Investor Presentation Q22019 Disclaimer Statements included or - - PowerPoint PPT Presentation

Investor Presentation

Q2’2019

Osotspa Public Company Limited (OSP)

Disclaimer

Statements included or incorporated in these materials that use the word “believes”, “anticipate”, “estimate”, “target”, or “hope”, or that otherwise relate to the objectives, strategies, plans, intentions, beliefs or expectations or that have been constructed as statements as to future performance or events, are “forward-looking statements” within the meaning that are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated at the time the forward-looking statements are made. Osotspa Public Company Limited (“OSP” or the “Company”) undertakes no obligation to publicly update or revise any forward-looking statement, whether as result of new information, future events or otherwise. OSP makes no representation and assume no liabilities against whatsoever about the opinion or statements of any analyst or other third party. OSP does not monitor or control the content to third party opinions or statements and does not endorse or accept any responsibility for the content or the use of any such opinion or statement. The information contained herein has been obtained from sources that the Company considers reliable, but the Company does not represent or warrant that the information is complete or accurate, in particular with respect to data provided by or regarding third parties. The information in the presentation does not purpose to be comprehensive or to contain all the information that a prospective investor may desire or require to decide whether or not to purchase securities of the Company. The information in the presentation might be incomplete or summarized and has not been independently verified and will not be updated. Such information may in the future be subject to audit, limited review or any other control by an auditor or independent party. Therefore, the information included in the presentation may be modified or amended in the future. The information in this presentation, including but not limited to forward-looking statements, applies only as of the date of this document and is not intended to give any assurances as to future

• results. The Company and each of its agents expressly disclaims any obligation or undertaking to update or release any updates or revisions to the information, including any financial date and any forward-looking

statements, contained in this [presentation[. This presentation includes forward-looking representations or statements on purposes, expectations or forecasts of the Company or its management up to the date of release of this document. Said forward-looking representations and statements or forecasts are mere value judgments of the Company and do not imply undertakings of future performance. Additionally, they are subject to risks, uncertainties and other factors, which were unknown or not taken into account by the time this document was produced and released and which may cause such actual results, performance or achievements, to be materially different from those expressed or implied by these forward-looking statements. Moreover, these forward-looking statements are based on numerous assumptions (which are not stated in the presentation) regarding the Company’s present and future business strategies and the environment in which the Company expects to operate in the future. There are many factors, most of them out

• f the Company’s control, which may cause the Company’s actual operations and results to substantially differ from those forward-looking statements. Accordingly, you should not place undue reliance on forward-

looking statements due to the inherent uncertainty therein. Certain financial and statistical information contained in this document is subject to rounding adjustments. Accordingly, any discrepancies between the totals and the sums of the amounts listed may be due to

• rounding. In additional, certain figures contained in this document, which have also not been subject to financial audit, are combined and pro forma figures. The information and opinions in this presentation are

not based upon a consideration of your particular investment objectives, financial situation or needs. You may wish to seek independent and professional advice and conduct your own independent research and analysis of the information contained in the presentation and of the business, operations, financial condition, prospects, status and affairs of the Company. This presentation discloses neither the risks nor other material issues regarding an investment in the securities of the Company. The information included in this presentation is subject to, and should be read together with, all publicly available information. Any person acquiring securities of the Company shall do so on their own risk and judgement over the merits and suitability of the securities of the Company, after having received professional advice or of any other kind that may be needed or appropriate but not only on the grounds of this presentation. By delivering this presentation, the Company is not providing any advisory, purchase or sale recommendation, or any other instrument of negotiation over the securities or financial instruments of the Company. This presentation does not constitute or form part of, and should not be construed as, any offer, inducement, invitation, solicitation or commitment to purchase, subscribe to, provide or sell any securities, services or products or to provide any recommendations for financial, securities, investment or other advice or to take any decision. This presentation is not and shall not constitute an offer for the sale of securities in Thailand or any jurisdictions. By attending to or receiving this presentation you agree to be bound by the foregoing restrictions and limitations and acknowledge that you understand the legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of the presentation.

