Business Update for 2018 3 Financial Highlight 4 Q&A 5 1 - - PowerPoint PPT Presentation

Applied DB Public Company Limited

ADB Opportunity Day

March 28, 2018

Business Overview Business Update for 2018

Market Trend and Business Opportunity

Financial Highlight 2 3 4 1 Agenda 5 Q&A

1

Business Overview

PCL

ADB Business Overview

• Applied DB was formed in 2005, from the joint venture
• f

Applied Chemical Industry Co., Ltd. (Plastic compound manufacturer since 1985) and DB Chemical Co. Ltd. (Adhesive manufacturer, since 1983).

• Major product includes plastic compounds, professional

adhesives, silicone sealants, and DIY products for household end-users.

• ADB become public company in 2017.
• Our products have been exported to major markets worldwide

i n c l u d i n g A s i a , A m e r i c a s , E u r o p e , A u s t r a l i a , Middle East, & Africa.

Applied plied DB

Shareholding structure

Shareholder Group

Shareholdin g (%) Wongcharoensin family 24.97 Wongtangtrakul family 15.61

• Mr. Wang Wanapaison’s family

21.30 Other shareholders 8.12 IPO 30.00 Total 100.0

Shareholding structure

As of January 31, 2018

24.97% 15.61% 21.30% 8.12% 30.00%

Wongcharoensin family Wongtangtrakul family

• Mr. Wang Wanapaison’s family

Other shareholders IPO

Adhesive & Sealant Plastic Compound

• ADB Adhesives are specially manufactured

to meet international standards for industrial use and household use.

• We sell under our house brand and OEM

for customers well-known brand names.

ADB

*Products manufactured by the Company under OEM brands cannot be publicly disclosed due to non-disclosure agreements and confidentiality

• ADB Sealant is currently repackaged from

bulk package and resell in smaller package.

• Future project supports the expansion of

a d h e s i v e & s e a l a n t p r o d uc t l i n e corresponding to increasing demand and profitability.

Major Products

• ADB is one of the leading manufacturer of

plastic compound especially for wire&cable industry.

• Wire & Cable PVC compound
• General Grade PVC
• Medical PVC Compound
• Polypropylene split yarn (PPY)

Adhesive & Sealant sales THB 679.08 mm. equivalent to 48.63% to total sales

Adhesive & Sealant Plastic Compound

Plastic Compound Sales THB 693.33 THB mm equivalent to 49.65% to total sales

Proportion of Adhesive&Sealant and Plastic Compound 2017 Sales Revenue

Plastic Compound 49.65% Adhesive and Sealant 48.63% Other 1.06%

2017’s Domestic sales = THB 972.47 mm; equivalent to 70.86% of total sales

Domestic sales

Note

• 1. Only take sales which has value more THB1.0 million into account
• 2. Other industries include sports, jewelry, and others

Proportion of domestic sales by customer’s industry The distribution channels for domestic sales include: 1) manufacturers 73% 2) distributors 18% 3) OEM 8% of domestic sales 4) Other 1% Majority plastic compound products are domestic sale

Proportion of domestic and export sales for 2015-2017

71% 19% 2% 1% 7% 76% 12% 2% 3% 7% 72% 15% 3% 1% 9% 0% 20% 40% 60% 80%

Construction Shoes & Leather Furniture Automotives Others

2015 2016 2017

Export sales

Note

• 1. Only take sales which has value more THB1.0 million into account
• 2. Other industries include sports, jewelry, and others

2017’s Export Sales = THB 399.94 THB mm; equivalent to 29.14% to total sales Proportion of export sales by customer’s industry The proportion of export sales can be classified into 1) distributor clients 67.37% 2) OEM 16.48% 3) manufacturers 16.15% of export sales

Proportion of domestic and export sales for 2015-2017

Majority of adhesive & sealant products are export sale

39% 39% 8% 10% 4% 40% 31% 16% 10% 2% 38% 35% 17% 7% 3% 0% 10% 20% 30% 40% 50%

Automotives Shoes & Leather Construction Furniture Others

2015 2016 2017

2

Business Opportunity and Market Trend

EASTERN ECONOMIC CORRIDOR DEVELOPMENT and ASEAN RAIL EXPRESS

In order to enhance the Company’s growth and competitive advantage within the industry, the Company has prepared to capture the prospect opportunities

Market Trend & Business Opportunity

1

The EEC is an organization which focuses

• n the implementation of infrastructural

development projects and seamless operation

• f transportation in providing vital linkages

for air , land, rail and sea routes. Infrastructure investment will drive economic growth and constructions demand for PVC and sealant as well.

Source: https://www.eeco.or.th/en/content/infrastructure-overview

The Big Trend

 Construction  PVC Compound & Sealant

Plastic Compound Market

Market Trend & Business Opportunity

2

U.S. plastic compound market size, by end-user, 2013 - 2024 (USD Billion)

Source: www.gminsights.com/industry-analysis/plastic-compounding-market

Plastic Compound Industry Trend 2013 - 2024

• Plastic Compound Market size was more than USD 32 billion in 2016 and will witness 6.0% CAGR during

the projected time span.

