presentation at the set opportunity day - listed...

Polyplex (Thailand) Public Limited Company

Tuesday, 7th June 2011

Website : www.polyplexthailand.com

Presentation at the SET Opportunity Day

• BOPET Film Industry

• Polyplex group

• Polyplex Competitive Strength

• PTL : Financial Performance

Contents


• Current Industry Scenario & Outlook

2

Film business - Value Chain

PTA SupplierP

E

T

R

E

S

I

N

MEG

Supplier

B

A

S

E

IndustrialIndustrial

BuyersBuyers

Polyplex’s area of operation

3

N

F

I

L

M

SConvertersConverters FMCG FMCG

CompaniesCompanies

BOPET Thin Film Application

4

BOPET Thick Film Application

5

BOPET Film

• BOPET is mainly segmented into Thin & Thick Films

– Thin Film : 50 Micron & Under (75% of total BOPET)

– Thick Film : Over 50 Micron (25% of total BOPET)

• The industry capacity is mainly divided based on above Thickness segments.

• Some lines are designed to produce intermediate range of Films from 12µ to

100µ

• Major End use of BOPET Film are • Major End use of BOPET Film are

– Imaging & Graphics

– Magnetic Tape

– Packaging & Metalizing : Main Segment for POLYPLEX

– Electronics / Electricals

– Other Industrial

6

BOPET Film – Influencers on Price

COST DRIVEN FACTORS

CRUDE OIL PRICE IMPACT ON POLYESTER

FILM (60%)PTA

MEG

ENERGY COST (FUEL / POWER)

LOGISTICS COST

MARKET DRIVEN FACTORS

7

CURRENCY VOLATILITY

COUNTRY EXPORT COMPETITIVENESS

IMPORT INTENSITY

CURRENCY WAR

TRADE AGREEMENTS AND BARRIERSPROTECTIONISM, ANTI-DUMPING

BILATERALISM & REGIONAL TRADE

DEMAND – SUPPLY BALANCE

BOPET Global Demand SupplyBOPET Thin Film "KMT" 2004 2009 2014 E BOPET Thick Film "KMT" 2004 2009 2014 E

Capacity 1,388 2,171 3,166 Capacity 626 847 1,137

Production 1,235 1,806 2,781 Production 479 587 829

Capacity Utilisation % 89% 83% 88% Capacity Utilisation % 77% 69% 73%

Demand 1,235 1,806 2,843 Demand 479 587 829

Imaging & Graphics 8 6 4 Imaging & Graphics 203 161 133

Magnetic Tape 94 22 7 Magnetic Tape - - -

Packaging & Metallising 730 1,232 1,998 Packaging & Metallising 4 17 32

Electrical / Electronics 59 90 187 Electrical / Electronics 142 248 443

Other Industrial 344 456 647 Other Industrial 131 161 221

• Largest End use :Flexible Packaging - which accounts for more than two-third of

total Thin Film used.

• Thin Film demand has witnessed a CAGR of about 8% Per Annum (2004-09) and

expected to grow at CAGR of 9.5% (2010-2014).

• Thick Film market has grown at a CAGR of about 4% per annum (2004-09) and is

expected to grow at CAGR of 7.2% (2010-2014).

• The above CUF is based on “Name Plate” Capacity. Achievable peak CUF is 85%-

90% for Thin Film and 70% - 75% for Thick Film against Name Plate Capacity.

8

Other Industrial 344 456 647 Other Industrial 131 161 221

*Source: Industry Sources

Packaging :Sustainable Growth

• Diversified application of BOPET has resulted in Sustainable Growth at better than

World GDP Growth rates.

• The growth in packaging segment proves it resilience to recessionary factors.

