A World Leading Natural Rubber Player Disclaimer Certain forward - - PowerPoint PPT Presentation

Investor Day Presentation 18 May 2015

A World Leading Natural Rubber Player

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Disclaimer

Certain forward looking statements may be made in the course of the presentation. These forward- looking statements generally can be identified by use of statements that include words or phrases such as STA or We or our management “believe”, “expect”, “anticipate”, ”intend”, ”plan”, ”foresee”, ”project”, ”may”, “will”, “shall”, or other similar words or phrases. Similarly, statements that describe STA’s

• bjectives, plans or goals also are forward-looking statements. These statements involve known and

unknown uncertainties and risks that could differ materially from actual results, performance or events. The forward-looking statements contained in the slides are not and should not be constructed as representations of the future performance of STA and that such statements are an expression of the Company’s reviews based on its current view and certain assumptions including, but not limited to, prevailing economic and market conditions and currently available information. The reader or the listener is cautioned to not unduly rely on these forward-looking statements. We do not undertake any duty to publish any update or revision of any forward-looking statements.

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Our Directors Present for the Investor Day 2015

• Dr. Viyavood Sincharoenkul

Chairman & Managing Director Kitichai Sincharoenkul Executive Director Paul Sumade Lee Executive Director

 Founding member of Sri Trang and

appointed as Chairman in 2010

 28 years of experience in the natural

rubber industry

 Joined Sri Trang in 1988 and has served

as a Director since 1995

 25 years of experience in the natural

rubber industry

 Joined Sri Trang in 2004 and appointed

as a Director in 2010

 10 years of experience in the natural

rubber industry Prakob Visitkitjakarn Chairman of Audit Committee Neo Ah Chap Independent Director

 Appointed as an independent director

since 1993

 Appointed as an independent director

since 2010 Veerasith Sinchareonkul Chairman of Risk Management Committee

 Appointed as a Director since 2010

I. Sri Trang Business Highlights II. Natural Rubber Industry Snapshot III. Financial Highlights

AGENDA

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Finished Products Rubber Plantation Processing Sales & Distribution

Fully Integrated and Globally Natural Rubber Supply Chain

• Having our own rubber

plantation in Thailand

• World leading capacity at

1.35 million tons per annum in Thailand and Indonesia

• Cover full range of products

from RSS, TSR and Concentrated Latex

• Largest glove manufacturer

in Thailand

• Produce both latex and

nitrile examination gloves

• Having trading and

distribution centers in key strategic countries

Note: Information as of 31 March 2015

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Sri Trang’s Strengths

Fully-integrated NR supply chain business model 1

Plantation

 Gain direct access to supply information  Ability to control the quality of supply

Sales & Distribution

 First-hand understanding of

customer requirements

 Quick access to reliable market

information

Processing

 Be flexible to any market

conditions and able to manage production and position efficiently

Cost efficiency High quality product Well-managed

• peration

High productivity High performance Enhance profitability

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Sri Trang’s Strengths (cont’d)

TSR RSS

• Con. Latex
• Capture all possible market segments with full

range of Natural Rubber products

• Benefit from economies of scale
• Balance the bargaining power with suppliers and

customers

• Enhance accessibility to different sources of fund

to support operation and expansion

A world largest NR processing Company (10% market share) 2 Having production base in major NR producing countries 3

• Excellent diversification
• Advantage in secure raw material as Thailand

and Indonesia collectively contributed about 60%

• f global production
• Well-balanced seasonal management

Thailand Indonesia

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• Led by a group of seasoned managements with almost 3-decade of experience in natural rubber industry
• Cover all class of customers to serve all demand from every corner of the word
• Good risk diversification as no single customer accounts more than 8% of our total sale volume
• Get direct access to end-users to gain demand flow and market sentiment

Well-balanced portfolio for coverage of sales and distribution 4

Sri Trang’s Strengths (cont’d)

Expand upstream to rubber plantation business Continually expand business to the new territories

