Analyst Presentation Financials as of 31 December 2015 Disclaimer - - PowerPoint PPT Presentation

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Analyst Presentation Financials as of 31 December 2015 Disclaimer - - PowerPoint PPT Presentation

Thai Foods Group Analyst Presentation Financials as of 31 December 2015 Disclaimer The information contained in this presentation (the Analyst Presentation) is for information purposes only, and does not co nstitute or form part of any


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Analyst Presentation

Thai Foods Group

Financials as of 31 December 2015

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Disclaimer

The information contained in this presentation (the “Analyst Presentation”) is for information purposes only, and does not constitute or form part of any offer or invitation to sell or the solicitation

  • f an offer or invitation to purchase or subscribe for, or any offer to underwrite or otherwise acquire any securities of THAIFOODS GROUP PUBLIC COMPANY LIMITED (the “Company”) or any
  • ther securities, nor shall any part of the Analyst Presentation or the fact of its distribution or communication form the basis of, or be relied on in connection with, any contract, commitment or

investment decision in relation thereto in any jurisdiction. This Analyst Presentation has been prepared solely for information use during the Company’s presentation to equity research analysts, and may not be taken away, reproduced or redistributed to any other person. By attending this presentation and/or reading this Analyst Presentation, you are agreeing to be bound by the foregoing and below restrictions. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. This Analyst Presentation is confidential, and all contents of this Analyst Presentation are to be kept strictly confidential until the publication of research in accordance with the applicable

  • guidelines. Some of the information in the Analyst Presentation is still in draft form, has not been verified, and will only be finalized at the time of approval of a final prospectus or admission to

listing on a stock exchange. This Analyst Presentation is intended only for the recipients thereof, and may not be copied, reproduced, retransmitted or distributed by a recipient to any other persons in any manner. This Analyst Presentation may not be distributed to the public in any jurisdiction where a registration or approval is required. No step have been or will be taken in any jurisdiction (other than Thailand) where such steps would be required. The issue of the subscription for or the purchase of the securities may be subject to specific legal or regulatory restrictions in certain jurisdictions. The company assumes no responsibility for any violation of any such restriction by any period This Analyst Presentation may contain forward-looking statements that may be identified by their use of words like “plans”, “expects”, “will”, “anticipates”, “believes”, “intends”, “depends”, “projects”, “estimates” or other words of similar meaning and that involve risks and uncertainties. All statements that address expectations or projections about the future, including, but not limited to, statements about the strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company does not guarantee that these assumptions and expectations are accurate or will be realized. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Although the Company believes that such forward-looking statements are based on reasonable assumptions, it can give no assurance that such expectations will be met. Representative examples of these factors include (without limitation) general industry and economic conditions, political uncertainty in Thailand, poultry and swine prices, competition from other companies, shifts in customer demands, customers and partners, changes in operating expenses, governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on these forward-looking statements, which are based on current views of the Company’s management concerning future events. The Company does not assume any responsibility to amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events, or otherwise. The information in this Analyst Presentation has not been independently verified, approved or endorsed by any manager, bookrunner, advisor or underwriter retained by the Company. No representation, warranty, express or implied, is made as to, and no reliance, in whole or in part, should be placed on, the fairness, accuracy, completeness or correctness of the information and

  • pinions in this Analyst Presentation. It is not intended that these materials provide, and you may not rely on these materials as providing, a complete or comprehensive analysis of the Company
  • r any proposed offering. The information and opinions in these materials are provided as at the date of this Analyst Presentation, and are subject to change without notice. None of the