9

Segment wise Demand of BOPET Film

616638

617659

710766

820

868

201222

255293

333338

389

444

508

575

630

211198

181178

172167

160

154

147

140

137

9455

4232

2822

17

15

11

9

7

1500

2000

2500

3000

3500

4000

• BOPET (Thin + Thick) Film demand expected to grow @ CAGR of 9%

• Packaging is expected to grow @ CAGR of 10%

10

734 842 951 1046 1149 1249 13921545

16981863

2030474524

568616

638201211

0

500

1000

1500

2004 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E

Packaging Other Industrial Electrical Imaging Magnetic Tape

Structural Shift in Application of BOPET

2000

2500

3000

3500

4000

5%

14%

7%1%

24%

17%

4%• P-I-E segment to

continue to grow at

robust rate

•Electrical segment

to witness highest

growth rate of 13%.

•Growth in Electrical

11

0

500

1000

1500

2004 2009 2014 E

Packaging Other Industrial Electrical Imaging Magnetic Tape

43%

28%

12%12%

5%

52%

26%

55%

K MT

•Growth in Electrical

due to new

applications.

•Packaging to follow

closely at 10%

•Imaging and Tapes

to experience

“Negative” growth

Changing Consumer Habits, convenience is the key

Consumer demand for fresh and healthy food, beverages drivingneed for intelligent as well as high barrier packing

Emergence of strong Retail sector

Packaging: Growth Drivers

Emergence of strong Retail sector

Securing product from counterfeiting

Sustainability - Growing concern on carbon footprint, promotion ofGreen Technology

12


• Polyplex group


PTL : Financial Performance

Contents



13

Polyplex Group – Global PresenceTurkey: Plant 3 India : Plant 1 & Plant

4

Thailand:

Plant 2

USA : Plant 5 (Under

Implementation)

14

Manufacturing Locations – India (PCL), Thailand (PTL),Turkey (PE) & USA (under implementation)

Distribution Companies – USA (PA) & China (PTSL).

Warehouses – 12 in USA, 3 in Mexico, 1 in Poland & 1 in Guangzhou, China

Factories

Warehouses

Polyplex Group Structure

Polyplex (Asia) Pte. Ltd.

SINGAPORE

Polyplex Corporation Limited

INDIA

Private Investor

Polyplex (America)

Inc. USA

Polyplex (Thailand) Public Company Ltd.

THAILAND

Public/

Institutional

Shareholders

9.88%

9.88%

16.5%% 34.5%

100%

100%

49%80.24%

15

Polyplex (Singapore) Pte. Ltd.

SINGAPORE

Polyplex Trading (Shenzhen)

Co. Ltd.

CHINA

Polyplex Europa Polyester Film Sanayi Ve Ticaret Anonim Sirketi

TURKEY

Outside Interest

Investment Company

Manufacturing Company

Distribution Company

100%

100%

Polyplex Group:

Serving Customers WorldwideMore than 1,200 Customers in 80 countriesMore than 1,200 Customers in 80 countries

• Customer solution oriented sales and technical

services teams (region specific ) & Global Innovation

Centre

PCL- SAARC, GCC and Africa

PTL- SEA, Far East & Oceania

PE - Europe & CIS countries

• Distribution subsidiaries in

PA - North and South America, Canada & Mexico

PTSL-China

• Distributors & agents increase reach and service

small customers

• Customer centric customized delivery model:

– Container loads drop-shipped for cost-

effectiveness

– Local warehousing support for higher flexibility

& security

16

Polyplex : Business Strategy

• We’re a fully integrated, global manufacturer of plastic films with Concentric

Diversification into BOPP & CPP

•

TurkeyTurkeyIndiaIndiaThailandThailand

• Our vision is to continuously grow, create value and establish global leadership in

the plastic film business

• We’re expanding to meet demand in new geographies and for new applications

like Extrusion lamination, Silicone Coated release films etc.

• Continually balance our Product & Market Portfolio to increase stability of our

Earnings.

• Judicious mix of On-shore, Off-shore and Near-shore strategy.