Financial Performance Core Strategy Updates Key Activity Highlights

Agenda

Financial Performance

Business Update New Business Segment Grouping and Additional Provisions

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Segment Regrouping Provision for Retirement Benefits When: Q1’19 Impact to account treatment: Re-group segment report for all periods in 2018 and 2019 into 3 main segments

• Beverage

: All beverages including C-Vitt and Calpis

• Personal Care : Babi Mild, Twelve Plus, Exit
• Others

: OEM, Healthcare, Confectionary, Other Impact to Financial Statement:

• No impact

When: Q2’19 (May 2019) Impact to account treatment: Set up additional provision for retirement benefits Impact to Financial Statement: Recognize expenses approximately 96.8 million baht (before tax) in the consolidated financial statements

Q2’19 Financial Highlights – by Segment

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• Chalarm

+33.9% Continued strong growth momentum from Chalarm Black Galingale

• Som In Sum

+ 25.1% Almost tripled in sales after repositioning in Q3’17

• Peptein

+ 70.8% Launched Peptein Plus in Q1’19

• Shark

+ 34.5% New NPD (Natural Caffeine)

• Babi Mild

+ 24.3% Mainly driven by NPD Sweet Almond launched in May’19

• Twelve Plus

+22.7% Continued momentum of Cool Powder and Perfume Mist launched last year

• OEM
• 17.9%

Lower sales on OEM- personal care

• Confectionery

+ 15.4% Driven by growth from Botan ▪ CLMV +4.5% Mainly driven from Myanmar and Laos (+9.4% at constant FX), offsetting with decline in Cambodia

• Others

+29.8% Driven by Middle East and Indonesia ▪ Net profit* +7.5% YoY ▪ Net profit margin** at 11.3% vs. 11.1% in Q2’18 (12.5% if excluding additional provision for retirement benefits 96.8 MB) ▪ Outstanding GM at 35.3% improved by 400 bps YoY from “Fit Fast Firm” project driving overall costs down

driven by all major categories of Beverage and Personal Care

Remark : * Net Profit attributable to owners of the parent ** Net Profit attributable to owners of the parent to Total Revenue from Sales

Net Profit*

THB 710M 11.3%

Net Profit Margin**

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1H’19 Financial Highlights – by Segment

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• C-Vitt

+ 62.6% Maintained no. 1 in Functional drinks for 4 consecutive quarters

• Chalarm

+29.7% Continued strong growth momentum from Chalarm Black Galingale

• Som In Sum

+ 23.4%

Doubled in sales after repositioning in 2H’17

• Peptein

+ 22.1% With Peptein Plus in Feb’19

• Babi Mild

+ 7.6% Mainly driven by NPD Sweet Almond launched in May’19

• Twelve Plus

+22.4% Continued momentum of Cool Powder and Perfume Mist launched last year

• OEM
• 2.6%

Growth in OEM-Glass

• ffsetting with lower sales
• n OEM-personal care
• Confectionary

+ 15.5% Driven by growth from both Botan and NPDs i.e. Olé Boost and Olé Mini Sugar Free ▪ Net profit* +10.7% YoY ▪ Net profit margin at 12.6%

• vs. 12.0% in 1H’19 (13.2% if

excluding additional provision for retirement benefits 96.8 MB) ▪ Outstanding GM at 35.0% improved by 330 bps YoY from “Fit Fast Firm” project driving overall costs down ▪ CLMV +8.0% Growth mainly driven from Myanmar and Laos (+9.9% at constant FX), offsetting with decline in Cambodia

• Others

+12.3% Driven by Middle East and Indonesia

Remark : * Net Profit attributable to owners of the parent ** Net Profit attributable to owners of the parent to Total Revenue from Sales

driven by all major categories of Beverage and Personal Care Net Profit*

THB 1,599M 12.6%

Net Profit Margin**

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31.3% 35.3% 31.7% 35.0% Q2'18 Q2'19 1H'18 1H'19

12,389 12,906

1H'18 1H'19 14.2% 15.7% 14.7% 14.8% 5.8% 7.5% 5.6% 7.2% Q2'18 Q2'19 1H'18 1H'19

661 710 1,444 1,599 11.1% 11.3% 12.0% 12.6%

3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 500 1,000 1,500 2,000 2,500

Q2'18 Q2'19 1H'18 1H'19

To the owner of the parents

Revenues Gross Margin SG&A Net Profit

Q2’19 and 1H’19 Financial Highlights

Admin Exp Selling Exp ⚫ Net Profit Margin

6,049 6,394

Q2'18 Q2'19 ⚫ Other Income (20.0%) (23.2%)

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(20.3%) (22.0%)

Net Sales Analysis: Thai Beverages

+25.1%

SALES GROWTH YOY Chalarm Black Galingale Turnaround Chalarm brand Continued Success of Campaign “Aroi Jing Mai Manoh” through Activation and promotion campaign nationwide, starting from North – Central - Northeast Reaching 9 million bottles/month

+70.8%

SALES GROWTH YOY

+33.9%

SALES GROWTH YOY

Focus on below-the-line activities

7

Launch new formula Peptein Plus in Mar’19 with Impressive performance in 7-11

New packaging (Aug’19)

Net Sales Analysis: Thai Beverages

38.5%

MARKET SHARE New LINE Official Account for M-Point collection campaign 2019 Communication campaign “Poo Klar LIPO” with local activations (emphasize of Japan heritage)

