Analyst Meeting March 3 rd 2011 h 3 rd 2011 M KCE at a Glance KCE - - PowerPoint PPT Presentation

Analyst Meeting

M h 3rd 2011 March 3rd 2011

KCE at a Glance KCE at a Glance

• Ranked #3 in the World – Automotive PCB maker
• Leading supplier of Printed Circuit Boards ‐

Leading supplier of Printed Circuit Boards Specialize in automotive PCB

• Largest State‐of the‐art mass production

facility in Southeast Asia

• Standard to complex PCB Technology capability
• Average sales growth 20% Y‐o‐Y, over the past

Average sales growth 20% Y o Y, over the past 5 year(2003‐2007/8)

• Most diversed customer portfolio in PCB

industry – world’s top 20 Tier 1s

Printed Circuit Board

• A device to wire electronic components
• Tailor‐made to fit customer’s design
• Technology from single sided to laser drilled multilayer boards
• Technology from single‐sided to laser drilled multilayer boards

Local to Global Milestones

Company Structure

Manufacturing Facilities

Sales Office Location

Financial

Sales Revenue Growth

• KCET Phase I started 2001

Phase II started 2003

UNIT : MILLION BAHT

Phase III started 2005

• Ramped up to full capacity in 2007 (21 m Sq.ft./yr.)
• Impact of economic crisis in 4Q08 and 1H09
• Full recovery in demand since March 2010

6,668 7,540 8,365 7,667 7,245 8,100 3,756 3,502 3,619 4,969 5,713 5,752

$142m $166m. (+16 6%) $199m. (+20.0%) $242m. (+21.6%) $232m. (‐4.1%) $270m. (+18%) $229m. (+36.3%) $95m. (+17.9%) $79m. (‐16.1%) $84m. (+6.3%) $119m. (+41.3%) $142m. (+19.2%) (+16.6%) ( 0 0%) ( %) $168m. (‐27.5%) ( 36.3%)

Y2000 Y2001 Y2002 Y2003 Y2004 Y2005 Y2006 Y2007 Y2008 Y2009 Y2010 Y2011F

Financial Summary

18% 14% 13% 19% 15% 20% 15% 15% 20% 25% 4% 3% 3% 11% 10% 14% 7% 13% 5% 2% 3% 2% 7% 7% 7% 3% 5% 10% 15% YR2007 YR2008 YR2009 0% ‐1% 5% 2% 2% ‐5% 0%

Gross Profit EBIT (Operating Profit) EBT Net Profit (Loss) EBITDA CAPITAL INVESTMENT

YR2010 YR2007 YR2008 YR2009 YR2010 USD/THB 34.5197 33.3215 34.1898 31.5768 ‐5% ‐10% Sales revenue THB 8,365.4 7,667.3 5,752.4 7,245.2 USD 242.3 230.1 168.3 229.4 Gross Profit 1,471.2 1,065.2 1,079.2 1,430.3 EBIT (Operating Profit) 365.2 (28.1) 264.8 481.1 EBT 234.7 (76.8) 124.6 494.3 Net Profit (Loss) 257.4 (399.2) 171.6 534.6 EBITDA 912.9 519.0 853.8 1,079.0 CAPITAL INVESTMENT 877.5 975.2 96.0 216.0

Financial Summary

Baht/Mil

8,365 7,667 5 752 7,245 7,000 8,000 9,000

Baht/Mil.

5,752 4,000 5,000 6,000 1,471 1,065 1,079 1,430 257 171 535 1,000 2,000 3,000 (399) ‐1,000 YR2007 YR2008 YR2009 YR2010 Sales revenue Gross Profit Net Profit (Loss)

YR2007 YR2008 YR2009 YR2010

• 1. SALES REVENUES (GROWTH Y‐o‐Y)

11% ‐8% ‐25% 26%

• 2. GROSS PROFIT (% to sale)

17.6% 13.9% 18.8% 19.7%

• 3. NET PROFIT (% to sale)

3.1% ‐5.2% 3.0% 7.4%

QTR Performance ‐ Group

1 858 1,894 1,972 2 000 2,500 7,245

7,000 8,000 Baht/Mil.