17

Polyplex Group: Existing Capacities

51000

42000

58000

PET FILM (151,000 TPA)

INDIA THAILAND TURKEY

35000

10000

16300

15200

11000

MET FILM (42,500 TPA)


Polyplex :Product Portfolio

PET Film 151 KTPA,CPP 10KTPA, BOPP

35 KTPA

151000

PET FILM (TPA) BOPP (TPA) CPP (TPA)

77600

57000

57600

PET RESIN 192,200 TPA


160150

SILICONE COATING (Mn Sqm)-India

EXTRUSION COATING (Mn Sqm)-Thailand


Offline Coater 310 Mn SQM

18

Polyplex Group capacities: 2012

19

• The above capacities include Silicone Coated Film and Thick PET film under

implementation in Thailand & Thin PET film line expansion ( Including metalized film line)

under implementation in US

Polyplex: Continuous Growth…

From 20 KMT capacity in 2002, we have become a TOP 5 Manufacturer of Thin BOPET

Film with capacity of 151 KMT and adding further 63.4KMT (Thin +Thick PET) by H1 of

FY 2013-2014. In addition, existing BOPP capacity of 35 KMT and CPP Capacity of 10

KMT 20

Thailand

Apr/ Nov

2003

Sep 2004

Feb 2005

July 2005

April 2008

PET Film – Line 1 & 2

Chip Plant –Batch /Continuous

Metallizer-1

Extrusion Coated Film

Turkey

PET Film – Line 1

Metallizer - 1

Chip Plant

December

2005

March

2006

December

2006

Polyplex Thailand : Journey So Far

21

May 2008 Metallizer -2

Metallizer -2

PET Film - Line 2May 2008

May 2008March 2010 Cast Polypropylene Film

Expected- Q3

2011-12Silicone Coating line

Expected H1

FY 2013-14PET Thick Film line + PET Chips USA

PET Film – Line 1

Expected in

H2 FY 2012 -

13

SILCONE COATING LINE – THAILAND

• Investment size – USD 25 million, including working capital.

• Target markets – Europe, US and Asia

• Applications – Used as a release liner for Label liners, graphic

arts, medical liners and Shingle Tapes

• Capacity – Dependant on the product mix being run on the line

Projects Under Implementation

22

• Capacity – Dependant on the product mix being run on the line

and can vary significantly across different product types – 200

million sq.mts to 600 million sq.mts

• Financial closure achieved.

• Delivery of main machinery received and commissioning under

progress

• Expected to be operational in Q3 of FY 2011-12.

THIN PET FILM LINE – US

•Project initially planned for Turkey, relocated to the US

•Capital Investment size – USD 75 million

•Capacity –

•Thin PET film line – 31,000 MT pa

•High speed Metallized Film line – 8,600 MT pa


•High speed Metallized Film line – 8,600 MT pa

•Financing Pattern:

•Investment to be made by PTL and/or its 100% held subsidiaries in a new

company to be incorporated in the US

•Debt Borrowing – Approx. 50 Million USD

•Balance to be funded out of internal accruals

•Expected to be commercially operational in 15-18 months from financial closure

23

Thin PET film line –US - Investment Rationale

•Market share of Polyplex in the American continent has increased significantly post

acquisition of the Trading Company in the US, in January 2006.

•With existing US PET thin film manufacturers shifting their focus from packaging

applications to high end industrial and electrical applications and no new capacities

coming in the US, there is a scope for Polyplex to further increase its market share in the

US

•On shore location in the US would be more competitive from a long term point of view

as compared to an off-shore supplier due to the following reasons:


24

as compared to an off-shore supplier due to the following reasons:

•Proximity to key markets leads to reduced cycle time, faster deliveries and is clearly

a source of differentiation in the eyes of the customer. Also this will help the

company to reduce its logistics, delivery costs including lower working capital.

•Both the key raw materials i.e. PTA and MEG are surplus in North America and

possibilities of co-location also exist to further improve the economics.

•Risk of Trade remedial measures like AD/CVD duties can also be significantly

reduced / eliminated.

•An additional location will also significantly diversify the overall business risk.