Company or any of its agents or advisers, or any of their respective affiliates, advisers or representatives, makes any representation as to, or assumes any responsibility with regard to, the accuracy or completeness of any information contained here (whether prepared by it or by any other person) or undertakes any responsibility for any reliance which is placed by any person on any statements or opinions appearing herein or which are made by the Company or any third party, or undertakes to update or revise any information subsequent to the date hereof, whether as a result of new information, future events or otherwise and none of them shall have any liability (in negligence or otherwise) for nor shall they accept responsibility for any loss or damage howsoever arising from any information or opinions presented in these materials or use of this Analyst Presentation or its contents or otherwise arising in connection with this Analyst Presentation. This Analyst Presentation may not be taken or transmitted into the United States, Canada, Australia or Japan or distributed directly or indirectly, in the United States (including its territories and dependencies and any state of the United States), Canada, Australia or Japan. No portion of these materials is an offer of securities for sale in the United States, Canada, Australia or Japan. Under the terms of any proposed offering, no securities will be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or an exemption from registration requirements thereof. No public offering of securities will be made in the United States, and the Bank does not intend to register any part of a proposed offering under the U.S. Securities Act. 1

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Agenda

2

Financial Highlights Future Plan Q&A Business Overview

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Business Overview

Section 1

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Symbol TFG Industry/ Sector Agro & Food Industry / Food & Beverage Share Outstanding 5,100.00 million share @ THB 1.00 per share Closed Price THB 1.39 per share (24/03/2016) Market Cap. THB 7,089.00 million % Free Float 15.70% Dividend Policy Not less than 50.00% of net profits of Company’s separated financial statement after deductions tax and any reserved portion required by law and the Company’s Articles of Association

Top Shareholders

1) Teawsomboonkij Group 83.66% 2) UBS AG HONG KONG BRANCH 1.75% 2) KT ZMICO Securities Company Limited 1.16% 3) Seamico Securities Public Company Liimited 0.74% 4) Trinity Securities Company Limited 0.58% 5) Mr. Wuttipong Wongsomboondee 0.54%

TFG Profile

4

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Our history and major milestones

5

2001

Established as Thai Food (2001) Co., Ltd.

2003

Commenced chicken slaughterhouse operations with a capacity of 139,000 chickens per day

2012

TFG’s registered name changed to Thai Foods Group Co., Ltd Commenced operations

  • f first parent pig farm

with a capacity of 1,800 pigs Acquired Thai Foods Research Center Co.,

  • Ltd. and Thai Foods

Layer Farm Co., Ltd.

2013

Established Vietnam swine operations and commenced operations of first grandparent pig farm in Vietnam with a capacity of 700 pigs and first parent pig farm in Vietnam with a capacity of 1,400 pigs Commenced operations of third feed mill facility with a capacity of 50,000 tonnes per month Acquired Thai Foods Swine Farm Co., Ltd

2014

Commenced operations of third chicken slaughterhouse with a capacity of 150,000 chickens per day Commenced two new parent pig farms increasing its total capacity at the parent pig farms (including Vietnam parent pig farm with a capacity of 1,400 pigs) from 9,300 pigs to 12,000 pigs Acquired Ayothaya Agri-Tech Company Limited, Thai Foods Swine International Co., Ltd. and

  • T. Paragon Holding Co., Ltd.

Converted to a public company and changed registered name to THAIFOODS GROUP PUBLIC COMPANY LIMITED

2007

Established first grandparent pig farm with a capacity of 1,900 pigs Established first feed mill facility with a capacity of 30,000 tonnes of feed per month

2015 2010

Established first great- grandparent pig farm with a capacity of 450 pigs

2004

Purchased 3 breeder chicken farms, increasing breeder chicken capacity to 312,000 chickens, and

  • ne hatchery, increasing

production capacity to 699,840 eggs per week

2011

Established 2 new grandparent pig farms, increasing capacity to 5,300 pigs and commenced

  • perations of first layer

chicken farm with a capacity

  • f 38,400 chickens

Kick-start export of chicken meat to Japan and Europe and domestic sales of chicken sausage Listed in SET on 8 Oct 2015 Joint Venture in SEVEN FOODS

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Overview of Corporate Structure

6

Production and selling of chickens, pigs and animal feed

Thai Foods Feed Mills Co., Ltd. Production and selling of animal feed 100%

Animal Feed

Thai Foods Research Center Co., Ltd. Operation of a research and development center Ayothaya Agri-Tech Company Limited Production of animal feed sacks and plastic farming equipment