1,628 1,730 1,858 1,894 1,522 1,500 2,000

4 000 5,000 6,000

341 426 453 405 362 209 124 162 181 161 165 500 1,000 1,430

2,000 3,000 4,000

124 162 181 161 165 27 ‐ Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 535

‐ 1,000

Y2010 20% 7.4% TOTAL SALES GROSS PROFIT NET PROFIT TOTAL SALES GROSS PROFIT

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

• 1. SALES REVENUES (GROWTH Q‐o‐Q)

26% 6% 7% 2% 4% ‐23% 2 GROSS PROFIT (% t l ) 20 9% 24 7% 24 4% 21 4% 18 4% 13 8%

• 2. GROSS PROFIT (% to sale)

20.9% 24.7% 24.4% 21.4% 18.4% 13.8%

• 3. NET PROFIT (% to sale)

7.6% 9.4% 9.7% 8.5% 8.4% 1.8% UTILIZATION % 91% 95% 87% 86% 87% 68% SCRAP 5.0% 6.0% 6.0% 5.0% 5.7% 5.9%

SG&A Expenses

900 1000

Baht/Mil. 758 20 887.84

In 2009 ,KCEI posted

13% to Sales 12% to Sales

600 700 800 Depre ‐ KCEI Shutdown Depre.&Amortization

758.20

depreciation of 51 mil to SG&A during plant shutdown. In 2010, KCEI reopened and

300 400 500 Depre.&Amortization Fixed Expenses Variable Selling

posted a full year expense of 99 mil to SG&A. Other increase was from the newly opened l ffi i J

100 200 expense Staff Cost

sales office in Japan.

Y2009 Y2010

Y2009 Y2010 % YoY Staff Cost 185.65 230.52 24% V i bl S lli 378 42 462 47 22% Variable Selling expense 378.42 462.47 22% Fixed Expenses 118.50 165.13 39% Depre.&Amortization 24.60 29.72 21% Depre ‐ KCEI Shutdown 51 04 0 00 ‐100% Depre ‐ KCEI Shutdown 51.04 0.00 ‐100%

Balance Sheet Structure

KCE Group 2007 ‐ 2010 Figures in million Baht

2007 2007 2008 2009 2010 2010 2009 2008

4,009 3,041 2,942 3,189

Current assets

6,280 6,323 4,872 4,863

Current Liabilities

5,867 6,343 5,866 5 563

Non-current t

887 752 1,457 1,245

Non-current liabilities

, , 5,563

assets

2,710 2,310 2,479 2,645 752

Equity

Total net assets 9,877 9,385 8,808 8,753 Total net equity 9,877 9,385 8,808 8,753 and liabilities

Liability Structure

80% 90% 100% 50% 60% 70%

S/T Loan

30% 40% 50% 0% 10% 20% 2008 2009 2010 Operating lease Long‐term debt

2.72% 3.84% 2.54% 7.90% 19.18% 17.84%

Other short‐term liabilities Current portion of long‐term debt Account payable

7.47% 4.40% 4.84% 6.60% 7.20% 8.24% 12.25% 13.81% 14.65%

Short‐term loans

63.05% 51.58% 51.88%

Capital Structure

5207 5679 5177 4918

2.5 3

5000 6000

Baht/Mil.

D/E

2710 2310 2479 2645 1.92 2.46 2.09 1.86

1.5 2

3000 4000 192 118 159 145

0.5 1

1000 2000 Y2007 Y2008 Y2009 Y2010 Cash and Current Investment Interest Bearing Debt Equity Net Interest Bearing Debt to Equity(time)

Key Ratios Y2007 Y2008 Y2009 Y2010 Net interest bearing debt to equity(times) 1.85 2.41 2.02 1.80 Total debt to equity(times) 2 64 3 06 2 55 2 31 Total debt to equity(times) 2.64 3.06 2.55 2.31 Net interest bearing debt to EBITDA(times) 5.49 10.72 5.88 4.42 Interest coverage(times) 1.24 ‐0.1 0.98 2.41

Debt Analysis

Debt Analysis Finance Cost

Baht/Mil

ST LOANS 65%

294 285 271 250 300 350

Baht/Mil.

65%

200 100 150 200

LT LOANS 30% CAPITAL LEASE 5%

50 100 Y2007 Y2008 Y2009 Y2010

5%

Weighted Avg Interest Rate 5.7% 5.1% 4.5% 3.5% Weighted Avg Interest Rate 5.7% 5.1% 4.5% 3.5%

Operation and Sales

Guidance

FY 2011

• Revenue:

~US$270mil (+18%)

• Gross Margin: ~22%‐23% (2010 ~20%)
• Reduce D/E
• Reduce D/E
• Net D/E: <1.4 times
• Total D/E: <1.8 times
• CAPEX: ~US$5mil
• Reduce Copper price risk and

Exchange rate risk using options Exchange rate risk using options

• Increase complex PCBs

QTR Performance ‐ KCE Electronics

Baht/Mil

645 715 716 715 838 629 700 800 900 2,898 2,500 3,000 3,500

Baht/Mil.