THICK PET FILM LINE – THAILAND

• New Project approved by the board on 14th February 2011

•Investment size – USD 75 million, including working capital.

•Capacity – Integrated line with Backward integration into PET resin

•Thick PET film line – 28,800 MT pa

•Polyester Resin plant – 28,000 MT pa


•Polyester Resin plant – 28,000 MT pa

•Financing Pattern:

•Debt Borrowing to the extent of 65-75% of project cost – Approx. 50 Million USD

•Balance to be funded out of internal accruals

•Main machinery ordered and down payment made on 15th February 2011.

•Expected to be commercially operational in 18-24 months from financial closure

25

PET Thick film line - Investment Rationale

•Thick film offers a relatively higher margin and more stable business, thereby mitigating

the risk of volatility in earnings

•Competition is limited and with high cost producers in USA, Europe, Japan, Korea etc

and not with Asian manufacturers (as in packaging applications)

•Diversification of risk from packaging dominated to industrial segments

•Opportunity to the company to meet the in house requirement of Thick PET film for


•Opportunity to the company to meet the in house requirement of Thick PET film for

Extrusion Coated film line and the Silicone Coating film line under implementation

•Leveraging existing sales and distribution network

•Rich experience in Thin PET films coupled with learning in traditional Thick film markets

can be leveraged for entry into Optical segment which has huge potential

•Duty advantage for exports from Thailand

•FTAs of ASEAN with Korea, Japan and China will enable Polyplex to meet demand in

these markets

•Trade defense measures (Anti Dumping duty) imposed by Korea on imports from

China26


• Polyplex group



Contents



27

• State-of-the-art machineries at all locations

• Backward Integration enables:

– Consistent quality

– Development of new and specialty application products

– Assured supplies

• Forward integration and Concentric diversification enables us to

Polyplex : Competitive Strengths

28

• Forward integration and Concentric diversification enables us to

offer more value to customers.

• Customer engagement initiatives

• Benefits of Global presence

• Focus on Operational Excellence – Better efficiencies, lower

operating costs etc.


• Polyplex group



Contents



29

Financial performance :FY 2010-11

FY

2009-10FY

2010-11YoY %

Production (PF+MF)-MT 107,913 112,150 4%

Total Revenues 7,300 11,320 55%

30

Financial Figures in Mn THBProduction Qty includes only BOPET Film (PF+MF).

EBITDA 1,527 4,371 186%

Profit before Tax 1,056 3,921 271%

Profit after Tax (excl.minority int) 1,039 3,883 274%

Financial Performance – Historical Data

10%

15%

20%

25%

30%

35%

40%

3,000

4,500

6,000

7,500

9,000

10,500

12,000

Ne

t P

rofit a

s a

% o

f S

ale

s

Mill

ion

Ba

ht

Historic Sales revenue & Net profits (Consolidated)

31

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Sales Revenue 3,300 4,719 6,399 6,860 7,125 11,183

Net Profits 561 342 814 1,042 1,039 3,883

NP margin 17.00% 7.24% 12.71% 15.19% 14.59% 34.72%

0%

5%

10%

-

1,500

3,000

Ne

t P

rofit a

s a

% o

f S

ale

s

Financial Year

Sales Revenue Net Profits NP margin

Financial Performance – Return on Assets

10%

15%

20%

25%

30%

35%

40%

5,500

7,000

8,500

10,000

11,500

13,000

Re

turn

on

As

se

ts (

%)

To

tal A

ss

ets

in

mil

lio

n b

ah

t

Growth in Total assets and Return on Assets

32

2006-07 20007-08 2008-09 2009-10 2010-11

Total Assets 5,838 8,299 8,881 8,867 11,933

Return on assets % 5.98% 11.51% 12.13% 11.71% 37.34%

0%

5%

10%

1,000

2,500

4,000

Re

turn

on

As

se

ts (

%)

