AAPICO HITECH PLC [AH] Q3 2017 Performance & Business Update - - PowerPoint PPT Presentation

AAPICO HITECH PLC [AH]

Q3 2017 Performance & Business Update

Opportunity Day

The Stock Exchange of Thailand December 4, 2017

Today’s Agenda

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1. Company Information 2. Thailand Automotive Industry Update 3. Financial Performance 4. Strategy & Direction

Company Information

AAPICO HITECH PLC [AH]

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AAPICO HITECH PUBLIC COMPANY LIMITED

• Established in 1996 and listed on SET in 2002.
• Main businesses: OEM Auto Parts, Jigs and Dies,

Car Dealerships and Car Navigation.

• Main locations: Thailand, Malaysia and China.
• Comprising of 37 companies (27 subsidiaries and

10 associates).

• Registered and paid-up capital of Baht 322.58

million, comprised of 322,583,844 ordinary shares at par value of Baht 1 each.

Industry/Sector : Auto Current price : Baht 36.25* 52 weeks range : Baht 13.30 – 38.25 Market Cap : Baht 11,694 million P/E (YTD) : 12.41* P/BV : 1.74* Dividend yield : 1.83%** TRIS / CG Rating : BBB+ /

* Data as of November 30, 2017 ** Dividend yield is calculated based on current share price

AH Shareholding Structure

5 Data from Share Register Book as of August 31, 2017 Sojitz Corp. 15.76% AH; 1.86% NVDR; 9.25% Institution - Foreign 2.34% Institution - Thai 7.25% Individual - Thai 25.20% Individual - Foreign 0.09% Yeap Family 38.24%

AH Shareholding Structure

AH’s main shareholders are Yeap Swee Chuan and family holding 38.24% of total capital and Sojitz Corporation holding 15.76% of total capital.

4,710 4,452 3,387 5,161 11,694 2013 2014 2015 2016 2017*

Market Capitalization +148%

*Based on share price as of November 30, 2017

AH Share Price since Jan 1, 2017

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16.00 16.50 20.10 25.50 37.75

12.00 17.00 22.00 27.00 32.00 37.00 42.00 12/16 1/17 2/17 3/17 4/17 5/17 6/17 7/17 8/17 9/17 10/17 11/17 FY2016 Results Announcement Q1 2017 Results Announcement JV Sakthi Announcement

+127%

AH Share price (in Baht)

Q2 2017 Results Announcement Q3 2017 Results Announcement

AH Board of Directors

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• Mr. Yeap Swee Chuan

Present & CEO Executive Director

• Mr. Kenneth Ng

Independent Director Audit Committee Ex ING Head of Research

• Mrs. Teo Lee Ngo

Executive Director

• Mr. Pipat R. Punya

Independent Director Chairman of Audit Committee Lawyer

• Mr. John Parker

Independent Director Chairman of Risk Committee Ex Chairman of Ford Asia Pacific

• Mr. Wichian Mektrakarn

Independent Director Audit Committee Ex CEO of AIS

• Mrs. Vachira Na Ranong

Independent Director Risk Committee Chairman of TIA

• Mr. Kai Taraporevala

Independent Director Audit Committee Ex President of TATA Capital

AAPICO’s Vision

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Where do we want to go? How do we want people to remember us?

MANUFACTURING RESEARCH & DEVELOPMENT CAR RETAILING

TO BECOME A LEAN, GREEN, HAPPY, DIGITAL WORLD-CLASS CORPORATION

• S : Safety
• Q : Quality
• C : Cost
• D : Delivery
• E : Engineering
• M : Management

(Focus Digital)

• Teamwork
• Look at problems as
• pportunities
• Love Family, Company

and Country

• Loyalty and Honesty
• Mutual Respect
• Profitability
• Reasonable Dividend
• Corporate Social

Responsibility

Happy Employees Happy Shareholders Happy Public Happy Customers AAPICO Key Fundamental Values