Others

100% 100% Thai Foods Poultry Farm Co., Ltd. Operation of breeder chicken farms Thai Foods Contract Farming Co., Ltd. Rearing of chickens through contract farmers Thai Foods Layer Farm Co., Ltd. Operation of layer chicken farms

Poultry

100% 100% 100% Production and selling of live pigs in Vietnam Thai Foods Swine Farm Co., Ltd. Production and selling of live pigs Thai Foods Swine International Co., Ltd. Start operating swine business in Thailand by the end of 2015

  • T. Paragon Holding

Co., Ltd. Investment Holding Company Thai Viet Swine Line Co., Ltd.

Swine

100% 100% 100% 100% Incorporated in Thailand Incorporated in Vietnam 2011 2011 2011/ 2005 2012/ 2010 2012 2013/ 2012 2014 2014/ 2010 2014/ 2006 Year of acquisition/incorporation 2013 Seven Foods Company Limited Trading company 2015 45.71% Incorporated in Japan

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Overview – One of the leading producers of chicken meat and live pigs in Thailand

  • Pig breeding and live pig

sales

  • Having the capacity to

raise over 334,020 fattening pigs at any given time as at 31 Dec 2015

  • Live pigs sold in Thailand

and Vietnam

  • Manufacture and sale of

feed for animals, mainly chickens and pigs

  • Having the capacity to

produce 120,000 tons of feed per month as at 31 Dec 2015

  • Provision of research facility

services and sales of medical supplies developed in its research and development facility to third parties

  • Production and sales of

animal feed sacks and plastic farming equipment Overview

Poultry Swine Feed Others

Vertically integrated food producer Operational presence in Thailand and Vietnam One of the largest market shares for chicken in Thailand One of the largest market shares for live pigs in Thailand Contract farming model to enable scalability and maximise return on capital investment Founded and owned/ controlled by Mr. Winai Teawsomboonkij and his related persons Well positioned to capture significant opportunities arising from lifting of import bans by Japan and the European Union

  • Chicken breeding, chicken meat production

and sales and sale of day-old chicks, live chickens, layer chickens and processed chicken

  • Having the capacity to produce 2.2 million

chickens per week at the slaughterhouses as at 31 Dec 2015

  • Chicken products sold in Thailand to Japan,

and to European Union in Q1 2015

  • Domestic sale of chicken sausage in Mar 2015

7 9,073 15,770 17,067 17,365 2012 2013 2014 2015

Consolidated revenue from sales

  • f goods and services (THB Million)

Poultry 64% Swine 26% Feed mill 10% Others 0% Revenue contribution of the year 2015

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Vertical Integrated Business Model

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Poultry Industry Production Value Chain

Grandparent stock farms Breeder farms Hatcheries Broiler farms

Slaughterhouse

Distribution

Processed meat

Fresh meat Great- Grandparent pig farms Grandparent pig farms Parent pig farms Raise fattening pigs

Slaughterhouse

Processing Distribution

Swine Industry Production Value Chain

Stages of the production value chain which TFG is presently involved in Stages of the production value chain which TFG is not presently involved in Stages of the production value chain which TFG is presently involved in Stages of the production value chain which TFG is not presently involved in

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Financial Highlights

Section 2

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TFG’s Performance

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YEAR 2015 YEAR 2014 Changes THB Million THB Million THB Million % Revenue from sales 17,365 17,067 298

1.75

Cost of sales (18,106) (15,121) (2,985)

19.74

Gross profit (loss) (741) 1,946 (2,687)

(138.08)

Gross profit margin (4) 11 (16)

(137.42)

Profit (loss) before income tax expense (1,862) 954 (2,816)

(295.18)

Profit (loss) for the year (1,574) 916 (2,490)

(271.83)

EBITDA Profit (loss) before income tax expense (1,862) 954 (2,816)

(295.18)

Finance cost 295 260 35

13.46

Depreciation of breeder poultry and swine 359 264 95

35.99

Depreciation and amortization 512 540 (28)

(5.10)

