2009 Revenue and Capacity As a result of business 70.00 6.00 - - PowerPoint PPT Presentation

• As a result of business

recovery, the utilization

• f KCE group (excluding

KCEI) reached 95.48% in Q4 2009

• A further increase in

demand in 2010 prompted KCE group to reopen KCEI in December 2009

• At the moment, KCEI is
• perating at 85%

utilization

2009 Revenue and Capacity

0.00 1.00 2.00 3.00 4.00 5.00 6.00 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Sales(M.US$) Capacity(M.US$) Sales(M.sqft) Capacity(M.sqft)

Q1 2009 Q2 2009 Q3 2009 Q4 2009 Utilization 57.36% 68.51% 90.90% 95.48%

Millions of USD Millions of Sq.Ft

• Gross profit for 4Q09 has

reached 24.65%

• KCE expects its gross

profit to remain at 23-24% for 2010

• Gross profit will vary

depending on copper price and foreign exchange rate, mainly US-Baht

• While copper price has

increased to about $7500 per ton and Baht has decreased to 32.7 Baht per USD in 1Q10, KCE gross margin remains stable due to an increase in efficiency and cost reduction

Gross Margin

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 500 1,000 1,500 2,000 2,500 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

Sales(Mil Baht) Cost of Sales(Mil Baht) Gross profit (%)

Millions of Baht

Net Income and EBIT

• Net income and EBIT have been gradually increasing from its lowest

point in 4Q08

• Net income in 4Q09 has increased to a 9-year high of 162.4mil

Baht, while EBIT reached 188.0mil Baht

• The increase in net income is a result of KCE’s cost reduction

program, an increase in more complex PCBs, and improved efficiency.

• 500.0
• 400.0
• 300.0
• 200.0
• 100.0

0.0 100.0 200.0 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

Net profit

• 300.0
• 200.0
• 100.0

0.0 100.0 200.0 300.0

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

EBIT

Exchange Hedging EBIT (Operating Income)*

Liability Structure

• Short-term loan

reduced to 51% from 63%

• Long-term loan

increased from 8% to 19%

• KCE plans to spend US$6.1mil in CAPEX
• US$3.1mil will be spent on maintenance of CAPEX while the rest will be spent
• n production improvements
• Total CAPEX for the Y2010 equals to approximately 2.5% of revenue. This figure

is an increase from Y2009 of 1.7%

CAPEX FY2010

Millions of USD 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 5 10 15 20 25 30 35 Y2007 Y2008 Y2009 FY2010 Cap Ex(Mil US$) Cap Ex/Sales(%)

KCE Market Trends

Monthly Sales Order

• After the 2008 Financial Crisis, KCE sales dropped drastically and reached

the lowest point in January 2009

• Since January 2009, KCE’s order steadily increased by more than 110%
• March 2010 order of $21mil can be viewed as a full recovery of KCE business

(This number excludes a backlog of $1.5mil from Jan and Feb 10)

Millions of USD Millions of Sq.Ft

0.00 0.50 1.00 1.50 2.00 2.50

0.00 5.00 10.00 15.00 20.00 25.00

US Dollars SqFt

2008 Financial Crisis

Revenue From New Customers

• During 2008 and first half of 2009, KCE acquired 16 new customers
• New customers contributed to more than 7% of KCE’s revenue in H2 2009. Revenue

from new customers grew from $3mil in H1 2009 to $7mil in H2 2009

• Revenue from these customers is expected to increase to roughly 15% of KCE’s

2010 revenue

Millions of USD 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 0.00 20.00 40.00 60.00 80.00 100.00 120.00 140.00 H1 2008 H2 2008 H1 2009 H2 2009

Current Customer New customer % of Sales from new customer

• Recovery in PCB

business is seen mostly in Asia and Europe

• Sales in USA is still

much lower than previously seen in 2008

Sales by Region

Millions of USD

• KCE has successfully increased its high

layer business

• 6 Layers increased from 17% of the

business to 20% in 2009

• On the other hand, double sided and 4

layers businesses were reduced from 14% to 12% and from 60% to 58% respectively

Product Mix (US$)

Double Sided 14% 4 Layers 60% 6 Layers 17% 8 Layers and above 2% HDI 4% Heatsink 2% SBU 1%

2008

Double Sided 12% 4 Layers 58% 6 Layers 20% 8 Layers and above 2% HDI 5% Heatsink 2% SBU 1%

2009

KCE Strategy

Strategy

2009 2010

Focus: Operation Stream-lining Area:

• Cost-cutting program
• Scrap-reduction program
• Implementation of SAP
• HR Management program

Results:

• Lowest scrap in 3 years
• Gross margin of 24.7%
• Completed 70% of all SAP

systems

• Completed company-wide KPI and
• ther HR management programs

Focus: Build Foundation for Future expansion Area:

• Maintain and improve KCE’s Cost

and Scrap

• Expand KCE’s presence in

Japanese Market

• Leverage on KCE’s experience in

automotive

• Increase R&D in high-technology

PCBs

• Increase KCE high-technology

PCBs

• Reduce gearing ratio and total D/E

• Japanese Market has always been the only

market that KCE cannot penetrate

• Due to financial crisis and depreciation of

Japanese Yen, an opportunity was opened to KCE to expand our market share in Japan

• KCE plans to open a sales office in Tokyo in

2010

Japanese Market

W. Europe, 3 434 N. America, 4488 Japan, 64 66 China , 20215 Taiwan, 32 97 South Korea, 54 13 ROW, 786 7 W. Europe, 2935 N. America, 4016 Japan, 6094 China , 12772 Taiwan, 2272 South Korea, 3683 ROW, 5498

2009 (Total US$37bn) 2013 (Total US$51bn)

Source: BPA Consulting Ltd

• N. America

China S.Korea

• W. Europe

Japan Taiwan Rest of the world 3 1 1 3 2

*Numbers for individual region on this slide vary from numbers in slide 10 because these numbers are based on production location not company location. The totals are the same.

• More than 20 years of

experience in automotive PCB

• Strong relationship to Tier 1

suppliers

• Rank #3 in the world for

automotive PCB suppliers (Based on 2008 figures)

Automotive Market

KCE’s Competitive Advantages

Competitors

Market Trends

KCE Strategy

1. CMK 2. Viasystem 3. KCE 4. Meiko 5. Hitachi 6. Ruwel 7. AT&S 389 181 133 133 115 91 83

• Demand for

automotive PCB is growing rapidly due to increase in electronics in automotive and the market shift to hybrid car

• Expand KCE footprint in the automotive industry, especially Japanese automotive suppliers
• Technology for Automotive PCBs has shifted to more complicated PCBs –get approval for complex

PCB

• Only a few PCB manufacturers has the

capability to build the board Competitors

• Much lower cost than full flexible PCBs
• Most SemiFlex only allows 10-15 flexes

Advantages/Disadvantages of Semiflex

• A few of KCE customer has already approved

KCE samples. These SemiFlex parts will be in mass production in 2010

• A number of KCE’s large-account customers

have approved KCE for SemiFlex production

• More than 10 parts have been quoted while 5

parts are entering mass production in early 2010 Current Customer

• Towards the end of

2008, several European PCB makers filed for Bankruptcy, as a result, some of our customers sent inquiries to KCE regarding SemiFlex PCBs

• After spending roughly

6 months in R&D, KCE successfully built its first SemiFlex PCBs

SemiFlex T echnology

Market Situation

• KCE will concentrate its resources in

expanding high-technology PCB businesses

• High layer PCBs (6 and more layers) are

expected to grow from 22% to 38%

• HDI, SemiFlex, and Sequential Build Up PCBs

are expected to grow from 6% to 16%

Product Mix FY2013 (US$)

Double Sided 12% 4 Layers 58% 6 Layers 20% 8 Layers and above 2% HDI 5% Heatsink 2% SBU 1%

Product Mix 2009

Double Sided 10% 4 Layers 36% 6 Layers 31% 8 Layers and above 7% HDI 7% Semiflex and SBU 9%

Product Mix FY2013

• KCE plans to reduce its

short-term and long-term debt from 5bn Baht to 4.3bn Baht in 2010

• The reduction in short-

term and long-term debt will result in a net debt-to-equity

• f 1.5
• Furthermore, KCE plans to

reduce its total debt from 6.3bn Baht to 5.7bn baht

• The reduction in total debt

will result in total debt-to- equity of 2.0

Debt-to-Equity

0.5 1 1.5 2 2.5 3 1000 2000 3000 4000 5000 6000 Y2007 Y2008 Y2009 FY2010

Net Debt‐to‐Equity

Net Debt Gearing ratio

Millions of Baht Millions of Baht

1 2 3 4 2000 4000 6000 8000 Y2007 Y2008 Y2009 FY2010

Total Debt‐to‐Equity

TL DEBT D : E

KCE Outlook

FY 2010

• Revenue: ~US$240mil
• Gross Margin: ~23%
• Reduce D/E
• Net D/E: <1.5
• Total D/E: <2.0
• CAPEX: ~US$6.1mil
• Reduce Copper price risk and

Exchange rate risk using options

• Increase complex PCBs

Guidance

• KCE forecasts its 6 layers PCB sales

to increase from 20% to 23% while 4 layers PCB will reduce from 58% to 56%

• Sales from other products should

remain stable

FY2010 Product Mix (US$)

Double Sided 12% 4 Layers 58% 6 Layers 20% 8 Layers and above 2% HDI 5% Heatsink 2% SBU 1%

Product Mix 2009

Double Sided 12% 4 Layers 56% 6 Layers 23% 8 Layers and above 2% HDI 5% Heatsink 1% SBU 1%

Product Mix FY2010

Thank you