Business Segments

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Manufacture of Auto Parts

(Thailand & China)

Car Dealerships

(Thailand & Malaysia)

Technology

(Thailand) ~63% of total revenue ~37% of total revenue <1% of total revenue

Thailand Malaysia

Stamping & Assemblies Forging & Machining Plastic Jigs and Dies

Countries of Operations

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Thailand 72% Malaysia 24% China 4%

Jan-Sep 2017

Sales by Country

CHINA

Kunshan Production: Connecting rods and Copper Forging

MALAYSIA

Kajang & Petaling Jaya Car dealers: Honda car

THAILAND

Ayutthaya, Chonburi, Rayong, Samutprakarn

Hitech Industrial Estate

Production: Stamping parts and Stamping Dies & Jigs

Amata Nakorn Industrial Estate

Production: Stamping & Chassis Frames and Forging & Machining Parts

Bangpli Industrial Estate

Production: Plastic Parts

Amata City Industrial Estate

Production: Stamping Parts Plastic Washers & Fuel Tanks

Mitsubishi Dealers

Navanakorn & Ramindra

Ford Dealers

Samutprakarn & Ladprao

OEM Customers

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Isuzu 40%

AAT* 16% Nissan 7%

FORD 4% GKN 4% AAM 4% TOYOTA 3%

Others- Parts 22%

Jan-Sep 2017 Top OEM Customer Profile

*Auto Alliance (Thailand) Co., Ltd – a JV between Ford and Mazda.

Our Partners

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Technical Partners

Joint Ventures

Strategic Partner

Sakthi Product Range

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Sakthi Automotive products are specialized in safety and critical components.

Thailand Automotive Industry Update

Thailand Car Production Volume

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312 271 254 266 276 264 302 188 207 219 191 200 192 214

507 487 483 468 486 465 527

• 100

200 300 400 500 600

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Pick-Up/PPV Passenger Others Domestic Sales Export Sales

837 842 618 612

1,477 1,478 9M16 9M17

Total Car Production by Quarter

Jan-Sep Car Production

+9.0% yoy +0.7% yoy

Q3 2017 Total car production volume grew by 9.0% year-on-year, driven by increased export volume and domestic sales.

‘000 Units

Source: The Federation of Thai Industry (Automotive Industry)

283 303 204 245

70 73

557 621 9M16 9M17

Domestic Car Sales Volume

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Domestic Car Sales by Quarter

Jan-Sep Domestic Sales

+11.5% yoy

99 93 90 111 107 94 102 58 71 75 76 80 81 83

24 23 23 25 23 24 25

182 187 188 212 210 199 211

• 100

200 300

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 1-Ton Pick-Up/PPV Passenger cars Other vehicles +12.2% yoy

‘000 Units

Q3 2017 Domestic sales grew by 12.2% year-on-year, driven by recovering economy, increased spending, new models and motor show.

Source: The Federation of Thai Industry (Automotive Industry)

Export Volume

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Export Volume by Quarter

Jan-Sep Export Volume

901 850 9M16 9M17 308 287 306 288 284 252 314

• 100

200 300 400

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Export Volume

• 5.6%

yoy

Q3 2017 Export volume grew year-on-year by 2.5%, driven by increased volume in almost all markets.

Source: The Federation of Thai Industry (Automotive Industry)

+2.5% yoy

‘000 Units

Financial Performance

January – September 2017

Financial Highlights

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• Solid revenue growth, driven by auto industry

growth in TH and CN, good car sales in MY, and THB 86 million interest income from SGAH.

• Gross profit margin below last year, mainly due to

rebate to customer for new project and lower margins in the car dealerships.

• SG&A expenses included unrealized FX loss.
• Finance costs increased due to loan to finance SGAH

investment.

• Higher share of profit from associates, mainly from

Hyundai and Able Sanoh.

• Net profit margin improved yoy to 5.8% of sales,

hence improving ROE and ROA.