Total of Depreciation of breeder poultry and swine & Depreciation and Amortization 871 804 67

8.39

EBITDA

(696) 2,018 (2,714) (134.47)

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TFG’s Performance

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EBITDA & EBITDA Margin (%) Gross Profit & GP Margin (%) 2014 1Q2015 2Q2015 3Q2015 4Q2015 2015

Gross Profit (THB Million) 1,947 (374) (224)

  • 99

(45) (741) Gross Profit Margin (%) 11% (9)% (6)% (2)% (1)% (4)% 2014 1Q2015 2Q2015 3Q2015 4Q2015 2015

EBITDA (THB Million)

2,018 (291) (217) (94) (91) (696)

EBITDA Margin (%)

12%

  • 7%
  • 5%
  • 2%
  • 2%
  • 4%
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TFG’s Performance by segment

YEAR 2015 YEAR 2014 Poultry Swine Feed mill Others Total Poultry Swine Feed mill Others Total Revenues from sales of goods 11,038 4,581 1,735 10 17,365 12,365 3,568 1,105 29 17,067 Cost of sales of goods (12,437) (4,035) (1,625) (9) (18,106) (11,462) (2,654) (978) (26) (15,121) Gross profit (loss) (1,399) 546 110 1 (742) 903 914 127 3 1,947 Gross profit margin

  • 13%

12% 6% 8%

  • 4%

7% 26% 11% 10% 11%

Unit: THB Million

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Sales volume by segment

Sales volume – Poultry Sales volume – Swine Sales volume – Feed

  • Sales volume of chicken sold increased from 281,908 tonnes in year

2014 to 288,046 tonnes in 2015 primarily due to the increase in farm production output and slaughterhouse capacity to support export volume.

  • The price of chicken decreased from Baht 40.84/kg in the year 2014 to

Baht 35.98/kg in 2015

  • Sales volume of swine sold increased from 47,908 tonnes in year

2014 to 64,909 tonnes in year 2015 due to additional capacity and productivity.

  • The price of swine decreased from Baht 69.96/kg in year 2014 to Baht

59.84/kg in year 2015 Unit: Tonnes

147,153 130,999 98,577 79,892 93,008 2011 2012 2013 2014 2015 93,794 155,041 271,885 281,908 288,046 2011 2012 2013 2014 2015 Average Selling Price (THB/Kg) 42.07 33.30 40.39 40.84 35.98 16,962 38,199 44,874 47,908 64,909 2011 2012 2013 2014 2015 Average Selling Price (THB/kg) 57.34 48.71 61.21 69.96 59.84 13

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Distribution Channel

Channel Revenue Volume THB Million % Tonnes % Station and Branch 1,338 13% 33,303 12% Export 821 8% 8,907 3% Industrial and Modern Trade 1,711 17% 32,041 11% Wholesales 6,483 63% 213,796 74% Total 10,354 100% 288,046 100%

Poultry Business - Distribution Channel by Volume

Live pig 97% Part 3%

Swine Business - Distribution by Volume

Channel Revenue Volume THB Million % Tonnes % Live Pig 3,760 97% 63,117 97% Part 135 3% 1,792 3% Total 3,895 100% 64,909 100%

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Processed Food - Sausage

All volume numbers in tonnes; all revenue figures in THB Million unless otherwise stated

  • Enter into processed food to enable higher margins and greater

product diversification

  • Started sales of chicken sausage in March 2015 by OEM
  • Sale Volume of Chicken Sausage in 2015 was 385 tonnes
  • Revenue of Chicken Sausage in 2015 was THB 25 million
  • Sell processed chicken sausage to our customers under “Thai

Aroi” product name with lotus flower symbol

  • Launch chicken sausage factory in April 2016 to add value of

carcass

15

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Financial Status

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Net Debt/ Equity

Interest Bearing Debt for the Year 2015 : THB 6,276.6 million

Bank

  • verdrafts and

short term loans, 4,874 Current portion of long term loans, 470 Long term loans, 561 2.8 4.0 3.1 2.4 1.7 2011 2012 2013 2014 2015

