scientex fy15 briefingslides draft10 150928 (for website) · corporate presentation fy15 corporate...

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Corporate PresentationFY15 Corporate Update & Financial Results

29 September 2015

IR Adviser

(Company No.: 7867-P)

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CONTENTS

• Operations Review & Growth Plans

• FY15 Financial Review

• Investment Merits

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OPERATIONS REVIEW

& GROWTH PLANS

4

Operations Review Growth Strategies Financial Highlights Investment Merits Appendix

7.5

9.1

9.5

10

.8

12

.3

FY13 FY14 FY15 FY16E FY17E

3.0

3.3

4.4

7.1

13

.2

FY13 FY14 FY15 FY16E FY17E

Operations Review: Manufacturing

Consumer packaging expansion plans progressing smoothly… on track to reach

25.5K MT sales tonnage per month in FY2017

Operations Review

Average monthly sales tonnage

(MT ‘000)

Products:

• Base film

• Functional films

Prod. Output: 62,400* MT p.a.Location: Rawang & Ipoh

PE FilmPE Film

Prod. Output: 6,000 MT p.a.Location: Rawang

BOPP

Film

BOPP

Film

Output: 6,000 MT p.a.Location: Shah Alam & Indonesia

AdhesiveAdhesive

Consumer PackagingConsumer Packaging

Prod. Output: 120,000 MT p.a.Location: Pulau Indah, Klang

Stretch

Film

Stretch

Film

Prod. Output: 18,000 MT p.a.Location: Melaka

PP

Strapping

Band

PP

Strapping

Band

Prod. Output: 10,000 MT p.a.Location: Vietnam

RaffiaRaffia

Industrial PackagingIndustrial Packaging

10.5 25.5

Industrial Packaging

Consumer Packaging

13.912.4

*includes additional capacity from acquisition of SGW Ipoh (formerly known as Mondi Ipoh) in August 2015

17.9

5


Industrial

58.7%

Consumer

41.3%

4Q15 Manufacturing Revenue

RM319.9 mil

Operations Review: Manufacturing

Revenue growth driven by consumer packaging segment due to larger capacity and

clientele… industrial packaging revenue stable on resilient demand

Operations Review

� Industrial Packaging

� 4Q15 revenue rose 6.9% yoy to RM187.9 mil due to higher export

demand and improved ASP for stretch film as well as favourable

exchange rate

� FY2015 revenue remained stable at RM770.5 mil, with average

monthly production tonnage increasing 4.1% yoy

� Consumer Packaging

� 4Q15 revenue rose 8.5% yoy to RM132.0 mil mainly due to enlarged

PE film production capacity and larger clientele

� FY2015 revenue rose 20.0% yoy to RM515.4 mil on PE film expansion

and full contribution from BOPP film via Seacera Polyfilms acquisition

Industrial

59.9%

Consumer

40.1%

FY15 Manufacturing Revenue

RM1,286.0 mil

+6.9%

yoy

+8.5%

yoy

+1.0%

yoy

+20.0%

yoy

6


Recent Developments: Manufacturing

Recent acquisition of SGW Ipoh immediately boosts Group’s PE production capacity

and strengthens MNC client base in APAC region…

Operations Review

� In August 2015, Scientex acquired two manufacturing plants of

Mondi Ipoh Sdn Bhd for RM58.0 mil (now known as Scientex

Great Wall (Ipoh) Sdn Bhd)

� SGW Ipoh’s current production output (Sg Siput and

Chemor plants) totals 14,400 MT p.a

� Products encompass bakery bags, hygiene products

packaging, form-fill-seal (FFS) bags – advancement to

woven bags, stretch and shrink hood

� 70% of sales is exported (including Japan, Indonesia,

Philippines, Thailand, and Indonesia)