Q3 2017 Results

In Million Baht

Q3

2016

Q3

2017 Revenues

Growth%

3,619

• 1.4%

4,284

+18.4%

Gross Profit

GP Margin (%)

182

5.2%

202

5.0%

SG&A 189 252 Associate 75 118 Interest & Tax 41 53 Net Profit

NP Margin (%)

132

3.7%

248

5.8%

ROE (%) 8.4% 14.7% ROA (%) 4.4% 7.3% D/E (x) 0.46 0.78

AAPICO Group : Total Revenues

20 3,910 3,681 3,619 3,929 3,946 3,903 4,284

• 1,000

2,000 3,000 4,000 5,000 6,000 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

Total Revenues by quarter

Auto parts Car dealers Non-op income 11,208 12,133

9M2016 9M2017

Jan-Sep Revenues

• Q3 2017: Revenue grew 18.4% yoy, driven by higher auto part sales in

TH and CN, in line with industry trend, and good car sales in MY. Q3 revenue included THB 86 million interest from loan to SGAH.

• Jan-Sep 2017: Revenue grew 8.2% yoy, mainly driven by THB 147 gain

from sale of investments and THB 107 million of interest from loan to SGAH.

THB million

8.2% yoy 18.4% yoy

Auto parts 62% Car dealers 36% Non-op income 2%

9M17

Auto Parts : Sales & EBIT

21 5.5% 5.0% 3.7% 2.7% 8.3% 4.9% 3.5%

• 1,000

2,000 3,000 4,000 5,000 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

Sales and EBIT by quarter

Thailand China EBIT% 7,027 7,267 4.8% 5.5%

9M2016 9M2017

Jan-Sep Sales & EBIT

• Q3 2017: Revenue grew 16.6% yoy, driven by growth in both China and

Thailand, in line with industry trend. EBIT was impacted by rebate to customer for new project.

• Jan-Sep 2017: Revenue grew 3.4% yoy, driven by higher sales in both

Thailand and China. EBIT margin improved from 4.8% in Jan-Sep 2016 to 5.5% of sales.

THB million

3.4% yoy 16.6% yoy

TH 94% CN 6%

9M17

Car Dealers : Sales & EBIT

22 2.3% 2.2% 1.8% 1.9% 1.3% 1.3% 1.2%

• 1,000

2,000 3,000 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17

Sales and EBIT by quarter

Thailand Malaysia EBIT% 3,874 4,234 2.1% 1.3%

9M2016 9M2017

Jan-Sep Sales & EBIT

• Q3 2017: Revenue grew 13.5% yoy, driven by good car sales in both

Malaysia and Thailand, attributable to new model introduction. EBIT was impacted by increased competition.

• Jan-Sep 2017: Revenue growth was driven mainly by good car sales in
• Malaysia. EBIT margin dropped from 2.1% in Jan-Sep 2016 to 1.3% of

sales.

THB million

9.3% yoy 13.5% yoy TH 33% MY 67%

9M17

EBITDA: Good improvement vs. LY

23 347 321 286 272 321 451 339

• 200

400 600 800 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Unit: in Million Baht

EBIT Depreciation 954 1,112

9M16 9M17

EBIT Depreciation 3.9% 2.7% 2.4% 3.9% 7.5% 4.3% 8.7% 7.9% 6.9% 8.1% 11.6% 7.9% 0% 5% 10% 15%

2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Unit: as % of revenue

EBIT% EBITDA% 3.6% 5.2% 8.5% 9.2%

9M16 9M17

EBIT% EBITDA% 16.5% yoy

Net Profit: Significant improvement

24 156 133 132 149 228 323 248

• 100

200 300 400 500 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Unit: in Million Baht

Profit from operations Associate income 421 799

9M16 9M17

Operations Associate 4.0% 3.6% 3.7% 3.8% 5.8% 8.3% 5.8%

0% 5% 10% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Unit: as % of revenue

