 9.21 10.80 (14.7%)

5.59 7.59 (26.4%) EPS (sen) 12.28 14.22 (13.6%)

9.7% 13.4% (3.7 pt) EBIT margin 10.4% 12.2% (1.8 pt)

9.3% 12.9% (3.6 pt) PBT margin 10.0% 11.5% (1.5 pt)

6.8% 10.0% (3.2 pt) Net margin 7.6% 9.5% (1.9 pt)

4

1H

10 Incom

e S

tate

ment

Top line sees growth… profitability impacted by lag effect in

passing still-rising raw material prices & forex volatility

Higher sales from

local and

overseas markets

(1) Due to lag

effect in passing

still-rising raw

material prices

to customers;

and

(2) RM1.1mil forex

loss in 1H10

(vs RM1.5 mil

gain in 1H09)

USD

Payments

(Trade) (‘000)

USD

Collection

(‘000)

12 months

(to 30.6.10)

19,451 17,764

6 mths

(to 30.6.10)

11,441 9,365

• FOREX Analysis:

USD retains natural hedge, with 12-mth and 6-mth to 30.6.10 largely matched

Impact of forex volatility contained to approx RM1 mil in 1H10

Average gain/(loss): USD (12 mth to 30.6.10): (RM48K) Std dev: RM126K

AUD (12 mth to 30.6.10): (RM49K) Std dev: RM187K

Total forex: (RM97K) Std dev: RM185K


5

FY10 revenue beginning on a higher plane…anticipated

breather in raw material prices to stabilize bottom line

Quart

erl

y T

rend

50

.7

55

.8

54

.0

56

.7

55.8

57

.6

53

.8

54

.6

59

.7

61

.2

35.0

40.0

45.0

50.0

55.0

60.0

65.0

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10

RM ‘mil Quarterly Revenue

1.7

2.7

1.5

2.3

5.0

5.8

5.9

6.1

5.0

4.2

0.0

2.0

4.0

6.0

8.0

10.0

1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10

RM ‘mil Quarterly PATMI

+6.3%+2.5%

(27.3%)

(16.5%)


6

Top line indicating healthy growth…gross margins

compressed by rising input prices

Gro

up R

evenue

160.7 198.1 210.0 202.4 217.2 221.8 120.9

6.3% 6.0%

10.2%11.5%

10.0%

18.3%

15.3%

0%

5%

10%

15%

20%

25%

0.0

50.0

100.0

150.0

200.0

250.0

2004 2005 2006 2007 2008 2009 1H10

MarginRM ‘mil Group Revenue

Group Revenue Gross Margin


7

Effects of price adjustments should be seen in 2H10…

0%

5%

10%

15%

20%

25%

30%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2004 2005 2006 2007 2008 2009 1H10

MarginRM ‘mil PBT & PATMI

PBT PATMI PBT margin PATMI margin

PBT

& P

AT

MI


8

1H

10 B

ala

nce S

heet

(Hig

hli

ghts

)Increased borrowings for working capital… net gearing still

manageable

RM’ mil As at 30.6.10(Unaudited)

As at 31.12.09 (Audited)

Fixed assets (excl associate investment) 61.54 60.43

Associate investment 22.81 22.91

Current assets 117.10* 104.37

Current liabilities 65.50 52.53

Shareholders’ equity 124.60 123.26

Total borrowings 35.16 20.49

Trade and other payables 31.90 34.44

Net gearing 0.22 x 0.12 x

Return on Average Shareholders Equity 14.9%** 19.2%

Return on Average Total Assets 9.5%** 11.9%

* Current assets include assets classified as land held for sale of RM4.5 mil

** Based on annualized 1H10 net profit


1.52 1.52 3.04 4.55 4.55 11.67 4.49

52.3%

73.8%

55.9% 52.4% 55.8%51.3% 48.8%

0.0%

25.0%

50.0%

75.0%

100.0%

0.00

3.00

6.00

9.00

12.00

2004 2005 2006 2007 2008 2009 1H10

%RM ‘mil Dividend Payout

Dividend Payout (RM 'mil) Payout Ratio

9

Div

idend H

isto

ryCommitted to quarterly dividend with 50% payout…

GROWTH STRATEGIESNew sectors to power Daibochi ahead…

10


11

Gro

wth

Str

ate

gie

sFocused on increasing premium clientele while managing

costs… coupled with additional capacity

(I) Cultivating stronghold F&B clients

• Maintained supply to Fonterra; received enquiries from Pepsico, Thailand

• Constant R&D to develop new applications

(II) Venturing into new sectors for wider customer base

• Recently obtained certification from USA to market new electronic

packaging solutions

» Target to commence supply to electronic manufacturers in FY2011

• Pursuing feedback on submissions for healthcare and tobacco packaging

(II) Expanding production capacity

• To build new warehouse in Melaka by end-2010

• To invest RM6.2 mil capex in FY2010 (RM10 mil previously)