• Emphasize on cost leading position
• Enhance profitability and reduce volatility in earning
• Pinpoint strategic locations for midstream factories in the future
• A newly established company in Vietnam will enable us to expand market

coverage in Indochina and gain direct access to Vietnam, the world’s third largest Natural Rubber producer

• Having a block rubber factory in Myanmar will create a business opportunity in

highly growing country for Natural Rubber

6 5 Captained by highly experienced managements 7

I. Sri Trang Business Highlights II. Natural Rubber Industry Snapshot III. Financial Highlights

AGENDA

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7.9 8.7 9.2 9.7 10.1 10.2 9.3 10.8 11.0 11.0 11.4 11.9 12.3 8.1 8.8 9.0 9.9 10.1 10.1 9.7 10.4 11.2 11.6 12.2 11.8 12.4

2 4 6 8 10 12 14 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015f 152 100 (194) 269 (81) (89) 434 (370) 219 568 831 (45) 77 (600) (400) (200) 200 400 600 800 1,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015f Demand Supply Supply Surplus

Supply deficit due to the falling NR prices lowered tapping & delayed replanting

Unit : million tons

Unit : ‘000 tons

World Natural Rubber Balance

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World Major NR Producing and Consuming Countries

4,170 3,101 1,097 946 811 667 0.0% 0.0% 0.6% 8.6% 10.8%

• 4.9%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Thailand Indonesia Vietnam China India Malaysia NR Production (tons) %growth from 2014

2015 NR production forecast 2015 NR consumption forecast Major suppliers of Natural Rubber Major consumers of Natural Rubber

Indonesia 27% Thailand 35% China 7% Malaysia 6% Vietnam 8% India 6% Others 12%

(by tonnage) (by tonnage)

China 38% USA 8% Europe 9% India 9% Japan 6% Thailand 5% Others 26%

Source: IRSG,

4,669 1,148 1,069 988 674 567 3.9% 1.6% 5.4% 4.3%

• 0.6%

4.0%

• 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 China Europe India USA Japan Thailand NR consumption (tons) %growth from 2014

Note: Information of year 2014

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Lower Supply Surplus

Unit : ‘000 tons

NR planting area of main producers Significant drop in supply surplus Area for rubber plantation Global natural rubber production by country

Source: IRSG, ANRPC,

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Malaysia Indonesia Thailand India PRC Vietnam Other

Unit : 000’Hectares

8,500 9,000 9,500 10,000 10,500 11,000 11,500 12,000 12,500 100 200 300 400 500 600 New planting (LHS) Replanting (LHS) Total area (RHS) 219 568 831

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77 51 85 73 71 95 86 71 75 (200) 200 400 600 800 1,000 Unit : 000’ tons Lower supply surplus due to smaller new planting area from 2009 onwards

3,016 2,755 720 650 575 473 115 115 640 62 428 429 405 341 247 25

3,656 2,817 1,148 1,079 980 814 362 140 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Immature area (000' Hectares) Tapped area (000' Hectares) Yield per hectare (Kg.)

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• 15%
• 10%
• 5%

0% 5% 10% 15% 20%

• 1%

0% 1% 2% 3% 4% 5% 6% GDP (LHS) NR consumption (RHS)

NR mainly used in tyre industry Global tyre production trend (Million units) NR demand mainly driven by world activities Global vehicle trend (Million units)

NR Demand Driven by Tyre Industry

(by tonnage) 0% 1% 2% 3% 4% 5% 6% 300 600 900 1,200 1,500 1,800 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Vehicles in use (LHS) Vehicles production (LHS) %Growth vehicles in use (RHS) %Growth vehicles production (RHS)

Source: IRSG, IMF

0% 1% 2% 3% 4% 5% 6% 500 1,000 1,500 2,000 2,500 3,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Tyre production (LHS) %Growth (RHS) Tyre 69% Non-tyre 31%

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Natural Rubber Price Interaction

NR price VS. fundamental demand/supply NR price VS. Oil price NR price VS. global stock Key Factors Affected NR Prices