300 400 500 600 1 000 1,500 2,000 2,500 141 183 175 171 192 132 48 111 75 51 113 66 ‐ 100 200 300 670 305 ‐ 500 1,000

23% 10.5%

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 TOTAL SALES GROSS PROFIT NET PROFIT Y2010 TOTAL SALES GROSS PROFIT NET PROFIT

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

• 1. SALES REVENUES*1 (GROWTH Q‐o‐Q)

27% 11% 0% 0% 17% ‐25% 2 GROSS PROFIT (% to sale) 21 9% 25 7% 24 4% 23 9% 22 9% 21 0%

• 2. GROSS PROFIT (% to sale)

21.9% 25.7% 24.4% 23.9% 22.9% 21.0%

• 3. NET PROFIT*2 (% to sale)

7.4% 15.5% 10.5% 7.1% 13.4% 10.5% UTILIZATION % 95% 101% 91% 89% 99% 82% SCRAP RATE % 4 2% 3 9% 4 8% 5 1% 4 6% 5 0% Remark : *1 Excl Interco.Sales *2 Excl Dividend , Impairment SCRAP RATE % 4.2% 3.9% 4.8% 5.1% 4.6% 5.0%

QTR Performance ‐ KCE International

/ Baht/Mil.

317 299 300 350 1,071 1,000 1,200 235 219 150 200 250 600 800 36 42 4 44 44 33 10 17 20 13 50 100 131 43 ‐ 200 400

12%

(7) (19) (31) (7) ‐50 ‐ Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 TOTAL SALES GROSS PROFIT NET PROFIT Y2010

TOTAL SALES GROSS PROFIT NET PROFIT

4.0%

12%

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

• 1. SALES REVENUES(GROWTH Q‐o‐Q)

454% 35% ‐6% ‐27%

• 2. GROSS PROFIT (% to sale)

18.7% 13.8% 11.0% 4.6%

• 3. NET PROFIT *2(% to sale)

7.2% 6.4% 4.3% ‐3.3% UTILIZATION % 0% 0% 62% 87% 80% 63% SCRAP RATE % 2.7% 3.0% 2.9% 3.3% Remark : *2 Excl Dividend

QTR Performance ‐ KCE Technology

953 992 879 820 1,000 1,200

Baht/Mil.

3,122 3,000 3,500 820 794 629 600 800 1,500 2,000 2,500 205 217 185 137 106 29 79 93 81 73 46 200 400 458 183 500 1,000 (17) ‐200 ‐

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 TOTAL SALES GROSS PROFIT NET PROFIT

‐ Y2010 TOTAL SALES GROSS PROFIT NET PROFIT

15% 5.9%

Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010

• 1. SALES REVENUES*1 (GROWTH Q‐o‐Q)

28% 4% ‐11% ‐7% ‐3% ‐21%

2 GROSS PROFIT (% to sale)

21 5% 21 9% 21 1% 16 8% 13 4% 4 6%

• 2. GROSS PROFIT (% to sale)

21.5% 21.9% 21.1% 16.8% 13.4% 4.6%

• 3. NET PROFIT (% to sale)

8.3% 9.4% 9.2% 8.9% 5.8% ‐2.7% UTILIZATION % 89% 91% 82% 83% 82% 62%

SCRAP RATE % 5 6% 7 4% 7 8% 6 7% 7 7% 7 9% *1 Excl Intercom ,Sales SCRAP RATE % 5.6% 7.4% 7.8% 6.7% 7.7% 7.9%

Scrap

Product Mix

(Value) (Value)

SWOT Analysis

STRENGTH WEAKNESS

2 f i i

Expand KCE presence in Automotive industry while moving more into

‐ Higher operating costs than some countries like China, India, and Vietnam ‐ Not fully vertically integrated ‐ Constantly appreciating currency ‐ 25 years of experience in PCB ‐ Strong sales network Worldwide ‐ Has its own laminate supply ‐ More than 20 years in automotive PCB

g High Technology PCB for consumer market both locally and abroad

Constantly appreciating currency ‐ High debt to equity ‐ High turnover rate due to high demand in labor ‐ Ranked 3rd in the World for auto PCB ‐ Implemented SAP on all modules ‐ It’s the only HDI plant in Thailand ‐ Has its own direct laser technology