Net Profit % 3.8% 6.6%

9M16 9M17

Net Profit % 90% yoy

Profitability continually increased

25 6.6% 8.1% 8.4% 9.3% 10.2% 12.9% 14.7%

0% 10% 20% 30% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Unit: in percentage

ROE (In the Quarter) ROE (Seasonally adjusted)

R O E R O A

3.3% 4.1% 4.4% 5.0% 5.5% 6.3% 7.3%

0% 2% 4% 6% 8% 10% 12% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Unit: in percentage

ROA (In the Quarter) ROA (Seasonally adjusted)

Ability to service debt improved

26 3.6 4.5 4.8 5.6 6.4 8.1 8.4

0.0 4.0 8.0 12.0 16.0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Unit: times

Interest Coverage Ratio (In the Quarter) Interest Coverage Ratio (Seasonally adjusted)

I C R Debt / EBITDA

2.8 2.6 2.5 2.4 2.2 3.2 2.9

0.0 2.0 4.0 6.0 8.0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Unit: times

Debt to EBITDA (In the Quarter) Debt to EBITDA (Seasonally adjusted)

Net gearing in line with target

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• Net interest-bearing debt to equity ratio as of Sep 2017 was

0.78x, in line with the Company’s target of less than 1.00x.

• Total liabilities net cash (Net debt) to equity ratio as end of Sep

2017 was 1.10x, which was also below the financial covenant target of less than 2.00x.

ST 68% CPLTD 21% LT Loans 5% Bond 6%

Interest-bearing Debt

Interest-bearing debts as

• f Sep 2017 was THB 5.3

billion, of which mainly related to funding for SGAH investment.

1.07 0.85 0.67 0.55 0.40 0.36 0.81 0.78 1.74 1.26 1.07 0.87 0.74 0.71 1.12 1.10

0.0 0.5 1.0 1.5 2.0 0.0 2.0 4.0 6.0 8.0 2012 2013 2014 2015 2016 1Q17 2Q17 3Q17 Unit: in Billion Baht

Debts Equity D/E (L-C)/E

Strategy & Direction

Attributes of AAPICO

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1 10 9 8 7 6 5 4 3 2

The 1st Thai listed company having a global footprint to expand through strategic partnership with Sakthi, a strong Indian company with footprints in India, Portugal, USA, China and Mexico. A professionally managed company with good corporate governance and integrity. An independent and competent board to guide and provide good strategy. A strong family company in strong partnership with other strong family companies in India and China. Ability to combine with its global partners and make larger strategic acquisitions. Many strong global JV partners and successful operations in Thailand. The only listed company in the auto sector to issue bond with a BBB+ rating. A top Tier 1 automotive supplier in Thailand with proven record of good Quality, Cost, and Delivery. Ability to win more business when a new model is being introduced by the OEMs. A strong financial planning company.

Key Milestones

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Taking steps toward globalization 2017

2013-2016 2008-2012 2005-2007 2002-2004

• Listed on SET.
• Acquired a chassis

frame factory from Dana Corporation.

• Expanded to China.
• Established strategic

global partnership with Sojitz Corp.

• Established JV with

Mitsuike Corp.

• Acquired forging

business from KPN.

• Established JV with

Minth Corporation.

• Established JV with

Takagi Seiko.

• Completed

construction of 3S showroom in Malaysia.

• New factory in

Kunshan (China) started operation.

• Established JV with;
• Lemtech (Taiwan)
• Edscha (Germany)
• Sumino (Japan)
• Sodecia (Portugal)
• Explored opportunity

in the start-up business.

• Established AAPICO

Training Center.

• Issued bond with a

BBB+ credit rating.

• Achieved 4-star CG

rating.

• Established

strategic global partnership with Sakthi Group and invested US$100 million for 25.1% stake in Sakthi Global Auto Holding Limited (SGAH).