(Unit : ‘000 tons) (USD per tons) (Unit : ‘000 tons) (USD per tons)

• World economic conditions as it is directly affected

automobile industry and tyre industry

• The magnitude of demand and supply
• Exchange rate fluctuation especially US dollar, Japanese

Yen, and natural rubber exporting currencies such as Thai Baht and Indonesian Rupiah as natural rubber is mainly traded in US Dollars

• Oil price since natural rubber and synthetic rubber, which is

derivatives of crude oil, are substitute products

(400) (300) (200) (100) 100 200 300 1,000 2,000 3,000 4,000 5,000 6,000 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Supply surplus / (deficit) (RHS) SICOM price (TSR20) (LHS) 500 1,000 1,500 2,000 2,500 3,000 1,000 2,000 3,000 4,000 5,000 6,000 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Total stock (RHS) SICOM price (TSR20) (LHS)

• 100%
• 50%

0% 50% 100% 150% 200% Brent Crude oil Butadiene-Rubber Natural Rubber

I. Sri Trang Business Highlights II. Natural Rubber Industry Snapshot III. Financial Highlights

AGENDA

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* Adjusting for (reversal) allowance of inventory, realised forex gains /(losses), and realised rubber futures gains/(losses)

(THB million) FY’13 FY’14 %YoY Q1’14 Q1’15 %YoY Q4’14 %QoQ Revenue 92,185 75,530 ▼18% 22,765 14,512 ▼36% 17,543 ▼17% Sale volume (tons) 1,126,463 1,204,342 ▲7% 308,456 268,892 ▼13% 326,095 ▼18%

• Avg. selling price

(Baht per ton) 79,600 60,583 ▼24% 71,777 48,265 ▼33% 51,665 ▼7% Gross profit 5,198 3,348 ▼36% 599 1,040 ▲74% 1,130 ▼8%

• Adj. gross profit*

6,049 4,642 ▼23% 1,708 1,077 ▼37% 1,343 ▼20% EBITDA 3,747 2,568 ▼31% 708 788 ▲11% 413 ▲91% Net profit 1,820 1,038 ▼43% 402 297 ▼26% 13 ▲2228%

• Adj. GP margin*

6.6% 6.1% ▼50bps 7.5% 7.4% ▼10bps 7.7% ▼30bps Net profit margin 2.0% 1.4% ▼60bps 1.8% 2.0% ▲20bps 0.1% ▲190bps

Financial Highlights

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100 200 300 400

01/02/13 02/02/13 03/02/13 04/02/13 05/02/13 06/02/13 07/02/13 08/02/13 09/02/13 10/02/13 11/02/13 12/02/13 01/02/14 02/02/14 03/02/14 04/02/14 05/02/14 06/02/14 07/02/14 08/02/14 09/02/14 10/02/14 11/02/14 12/02/14 01/02/15 02/02/15 03/02/15 04/02/15 05/02/15

SICOM Price Movement Crude Oil Price Movement

RSS TSR (US Cent / Kg)

2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 40 60 80 100 120

01/02/13 02/02/13 03/02/13 04/02/13 05/02/13 06/02/13 07/02/13 08/02/13 09/02/13 10/02/13 11/02/13 12/02/13 01/02/14 02/02/14 03/02/14 04/02/14 05/02/14 06/02/14 07/02/14 08/02/14 09/02/14 10/02/14 11/02/14 12/02/14 01/02/15 02/02/15 03/02/15 04/02/15 05/02/15

THB/USD Movement

28 30 32 34

01/01/13 02/01/13 03/01/13 04/01/13 05/01/13 06/01/13 07/01/13 08/01/13 09/01/13 10/01/13 11/01/13 12/01/13 01/01/14 02/01/14 03/01/14 04/01/14 05/01/14 06/01/14 07/01/14 08/01/14 09/01/14 10/01/14 11/01/14 12/01/14 01/01/15 02/01/15 03/01/15 04/01/15 05/01/15

(USD / Bbl)