OPPORTUNITY THREAT

y

‐ Many automotive PCB makers have merged or went out of business during the crisis while the demand in automotive is expected to exceed its peak in 2008 ‐ Growing demand while supply is limited for HDI PCB as a

‐ Automotive market is the first to slow down and the last to recover during crisis ‐ More Chinese PCB makers may want to h i k i

Growing demand while supply is limited for HDI PCB as a result of global crisis ‐ Growing demand for MLB and HDI PCB in Thailand ‐ The future trend of automotive industry is shifting towards hybrid and electric cars which will drastically increase the

enter the automotive market since currently there are only a few Chinese PCB makers in Automotive PCB.

y y demand of PCB

Transition into High Technology Products

HS SBU and HS, SBU and

P d t Mi 2009

Doublesided 14% 6 Layers and HDI 5% HS, SBU and Semiflex 2%

Product Mix 2010

Doublesided 13% 6 Layers and HDI 5% Semiflex 2%

Product Mix 2009

4 layers 6 Layers and above 25% 4 layers above 21% 54% 59%

Product Mix FY2013

Doublesided 8% HDI 14% HS, SBU and Semiflex 7%

Product Mix FY2013

4 layers 33% 6 Layers and above 38%

CAPEX FY 2010

12.0% 14.0% 25.00 30.00 6.0% 8.0% 10.0% 0 00 15.00 20.00

• ns of USD

0.0% 2.0% 4.0% ‐ 5.00 10.00

Milli

2007 2008 2009 2010 CAPEX (M. US$) Capex/Sales (%)

• KCE spent $6.8mil in CAPEX (2010)
• US$1.9mil is spent on maintenance of CAPEX while the rest is spent
• n production improvements
• Total CAPEX for the Y2010 equals to approximately 3% of revenue. This figure

is an increase from Y2009 of 1.5%

Appendices

World Electronic Equipment

Growth rate World Electronic Equipment

Electronic Product Shipment Forecast(Constant 2010 rate)

2 207 2,394 2,599

2500 3000

2009 ‐ 2014 9.90% CAAGR

16% 14% 16% 18%

Growth rate

$ Billion

1,618 1,876 2,025 2,207

1500 2000 8% 9% 8% 9% 6% 8% 10% 12% 14% 500 1000 0% 2% 4% 6% 2009 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

Source: N.T. Information Ltd February 2011 y

World PCB Production

World PCB Production

(Constant 2010 Rates)

Growth rate

52 08 55.24 58.40 61.98 66.03 60 70 $ Billion 18% 25% 30% 44.07 52.08 30 40 50 60 18% 7% 10% 15% 20% 10 20 30 6% 6% 6% 7% 0% 5% 2009 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

Source: N.T. Information Ltd February 2011 y

Automotive PCB

Growth rate

2008 2009 2010 2011 2012 2013 2014 2015 27% 25% 30% 3860 4130 4460 4817 62.3 74.1 79.7 85.7 88 90 70 80 90 100 5000 6000 7000 9% 7% 8% 8% 10% 15% 20% 2800 3550 3860 20 30 40 50 60 2000 3000 4000 7% 8% 8% 0% 5% 10 20 1000 2009 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014

*Including passenger cars, trucks and buses

PCB Usage($M) Auto Shipment(M)*

Sales by Currencies

90% 100% 70.8% 74.2% 72.4% 71.2% 75.3% 60% 70% 80% 30% 40% 50% USD EUR BATH 3 9% 2 7% 2 7% 3 6% 3 1% 25.3% 23.1% 24.9% 25.2% 21.6% 0% 10% 20% 3.9% 2.7% 2.7% 3.6% 3.1% 0% Y2006 Y2007 Y2008 Y2009 Y2010

CURRENCY Y2006 Y2007 Y2008 Y2009 Y2010 EUR € 39,203,346 € 39,212,331 € 36,310,052 € 29,173,034 € 35,575,233 PSS £43,630 £595,151 £942,299 £61,653 £337,727 USD $140,722,628 $180,410,489 $167,226,456 $121,644,686 $173,950,960

Copper and Currency Risk

Thank you