Global Business Strategy

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CHINA INDIA EUROPE USA JAPAN THAILAND MALAYSIA

Current Global Footprints

32 Detroit, USA Durango, México Coimbatore/Erode, India Rushan, China Porto, Portugal Thailand Malaysia Singapore Kunshan, China London, UK AAPICO Facilities Sakthi Facilities Other JV partners

Japan Taiwan Germany

New York, USA

Shareholder portfolio and generate return to shareholders Improve profitability through margin management

Finance Strategy

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Portfolio diversification Cash flow management

Managing strong financial positions

4.9% 5.9% 6.3% 2.3% 3.8% 6.6%

2015 2016 9M17

Profitability Trend

GP% NP%

0.97 1.70 2.47 0.30 0.66 0.60 30.9% 38.9% 35.2%

2015 2016 9M17

Dividend Payment

EPS DPS % Payout

3.28 2.52 5.31 0.80 1.10 1.10

2015 2016 9M17

Debt Profile

Bank Bond

Profita- bility Liquidity Equity

Maximize shareholder value

927 1,214 1,022 273 167 118

2015 2016 9M17

Cash flow

Cash from operations Capex

Core Pillars of AAPICO Business

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Auto Part Manufacture Car Dealerships IOT Connectivity & Mobility Business

Thailand Car Industry Outlook

35 0.5 0.6 0.8 0.9 1.1 1.2 1.3 1.4 1.0 1.6 1.5 2.5 2.5 1.9 1.9 1.9 1.5 1

• 0.5

1.0 1.5 2.0 2.5 3.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 …. Production Forecast Domestic Export

Unit: Million

• 0.3%
• The forecast of total car production has been revised to 1.95 million units, of which production for

domestic is forecasted at 830,000 units (43%) and for export at 1,100,000 units (57%).

Global Financial Crisis Flood First car campaign

Source: The Federation of Thai Industry (Automotive Industry)

Sample orders for current & new models

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100 200 300 400 500 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18 Y19 Y20 Y21 Y22 Y23 Y24 Y25 Y26 Y27 Y28

Global Financial Crisis Flood First car campaign

Unit: ‘000

Previous model Current model New model

Basically AAPICO has stable sales volume with steady future growth.

Thailand and Global Car Industry

37

USA 16 Million CHINA 30 Million EUROPE 17 Million

OTHERS 20 Million

Thailand 2 Million

Disclaimer

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The information contained in this material has been prepared by AAPICO Hitech PLC (“AH” or “AAPICO”) solely for information purpose and does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to purchase or subscribe for shares in AAPICO. Some statements made in this material are forward-looking statements. These statements typically contain words such as “expects” and “anticipates” and words of similar import. Any statement in these materials that are not a statement of historical fact is a forward-looking statement that involves various risks and uncertainties. These include statements with respect to our corporate plans, strategies, and beliefs. These statements are based on our management assumptions and beliefs in light of the information currently available to us. These assumptions involve risks and uncertainties which may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. None of the future projections, expectations, estimates or prospects in this presentation should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct and exhaustive or, in the case of the assumptions, fully stated in the presentation. We assume no

• bligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors

affecting these statements. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of AAPICO or any of its shareholders, directors,

• fficers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this
• presentation. None of AAPICO nor any of its shareholders, directors, officers or employees accepts any liability (in negligence or otherwise)

whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. Individual situations and local practices and standards may vary, so viewers and others utilizing information contained within a presentation are free to adopt differing standards and approaches as they see fit. Products and names mentioned in materials or presentations are the property of their respective owners and the mention of them does not constitute an endorsement by AAPICO. The information contained in this presentation is

• nly current as of the date its date. In giving this presentation, neither AAPICO nor its respective advisers and/or agents undertake any obligation

to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent. You must make your own assessment of the relevance, accuracy, and adequacy

• f the information contained in this presentation and must make such independent investigation as you may consider necessary or appropriate

for such purpose. The presentation should not be construed as legal, tax, investment or other advise. ir@aapico.com | +66-(0)-2613-1504