INVESTMENT MERITSTowards gaining market share…

12


13

Invest

ment

Meri

tsGrowth propelled by new ventures…

Broadening clientele in F&B and new sectors

Continuous innovation to attract new

premium customers

Valuation underscored by commendable

growth and dividend policy

Resilient customer sectors result in business stability

THANK YOUBursa: DAIBOCI/8125 Bloomberg: DPP:MK Reuters: DPPM.KL

14

IR Contacts:

Thomas Lim E: [email protected] T: 06-231 9779

Julia Pong E: [email protected] T: 012-3909 258

APPENDIX

15


The LARGEST supplier of packaging in SEA

16

Daibochi, a resilient investment case…T

rack R

ecord The SOLE supplier to Chembong Confectionery

Factory in M’sia

Supplier of >90% of ’s flexible packaging in M’sia

The SOLE supplier of Kraft / biscuits in M’sia

Other important customers: , London Biscuits

Listed since 1990, now on Main Market of Bursa M’sia

Market cap of RM236.1 mil (4.8.10)

Revenue’s 10-year CAGR:11.9% to RM221.8 mil (FY09)

Dividend policy of paying minimum 50% of net profit to shareholders


Food Beverage FMCG Specialty

Cust

om

er

Base

Diversified clientele of leading global brands… 17


DAIBOCHI PLASTIC & PACKAGING INDUSTRY BERHAD

ListedMain 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 RM75.9 mil (75.902 mil shares of RM1 each)

Market Capitalization RM233.8 mil (RM3.08 as at 6 August 2010)

18

Listed since 1990…C

orp

ora

te Info

rmati

on


Corp

ora

te P

rofi

le19

Leading flexible packaging solutions provider, with enviable

reputation exceeding 35 years…

1994 – Acquired fastest extrusion laminator in SEA

1996 - Moved to current 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;

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

Regional supplier for BAT

2010 – Obtained Letter of Validation from USA for electronic packaging


Corp

ora

te P

rofi

le

• Accredited and world-class

production facilities

» Attained ISO:9001 certification

» Hazard Analysis Critical Control Points

(HACCP) compliant to ensure

adherence to food safety requirements

» Obtained HALAL certification

• Well-equipped laboratory testing

facilities

» To ensure our products exceed customers’

packaging barrier (MVTR ASTM F1249, O2TR

ASTM D3895-35), retention (GC with

Headspace) and migration (COF ASTM

D1894) requirements.

20

Internationally-certified production facilities that comply

with all factory audits by our MNC clientele…


21

Pro

ducti

on F

acil

itie

sIntegrated end-to-end packaging process… equipped with

specialized in-house capabilities

PrepressCylinder Making

Gravure Printing

Lamination (Extrusion /

Dry)

Slitting / Bagging

CPP Film Metallizer

Up to 9-colour 2-sided printingIn-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 barriersPolypropylene sealing films


22

Daib

ochi

Pro

ducts

Wide range of packaging solutions for various product

functions… Constantly innovating for changing requirements

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


23

Key M

anagem

ent

Experienced management with industry expertise…

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.

Colin Yong Jaw Teck, Executive Director

- Was the Managing Director from 1972 to 1979, and from 1998 until his retirement in 2005.

- Holds a degree in Bachelor of Applied Science with Electronic Engineering from the Western Australian Institute

of Technology.

- Instrumental in making the Group a regional player.

Datuk 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.


24

Majo

r Share

hold

ers

Growing institutional following… Free float retained at >50%

No. of shares (‘mil)(30.06.2010)

Percentage *

Low Chan Tian, ED 8.81 11.78%

Datuk Wong Soon Lim, ED 4.71 6.29%

* Excluding 1,120,800 shares bought back by the Company and retained as treasury shares

INDUSTRY INSIGHTFlexible Packaging Here To Stay

25


• F&B constituted 70% of total packaging

market in 2005

• Flexibles typically constitute 40% - 70+% of

all food packaging in major markets

26

Indust

ry Insi

ght

Large market for flexible packaging, particularly in F&B

sector… other segments present ample growth opportunities


• Environmental concerns allayed with flexible packaging» The ‘greener alternative’ compared to rigid packaging

• Flexible packaging market, worth $1.41 bil in 2008, estimated to

reach $2.22 bil in 2015*» Robust growth in food processing sector

» Rising demand for food exports, i.e. higher food safety concerns

» Increasing affluence of urban population who favour packaged food

• Evident trend of flexible packaging gradually replacing rigid

packaging» Similar functions achieved with lower cost and greater flexibility; e.g. Stand-up

pouches and re-closable packs offer merchandizing advantages to FMCG players

» Consumes ~17% less energy compared to rigid packaging, reducing transportation costs.

27

Indust

ry Insi

ght

(con’t

)Flexible packaging perceived as the environmentally-friendly

alternative… poised to tap into large market potential

* Source: “Southeast Asia Plastic Flexible Packaging Market for Food,” Frost & Sullivan, May 2009.

Countries covered were Thailand, Indonesia, Malaysia, the Philippines, and Singapore

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