1Q15

SICOM - Oil Prices - FX

1Q13

▼30% YoY ▼32% YoY

FY13 Avg. 279 251 FY14 Avg. 196 171

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560,570 574,932 427,070 500,647 84,363 75,534 50,356 52,350 4,102 879 1,126,462 1,204,343 FY 2013 FY 2014

PRC ASIA (Ex. PRC) USA Europe Others

157,286 132,735 126,780 158,131 111,016 115,432 120,441 128,958 135,816 123,848 21,577 17,648 17,617 18,692 20,024 13,813 13,693 11,388 13,457 13,843 348 396 134 161 308,456 284,913 284,877 326,095 268,892 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015

PRC Asia (Ex PRC) USA Europe Others

Sales Volume – Yearly (tons) Sales Volume – Quarterly (tons)

• 12.8%
• 17.5%

+6.9%

Sale Volume Breakdown by Geography (Tons)

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12,846 9,819 70,774 57,512 6,047 5,631 2,519 2,567 92,185 75,530 FY 2013 FY 2014

RSS TSR

• Con. Latex

Others

Revenue – Yearly (THB mm) Revenue – Quarterly (THB mm)

• 36.3%
• 17.3%
• 18.1%

3,069 2,700 2,200 1,851 1,328 17,373 13,852 12,666 13,620 10,503 1,698 1,254 1,303 1,377 1,147 625 838 643 696 1,534 22,765 18,644 16,812 17,543 14,512 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015

RSS TSR

• Con. Latex

Others

Revenue Breakdown by Product

19 19 6,049 4,642 6.6% 6.1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 1,000 2,000 3,000 4,000 5,000 6,000 7,000 FY 2013 FY 2014 1,708 462 1,129 1,343 1,077 7.5% 2.5% 6.7% 7.7% 7.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015

Adjusted Gross Profit – Yearly (THB mm) Adjusted Gross Profit – Quarterly (THB mm)

Margin % THB mm Margin % THB mm

• 37.0%
• 19.8%
• 23.3%

* Adjusting for (reversal) allowance of inventory, realised forex gains /(losses), and realised rubber futures gains/(losses)

Adjusted GP and GPM*

20 20

2,520 1,155 496 535 3,016 1,690 FY 2013 FY 2014 402 189 507 57 486 103 150 154 128 68 505 339 661 185 554 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015

EBIT – Yearly (THB mm) EBIT – Quarterly (THB mm)

Share of profits from associates & a Joint Venture Operating profits % of profits from associates & a Joint Venture to PBIT

• 44.0%

Share of profits from associates & a Joint Venture Operating profits 16.4% 31.7% % of profits from associates & a Joint Venture to PBIT

+9.6% +199.0%

69.2% 23.3% 44.2% 20.4% 12.3%

EBIT

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Net Profit – Yearly (THB mm) Net Profit – Quarterly (THB mm)

Net profit Net profit margin %

• 43.0%

Net profit Net profit margin %

• 26.0%

+2,228.0% 1,820 1,038 2.0% 1.4% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 400 800 1,200 1,600 2,000 FY 2013 FY 2014 402 167 456 13 297 1.8% 0.9% 2.7% 0.1% 2.0% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 50 100 150 200 250 300 350 400 450 500 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015

Net profit and Net profit margin

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ROA ROE

3.36% 3.59% 4.50% 2.53% FY2011 FY 2012 FY 2013 FY 2014 9.19% 7.46% 9.37% 5.11% FY2011 FY 2012 FY 2013 FY 2014

Debt / equity Net debt / equity

1.22 0.94 1.21 0.84 FY2011 FY2012 FY2013 FY2014 1.10 0.86 1.12 0.73 FY2011 FY2012 FY 2013 FY 2014

Interest Coverage

3.74 4.00 3.48 3.87 FY2011 FY2012 FY2013 FY2014

Cash Cycle

64.1 75.2 78.3 83.3 FY2011 FY 2012 FY 2013 FY 2014

Financial Ratios

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Q&A