• Future construction projects, including roads & highways, commercial buildings, residential projects,

urban transportation, hydropower, etc. will further boost the plastic compound market.

Source: https://www.gminsights.com/industry-analysis/plastic-compounding-market

Adhesive and Sealant Market Trend

Market Trend & Business Opportunity

3

Rapid urbanization and population growth propels growth in infrastructure and construction activity in Asia thus also boosting growth of adhesives and sealants market as well.

Adhesive and Sealant Market Trend

Market Trend & Business Opportunity

3

Global Adhesive Market 2017-2022

• The global adhesives market will grow at a CAGR of 4.5% to reach USD

53,503 million by 2022.

• Increasing need for eco-friendly, low VOC, & green sustainable adhesives
• ffers significant opportunities.

Source: The Adhesives Market - Global Opportunity Analysis and Industry Forecasts to 2022

Global Sealant Market 2017-2022

• The global sealant market is expected to register a CAGR of 6.42% in

terms of revenue.

• Longer-term demand is expected to be evinced in South America and

Asia, where major construction and infrastructure projects are planned.

Source: www.mordorintelligence.com/industry-reports/sealants-market

Market Trend & Business Opportunity

Key Strategic Direction in 2018

• 1. Investing in Sealant Compound business in order to capture

new business opportunity.

• 2. Increasing capacity of PVC Compound to meet foreseeable

growing demand.

3

Business Update for 2018

Business Update for 2018

• PVC Compound Capacity Boosting Project
• Sealant Project

Progress of new factory to support sealant products (Sealant Project)

In order to enhance the Company’s growth and competitive advantage within the industry, the Company has planned to increase production capacity.

Business Update for 2018

1

• Factory Structure is 90% completed.
• Warehouse Structure is 85% completed.
• Next process is surface adjustment for

infrastructure including roads and laying sewer pipe

• Expected to start production in Q4/2018
• The factory mainly supports silicone sealant

material to re-packer including ADB itself. Construction Updated of March 2018

Boosting PVC compound capacity (Machine Modification)

Business Update for 2018

2

• Due to PVC rising demand, our production capacity is currently operating at about 90% of

capacity.

• More capacity is required to meet increasing demand
• Convert TPE production line to PVC production Line
• Increase capacity 250 tons/month or 13% of PVC total current capacity

PVC Machine Modification

TPE PVC

Boosting PVC compound Capacity (Machine Upgrade)

Business Update for 2018

3

Co-Kneading Extruder

• Increase more than 50% higher in output

comparing to traditional type.

• Better quality control
• 2 Production lines will be installed in 2018 and

2019

• Capacity 860MT/month

Installation of 1st Medical grade machine production line has finished.

Business Update for 2018

4

PVC Medical Grade’s Production Status

• One production line has been completed

installation with capacity

• f

200 tons/month.

• Expect to start production in April 2018.
• Plan to increase one production line in

Q3 to increase capacity 200 tons/month.

Research and Development Project Update

Business Update for 2018

5

5.1 Develop existing and new products, focusing on environmental friendly products to support future growth and market trends 5.2 Continually research and enhance formula of Medical PVC and sell under ADB brand within 2018 Research & Develop Update!

Research and Development Project Update

Business Update for 2018

5

5.3 Develop chemical formula to create economy grade as alternative option for customers Research & Develop Update! 5.4 Conduct new research of Hybrid Sealant and Hybrid Technology for developing a new product

4

Financial Highlight

Financial performance for year 2015- 2017

712 726 693 722 686 679

200 400 600 800 1000 1200 1400 1600

2015 2016 2017

Plastic Compound Adhesive and Sealant

(Unit: million Baht)

50% 50% 51% 49% 51% 49% 1,434 1,412 1,372

Revenue structure

The sales revenue in 2017 was slightly decreased leading by price adjustment with cost competitiveness and the slowdown of shoe industry.

Financial performance for year 2015- 2017

Revenue structure (domestic / international)

969 991 972 465 421 400

• 200

400 600 800 1,000 1,200 1,400 1,600

2015 2016 2017

Domestic Export 68% 32% 68% 32% 70% 30% 1,434 1,412 1,372

(Unit: million Baht)

The Baht appreciation especially during Q4/17 also has impact to export, some delay of the foreign customers causing the delay of the shipment.

Financial performance for year 2015- 2017

611 647 628 27 27 20 74 52 45

540 560 580 600 620 640 660 680 700 720 740

2015 2016 2017

PVC PPY TPE 86% 4% 10% 89% 4% 7% 7% 3% 91% 712 726 693

Revenue structure - Plastic compound

(Unit: million Baht)

The THB 32.50 million or -4.48% decrease in sales of PVC wire and cable in 2017 resulting from the price competition as the Company adjusted the pricing in sales order to achieve appropriate profit margin since Q3/2017.