� Expanded clientele to include more leading MNCs in Asia

Pacific for F&B and FMCG products

� Purchase consideration at EV/normalised EBITDA of 6.44x

and P/B value of 1.56x; to be funded via internally

generated funds

� In July 2015, Futamura Chemical Co., Ltd (FCC) acquired

additional 5% of issued and paid up share capital of Scientex

Great Wall (SGW) for RM40.0 mil

� FCC’s stake in SGW increased to 10% from 5% previously

� Acquisition represents P/B value of 2.18x

� FCC has option to acquire up to 20% of SGW

SGW Ipoh – Chemor PlantSGW Ipoh – Sg Siput Plant

7


Growth Plans: Manufacturing

CPP plant to contribute in FY2016 while BOPP plant progressing well… on track to

become a full-fledged consumer film supplier in SEA in FY2017

Growth Strategies

30,000MT

Per Annum

24,000 MT PE

6,000 MT BOPP

146,400MT

Per Annum

74,400* MT PE

60,000 MT BOPP

12,000 MT CPP

To be completed

in mid-2016

2014 2016

Consumer packaging expansion plan

To be completed

in end-2015/2016

� Completed construction of new CPP film plant in

August 2015

� On track for commercial run by end-2015 with

total capacity of 12,000 MT p.a

� To complement PE and BOPP businesses and

leverage on existing clientele in Malaysia and

South East Asia

� Construction of new BOPP plant 70% completed

� Commercial run targeted to commence in mid-

2016

� BOPP production to be increased to 60,000 MT

p.a. from 6,000 MT p.a. currently

� Installed new 10-color printing machine in July 2015

� To increase sales of more value-added production

� Further expansion of PE film from 62,400* MT p.a. to

74,400 MT p.a. targeted for completion in mid-2016

� Estimated CAPEX of RM21 mil for 3 more lines

*includes additional capacity from acquisition of SGW Ipoh (formerly known as Mondi Ipoh) in August 2015

CPP plant in Melaka

completed in August 2015

Site progress of BOPP plant in

Pulau Indah

8


Operations Review: Property

Demand for affordable homes still intact… unbilled sales of approximately RM585

million to be recognized over the next 2-3 years

Operations Review

Ongoing GDV

RM339 mil

Ongoing GDVRM366 mil

� Property development revenue grew 11.3% yoy to RM132.6 mil in

4Q15 on higher revenue recognition across all developments

� FY15 property development revenue up 29.5% yoy to

RM515.7 mil

� 14 new launches worth RM667.4 mil GDV in FY15

� Comprised mainly affordable and higher premium residential

properties in Pasir Gudang, Kulai, Skudai, and & Senai

� Launch profile comprising approximately 80% affordable

housing

� Launched 1,420 units of affordable properties in Pasir

Gudang in May 2015 under the Johor Affordable

Housing Scheme / Skim Rumah Mampu Milik Johor

(RMMJ)

� First phase comprised 479 units Pakej B (RM80K) and

239 units RMMJ (RM150K) homes. Balance to be

launched in stages and to complete by 2017

� Unbilled sales stood at RM584.9 mil to be recognized over the next

2 to 3 years, versus RM537.5 mil as at 31 July 2014

Note: Data presented as at 31 July 2015




9


Recent Developments: Property

Recently acquired 326-acre land in Pulai… ongoing and undeveloped landbank

increases to 1,200 acres to last for 10 years

Operations Review

New lands

� On 29 September 2015, shareholders approved proposed

acquisition of 326-acre land in Pulai for RM218.97 million

� To be financed by approximately 80% bank

borrowings and 20% cash

� Currently pending final approvals from relevant

authorities

� Located 33 km from Johor Bahru City Centre, 25 km from

MY-SG Second Link Customs Checkpoint, and 5 km from

proposed Pulai Jaya Interchange Exit to the Second Link

� To contribute towards long term development profile

and boosts ongoing and undeveloped landbank to

approx. 1200 acres from 870 acres currently

� To benefit from established branding of existing 150 acre

Taman Mutiara Mas development, good road connectivity

and proximity to various mature townships such as Taman

Pulai Indah and Bandar Baru Kangkar Pulai

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FY15 FINANCIAL REVIEW

11


24

.9

25

.6

29

.5

27

.1

26

.0

33

.9

36

.3

48

.8

30

.3

36

.1

43

.0

48

.9

4.4 7

.8 2.8 7

.3

Quarterly PATMI (RM ‘mil)

Forex differences (net of tax)

Core operations record financial performance in FY2015… despite forex losses as

Group rebalanced foreign debt exposure

4Q15 Income Statement Summary

Financial Highlights

24

1.6

27

1.1

34

5.1

37

1.2

36

4.8

38

3.5

42

6.8

41

5.4

43

1.1

46

2.9

45

5.3

45

2.5

Quarterly Revenue (RM ‘mil)

31

.3

33

.2

38

.2

40

.2

32

.9

44

.4

48

.1

56

.0

40

.2

47

.3

56

.5

77

.0

5.2 9

.7 3.1

9.2

Quarterly PBT (RM ‘mil)

Forex differences

4Q15 4Q14 Change RM'mil FY15 FY14 Change Remarks

452.5 415.4 8.9% Revenue 1,801.7 1,590.5 13.3%Driven by a l l -round growth across manufacturing and

property segments

88.5 66.3 33.5% EBITDA 268.8 229.2 17.3%

19.6% 16.0% 3.6 pt EBITDA margin 14.9% 14.4% 0.5 pt

77.0 56.0 37.5% PBT 221.0 186.3 18.6%

17.0% 13.5% 3.5 pt PBT margin 12.3% 11.7% 0.6 pt

48.9 48.8 0.1% PATMI 158.2 148.5 6.5%

10.8% 11.8% (1.0 pt) Net margin 8.8% 9.3% (0.6 pt)