Cost of Debt 2013 2014 2015 OD and ST- Loan 3.44 – 5.50 1.30 – 7.78 1.30 – 5.00 LT - Loan 4.75 – 5.63 4.75 – 5.63 4.53 – 5.65

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Future Plan

Section 3

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Capital expenditure

Historical and planned capital expenditure

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  • 1 chicken slaughterhouse
  • 7 breeder chicken farms
  • 3 hatcheries
  • Construction of 1 feed mill
  • Completion of feed mill
  • 3 breeder chicken farms
  • 1 hatchery
  • 1 chicken slaughterhouse
  • Completion of chicken

slaughterhouse

  • Completion of 1 breeder chicken

farm and 1 hatchery

  • 1 layer chicken farm
  • 2 parent pig farms
  • 1 grandparent pig farms
  • Conversion of one breeder chicken

farm into layer chicken farm All figures in THBm unless otherwise stated (a) Note that the capital expenditure of 2015E-2017E does not included the capital expenditure of existing projects

(a)

Projects: 2016 – 2018E Purchase new machinery at chicken slaughterhouses in Kanjanaburi and Prajinburi to support future export business Construct and operate a great-grandparent pig farm in Sa Kaeo Construct and operate a breeder chicken farms (6 houses) Construct and operate chicken sausage facility in Thailand Improvement and expansion capacity of existing feed mill at Supanburi Joint venture with other investor (Japanese) to construct and operate Further factory at Karnchanburi Expansion 5 parent pig farms and pig contract farming Construct and operate a pork sausage factory (Studying process) Construct and operate a pet food factory (Studying process)

1,009 1,605 1,650 882 1,001 2,620 2011 2012 2013 2014 2015 2016E - 2018E

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Cost reduction

  • Reduce cost of feed mill production which is total amounted 60% of total TFG’ cost, by the following

action;

  • Reduce cost of imported raw materials which are feed additives, vaccine, soy bean meal and

soy bean

  • Reduce cost of local raw material which is corn
  • Modification of feed formula (Both chicken feed and swine feed)
  • Increase in feed mill production efficiency at Suphanburi and Kabinburi
  • Reduce cost of raising chicken by increase in broiler production and hatchery efficiency, contract

farm condition adjustment such as transportation

  • Reduce cost of raising pig by FCR (Feed Conversion Rate) improvement, decrease in death or
  • ther loss of pig and quality improvement
  • Reduce cost of chicken slaughterhouse at Suphanburi and Kabinburi
  • Reduce cost of inventory by focusing in inventory management
  • Reduce cost of selling and administrative expenses
  • Reduce cost of transportation of feed mill, raw material and chicken meat/ parts
  • Reduce personnel cost by reorganization policy

Turnaround plan for the year 2016

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Increase revenue and mitigate risk from fluctuations in chicken price

  • Increase in export sales volume from 9,000 tonnes in year 2015 to 32,000 tonnes in year 2016
  • Entered into a 45.7% joint-venture in Seven Foods to expand our sale volume in Japan
  • Launch chicken sausage factory in April 2016 to support lower price of carcass
  • Penetrate the industrial market
  • Increase the number of station and sales branches
  • Launch new sale channel via restaurant chain and food service
  • Continue to expand broiler production capacity and also reduce production cost per chick

Increase in fatten pig raising capacity in Thailand from 45,000 pigs per month to 54,000 pigs per month

  • Increase sale volume of swine parts by selling to Tesco Lotus
  • Expand swine production capacity in Vietnam, this will help to reduce production cost and gain more

profit in year 2016 The Company plan to increase sale volume of feed from 9,000 tonnes per month to achieve 16,500 tonnes per month to external sales

Turnaround plan for the year 2016

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TFG Investment Highlights

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  • Enter into a joint-venture with a well-known Japanese company to produce cooked chicken products

for export to Japan, European Union and also domestic market

  • Invest on pork sausage factory
  • Invest in pet food factory
  • Expand 5 parent pig farms
  • Increase in fattening pigs farm
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Q&A