Financial Year

Total Assets Return on assets %

Financial Performance – Growth in Shareholder Equity

6

7

8

9

10

11

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Bo

ok V

alu

e p

er

sh

are

Sh

are

ho

lder

Eq

uit

y

Growth in Shareholder Equity and Book value per share

33

2004-05 2005-06 2006-07 20007-08 2008-09 2009-10 2010-11

Sh. Equity 3,267 3,483 3,522 4,329 4,596 5,012 8,363

Book Value 4.08 4.35 4.40 5.41 5.75 6.27 10.45

3

4

5

1,000

2,000

3,000

4,000

Bo

ok V

alu

e p

er

sh

are

Sh

are

ho

lder

Eq

uit

y

Financial Year

Sh. Equity Book Value

Historic Dividend Payout

34

Capacity Utilization Rate- Thailand

42,000 42,000 42,000 42,000 42,000

88%

95%

90%

97% 101%

71%

91%

67%74%

79%

60%

80%

100%

120%

18,000

24,000

30,000

36,000

42,000

48,000

Capacity Utilization rate- Thailand

35

5,000 5,000

10,250 11,000 11,000

0%

20%

40%

-

6,000

12,000

18,000

Financial Year

Plain Film Metallized Film Plain Film Metallized Film

Capacity Utilization Rate- Turkey

29,000 29,000

54,375

58,000 58,000

81%

92%

74%

89% 91%

50%

83%

57%

72% 76%

50%

60%

70%

80%

90%

100%

30,000

36,000

42,000

48,000

54,000

60,000

Capacity Utilization rate- Turkey

36

5,000 5,000

10,250 11,000 11,000

50%

0%

10%

20%

30%

40%

-

6,000

12,000

18,000

24,000

Financial Year

Plain Film Metallized Film Plain Film Metallized Film

Sales Mix – Region Wise

37

Note: Above region wise break up is based on Film Sales Value for FY 2010 - 11 at Polyplex (Thailand) Consolidated level

• Significant presence in all leading markets

• The company’s sales reach in premium markets of Europe & North America validate company’s

strategy to set up manufacturing facility in Turkey and acquire the distribution company in the

US - Judicious mix of On-shore, Off-shore and Near-shore strategy

• Well balanced region wise mix – no dependency on any single region

Sales Mix – Increasing Value Added Products

38

* Value added films include Chemically Coated films, Metallized Film (PET + CPP)

and Thermal Laminated film which have higher value addition as compared with

normal plain film.

Note: Above data is for PTL (standalone) based on Sales quantity


• Polyplex group



Contents


• Industry Outlook

39

Industry Outlook

• The expected global growth in flexible packaging for the year

2011 is estimated at about 9-10%.

• Polyplex's estimate of Global Demand supply situation of Thin

Film Segment till 2013 is as follows:

40

Calendar Year

Industry Outlook

• Consumer preference for smaller and one time use packs are expected to

increase which will bring in more demand for packaging material.

• Changing life style of consumers to result in increase in demand for “ready

to eat” foods

• New applications like PV, Touch-screen panels etc will continue to drive the

growth of Thick PET film.

• Exceptionally high margins of 2010 are likely to result in capacity additions

by existing as well as new players, specially in China and India.

41

by existing as well as new players, specially in China and India.

• Hence, the shortage situation in 2010 is expected to be better balanced in

2011.

• Raw Material price fluctuation as well as currency volatility would continue

to remain a challenge

The views expressed here contain information derived from publicly available sources that have notbeen independently verified. No representation or warranty is made as to theaccuracy, completeness or reliability of the information. Any forward looking information in thispresentation has been prepared on the basis of a number of assumptions which may prove to be

42

Disclaimer

presentation has been prepared on the basis of a number of assumptions which may prove to beincorrect. This presentation should not be relied upon as a recommendation or forecast by Polyplex(Thailand) Public Co., Ltd. Nothing in this release should be construed as either an offer to sell or asolicitation to buy or sell shares in any jurisdiction.

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