21.66 22.09 (1.9%) Basic EPS (sen) 70.43 67.12 4.9%

PBT includes RM12.6 mi l fa i r va lue gain from investment

properties ; wi thout which the Group s ti l l mainta ined

double-digi t growth on improved product mix and effi ciency

Profi t increased in l ine with higher topl ine; margins largely

sustained due to product mix and despite forex loss es as

Group pared down USD borrowings exposure

*4Q15 and FY15 PBT and PATMI includes RM12.6 million fair value gain on investment properties

12


41.9%

58.1%

FY15 Group EBITDA*^: RM283.4 mil

Property segment leading growth in FY2015… manufacturing contribution

increasing in volume

Revenue & EBITDA Segmentation


71.4%

28.6%

FY15 Group Revenue: RM1,801.7 mil

Manufacturing Property

75.0%

25.0%

FY14 Group Revenue: RM1,590.5 mil

Manufacturing Property

+29.5%

yoy

+7.9%

yoy

45.7%54.3%

FY14 Group EBITDA*: RM225.3 mil

+34.7%

yoy+15.3%

yoy

*EBITDA presented excludes gains/losses from foreign exchange

^Excluding RM12.6 million fair value gain on investment properties

13


483 635 763 771153

284430 515

2012 2013 2014 2015

RM’mil

Manufacturing Revenue (by Segment)

Industrial Packaging Consumer Packaging

Financial Review: Manufacturing

Manufacturing segment growth largely driven by consumer packaging

expansions…


54

56

58

77

10

3

11

9

9.9% 9.6% 9.1% 8.4% 8.6% 9.2%

2010 2011 2012 2013 2014 2015*

RM’milEBITDA & EBITDA Margin

EBITDA EBITDA Margin

54

5

58

5

63

7

91

9

1,1

92

1,2

86

12.2%11.3% 11.0% 11.1%

9.8%11.0%

2010 2011 2012 2013 2014 2015

RM’mil

Manufacturing Revenue & Gross Margin

Revenue Gross Margin

FY15 EBITDA growth in line

with stronger topline,

margin remains stable

FY15 EBITDA growth in line

with stronger topline,

margin remains stable

FY2015 manufacturing

revenue growth largely

driven by consumer

packaging; also seeing

improvement to GP margin

on better ASPs

FY2015 manufacturing

revenue growth largely

driven by consumer

packaging; also seeing

improvement to GP margin

on better ASPs

Industrial packaging revenue remained

stable on resilient export demand

Industrial packaging revenue remained

stable on resilient export demand

Consumer packaging revenue increased 20.0% with

expanded PE film capacity and clientele, and full

contribution from BOPP films (via Seacera Polyfilms)

Consumer packaging revenue increased 20.0% with

expanded PE film capacity and clientele, and full

contribution from BOPP films (via Seacera Polyfilms)

*Excluding RM27.2 million loss from foreign exchange

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15

0

21

9

24

5

31

0

39

8

51

6

37.8%42.6% 44.2% 47.0% 44.1% 42.3%

2010 2011 2012 2013 2014 2015

RM’milRevenue & Gross Margin

Revenue Gross Margin

34

63

73

10

0

12

2

16

5

22.8%28.8% 29.8% 32.3% 30.7% 32.0%

2010 2011 2012 2013 2014 2015*

RM’milEBITDA & EBITDA Margin

EBITDA EBITDA Margin

Financial Review: Property Development


Property segment benefitting from resilient demand for affordably-priced

properties in Johor…efficient operations reflected in higher profitability

30% revenue growth mainly on steady demand

for affordable housing, particularly in Pasir

Gudang and Senai

Group margins largely maintained

30% revenue growth mainly on steady demand

for affordable housing, particularly in Pasir

Gudang and Senai

Group margins largely maintained

*Excluding RM12.6 million fair value gain from investment properties

Higher profitability consistent with revenue

growth; EBITDA margins maintained around 30%

Higher profitability consistent with revenue

growth; EBITDA margins maintained around 30%

15


Strengthening cash balance from operational cashflow… net gearing at

comfortable level amidst ongoing expansions

1 Based on share capital of 225.9 mil shares after deducting treasury shares of 4.1 mil shares


Balance Sheet (Highlights)

As at As at

31.7.2015 31.7.2014

Property, Plant & Equipment 642,791 552,100 In l ine wi th consumer packaging expans ion

Investment Property & Other Investments 24,082 9,571 Includes reva luation of investment properties

Land Held & Property Development Costs 405,115 365,019 Due to increased property development activi ties