Financial performance for year 2015- 2017

345 305 293 146 182 193 206 177 171

100 200 300 400 500 600 700 800 2015 2016 2017

Adhesive Sealant DIY Trading 48% 4% 20% 44% 3% 27% 43% 3% 28% 29% 26% 25% 723 686 680

Revenue structure - Adhesive & Sealant

(Unit: million Baht)

• The slowdown of shoe industry causing lower sales orders from local adhesive dealers.
• Sales from DIY products slightly dropped due to the baht appreciation especially during Q4/17 and

some delay of the foreign customers in Africa causing the delay of shipment.

Financial performance for year 2015- 2017

Gross profit & gross profit margin

(Unit: million Baht)

0% 5% 10% 15% 20% 25%

40 80 120 160 200 240 280 320 2015 2016 2017 Q4 2016 Q4 2017

Gross Profit (MB) GPM

17%

The significant drop of gross margin in 2017 is mainly due to:

• The fluctuation of materials price and pricing adjustment on the Compound Business
• The increase in material costs of Adhesive & Sealants

Financial performance for year 2015- 2017

0% 5% 10% 15% 20 40 60 80 100 120 2015 2016 2017 Q4 2016 Q4 2017 Gross Profit (MB)

The significant drop of gross margin in 2017 is mainly due to:

• The unusual fluctuation of raw materials price
• The strict implementation of the new pricing adjustment, GPM has returned reaching to normal at 14%

Gross profit & gross profit margin - Plastic compound

(Unit: million Baht)

14%

Financial performance for year 2015- 2017

0% 5% 10% 15% 20% 25% 30% 35% 40 80 120 160 200 2015 2016 2017 Q4 2016 Q4 2017 Gross Profit (MB) GPM

Gross profit & gross profit margin - Adhesive & Sealant

• The gross profit margin for adhesive & sealant is lower in 2017, including Q4, due to the higher cost of

the main raw materials for adhesive & sealant product, as well as baht appreciation since more than half

• f revenue derived from export section

(Unit: million Baht)

24%

Assets

Financial performance for year 2015- 2017

The increase in asset size is contributed by

• The significant increase in PPE in 2017 mainly results from investment in new Silicone factory and

machines for adhesives.

• The increasing inventory is a result of management’s raw material planning.

259 365 375 316 253 213 267 319 287 292 355 448 75 78 76 125 200 400 600 800 1000 1200 1400 2014 2015 2016 2017

A/R Inventory PPE Others

875 948 1,072 1,208

195 210 239 212 332 330 416 277 114 135 120 134

100 200 300 400 500 600 700 800 900

2014 2015 2016 2017

A/P ST Loan Others

(Unit: million Baht)

640 675 775 623

Liability

Financial performance for year 2015- 2017

As at December 31, 2016 and 2017, the Company had total liabilities of THB 774.82 million and THB 622.86 million, respectively.

210 210 210 300 23 61 85 83 100 200 300 400 500 600 700 2014 2015 2016 2017 Paid-up capital Retained earnings Share premium

585 235 273 298 (Unit: million Baht)

202

Shareholder’s equity

Financial performance for year 2015- 2017

The increase in shareholders’ equity during 2017 was mainly attributed to the capital increase for Initial Public Offerings of THB 90 million increasing from THB 210 million to THB 300 million.

2.72 2.47 2.6 1.06 0.5 1 1.5 2 2.5 3 2014 2015 2016 2017

D/E

D/E

(Unit: Times)

Debt to equity

Financial performance for year 2015- 2017

After IPO proceeds and the partial debt repayment, the Debt-to-Equity ratio decreased to 1.06 at the end of 2017

Conclusion – Why ADB?

New product meeting new demand from customers

R&D

New project boosting capacity

Production

Sales & Marketing

Expanding construction related business

Finance

Sound and solid Capital foundation

Thank you

Disclaimer

• The information contained in this presentation is for information purposes only and does not constitute an offer or invitation to

sell or the solicitation of an offer or invitation to purchase or subscribe for share in Applied DB Public Company Limited (“ADB” and shares in ADB, “shares”) in any jurisdiction nor should it or any part of it form the basis of, or be relied upon in any connection with, any contract or commitment whatsoever.

• This presentation may include information which is forward-looking in nature. Forward-looking information involve known and

unknown risks, uncertainties and other factors which may impact on the actual outcomes, including economic conditions in the markets in which ADB operates and general achievement of ADB business forecasts, which will cause the actual results, performance or achievements of ADB to differ, perhaps materially, from the results, performance or achievements expressed or implied in this presentation.

• This presentation has been prepared by the ADB. The information in this presentation has not been independently verified. No

representation, warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions in this presentation. None of the ADB or any of its agents or advisers, or any of their respective affiliates, advisers or representatives, shall have any liability (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation.

• This presentation is made, furnished and distributed for information purposes only. No part of this presentation shall be relied

upon directly or indirectly for any investment decision-making or for any other purposes.

• This presentation and all other information, materials or documents provided in connection therewith, shall not, either in whole
• r in part, be reproduced, redistributed or made available to any other person, save in strict compliance with all applicable

laws.