Investment in Jointly Control led Enti ty &

Associated Company41,524 37,465

Inventories 111,953 108,998

Trade & Other Receivables 321,698 243,459 In l ine with increase in revenue

Cash & Bank Ba lances 90,626 83,766

TOTAL ASSETS 1,637,789 1,400,378

Trade & Other Payables 308,259 254,441 In l ine wi th enlarged operations

Borrowings (ST + LT) 225,431 340,420Pared down due to higher cashflow and reduced USD-denominated

borrowings

Tax & Deferred Tax 60,502 35,059

Shareholders ’ Equi ty 941,978 712,718 Due to higher reta ined earnings

Minority Interest 62,784 22,705Due to additional equity parti cipation of Futamura Chemica l Co., Ltd into

Scientex Great Wal l Sdn Bhd

Net Tangible Assets / Sha re (RM) 1 4.17 3.22

Net Gearing 0.14x 0.36x Paring down of borrowings due to s trong cashflow

Balance Sheet (RM ‘000) Remarks

16


USDDr

USDCr

USDDr

USDCr

Recent forex losses due to rebalancing of balance sheet to have less USD exposure

on Cr side…mitigating by paring down USD loans in recent months


Loan Analysis

� On income statement side, operations

generate USD-denominated cashflow of

about USD 5 million monthly

• about 12 months exposure prior to

strategic rebalancing

� Management recently adopted maximum

exposure of 6 months

• resulting in RM27.2 mil forex losses

in FY15

Before strategic rebalancing

USD60 mil

After strategic rebalancing

<USD30 mil

Reducing

USD Borrowings

13 (3%) 12 (3%) 12 (4%) 10 (4%)

280 (77%)

210 (58%)

134 (47%)

56 (25%)

72 (20%)

140 (39%)

137 (49%)

160 (71%)

MYR

USD

JPY

MYR

⇩ 2%

USD

⇩ 36%

USD

⇩ 25%

MYR

⇧ 95%

1Q15

RM365m2Q15

RM362m

3Q15

RM283m

Total Borrowings (RM ‘mil)

4Q15

RM225m

USD

⇩ 58%

MYR

⇧ 16%

Loans

denominated in:

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INVESTMENT MERITS

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Investment Merits

A high-growth proposition all-round... attractive proxy to the burgeoning packaging sector

and Southern Malaysia property market

Investment Merits

MANUFACTURING

• Top 3 stretch film producer in the world

• Consumer packaging segment facilitates

entry into burgeoning F&B and FMCG sectors

• Further integration and expansion initiatives

position Group to cater to larger regional

clientele and enhance competitiveness

PROPERTY DEVELOPMENT

• Reputable developer in the southern states

of Johor and Melaka

• Current projects of RM1.6 bil

• Pipeline GDV of RM3.6 bil on existing

landbank to sustain another 8 years

• Future projects displaying higher GDV/acre

• Strong fundamentals with strong upside to profit and margin expansion

• Dividend policy of minimum 30% payout

� 31.4% dividend payout in FY2015*

• Valuations to be compressed with foreseeable earnings boost

• Trading at trailing 12-month PE of 10.1x and EV/EBITDA of 6.7x (as at 25 September 2015)

*including single-tier final dividend of 13 sen subject to shareholders’ approval

19

Operations Review Growth Strategies Financial Highlights Investment Merits Appendix2

.7

2.7

2.7

4.5

8.1

14

.2

4.2

17

.2

10

.8

19

.4

25

.8

30

.1

35

.4

47

.1

49

.7

22

.1

49.2% 48.0%

74.0%

26.6%

36.6%

49.8%

28.7%36.1%

28.8%32.1% 33.4% 35.9%

52.1%

31.7%31.4%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 FY15

RM’mil Dividend History

Net Dividend Payout Special Dividend Payout Ratio

Group has dividend policy of minimum 30% net profit payout…

Dividend History

� FY2014 Dividends (Total Dividend of 21 sen):

• Paid interim dividend of 8 sen per share on 8 August 2014

• Paid final dividend of 13 sen per share on 6 February 2015

� FY2015 Dividends (Total Dividend of 22 sen) :

• Paid interim dividend of 9 sen per share on 7 August 2015

• Proposed final dividend of 13 sen per share

Ex-date on 7 January 2016, payable on 25 January 2016; subject to shareholders’ approval

Dividend Policy:

Minimum 30% of Net Profit(effective FY2011)

Investment Merits

FY15 Dividend Payout

RM49.7Million

FY15 Dividend Payout

RM49.7Million

Share Dividend

5.9

RM29.4 mil subject

to shareholders’

approval

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Thank You

Contacts:

Ms. Jocelyn Ng [email protected] T: 03-5519 1325

Ms. Julia Pong [email protected] T: 03-2711 1391

scientex fy15 briefingslides draft10 150928 (for website) · corporate presentation fy15 corporate...

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