8.9%

MARKET SHARE

Strengthen communication campaign and below-the-line activities

22.5%

MARKET SHARE

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Continued reinforcing brand awareness and ensure adequate supply

+22.7%

SALES GROWTH YOY

Net Sales Analysis: Thai Personal Care

Continued Momentum from Cooling Powder and Perfume Mist

+24.3%

SALES GROWTH YOY The Launch of EXIT x BNK48 Special Collaboration with Collectable Premium

+20.8%

SALES GROWTH YOY

9

Babi Mild Sweet Almond Launch in May’19 Organik by Babi Mild Launch

Net Sales Analysis: International Sales

SALES GROWTH +8.7% YOY (at constant FX)

10

▪ Launched TVC with refreshing look using Khar Ra, a Burmese actor, model and singer, emphasizing as a drink for all occasions #SHARKforalloccasions ▪ Activate Instant Win Campaign in May 2019

Balance Sheet (as of 30 Jun 2019)

11 Key Changes in Balance Sheet Items

• Total assets: Decrease by THB 717mn from

: THB 1,825mn decrease in cash and cash equivalents : THB 200mn decrease in current investments, which shift to long term investments : THB 217mn decrease in inventories : THB 1,329mn increase in PPE

• Total liabilities: Decrease by 222mn from lower trade and other payables
• Shareholders’ equity: Decreased by THB 495mn, where profit for the period was
• ffset by to dividend payment of THB 2,072mn for 2018 performance

Cash Flows and Key Ratios

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Cash Flow (as at 30 Jun 2019) Key Financial Ratios

Notes: ROE and ROA are annualized

Units: THB mn

Q2'19 Q2'18 1H'19 1H'18

Liquidity Ratios Current ratio (times) 2.1 0.6 2.1 0.6 Number of days of inventory 30 40 32 39 Collection period (days) 43 43 43 43 Accounts payable (days) 42 45 42 43 Profitability Ratios Gross profit margin (%) 35.3 31.3 35.0 31.7 EBITDA margin (%) 17.8 18.1 19.4 19.2 Net profit margin for the period (%) 11.4 11.3 12.8 12.2 Net profit margin attributable to

• wners of the parent (%)

11.3 11.1 12.6 12.0 Return on equity (%) - trailing 28.9 58.1 28.9 58.1 Return on assets (%) - trailing 16.9 17.4 16.9 17.4 Other Ratios Total debt to equity (times) 0.3 2.5 0.3 2.5

Cash Flow Movement

• Operating CF: THB 1,923mn cash inflow from

1) THB 1,618mn Net profit 2) THB 862mn Non-cash transactions (depreciation and provision) 3) THB -50mn change in working capital 4) THB -507mn tax paid Investing CF: THB 1,655mn cash outflow from 1) THB 1,660mn PPE acquisition Financing CF: THB 2,093mn cash outflow from 1) THB 2,072mn Total dividend payment

13

Dividend Payment and Policy

Dividend Paid (after IPO)

• Interim Dividend 0.35 Baht paid on 13 September 2019 (Approx. 66% payout)

(XD-date on 27 August 2019 and record date on 28 August 2019) Dividend policy

• At least 60% of consolidated net profit after deducting the legal reserve

specified by law or Articles of Association of the Company

Nonetheless, the consideration of a dividend payout shall depend on the Company’s performance, financial position, cash flow, contractual obligations (i.e. loan payments), working capital, investment plans, general economic situation, and related factors as deemed appropriate by the Board of Directors and when in compliance with the laws & regulations.

Core Strategy Updates

Production Efficiency – New facilities

• New glass factory (SGA2)
• New factory in Myanmar
• New cullet treatment lines
• Total Productive Maintenance

(Increase capacity without major investment in new production line)

Business Update: Core Strategies Progress Update

15

Strengthen domestic presence in broader non-alc. beverages and expand PC Leverage market-leading position in Thailand to sustain and expand to

• verseas markets

Focus on cost-efficiency and margin enhancement through NRM principle

Maintain Energy Drink Market Share (Value) : 1H’19

53.8%

Grow Functional Drink Market Share 1H’18 → 1H’19

28.4%→33.6%

Personal care sales growth in 1H’19 :

+13.4%

Total international sales growth for 1H’19 (at constant FX):

+8.7%

International PC sales growth For 1H’19:

+15.2%

OEM Bottle sales – Improve margin

• verall beverage by sharing fixed costs

1H'18 2H'18 1H'19

Fit Fast Firm

1H’19 GM

= 35.0%

+330bps YoY

+19.8%YoY

Continued impact in 1H’19: Bev international sales growth for 1H’19 (at constant FX):

+8.3%

2019 “Fit Fast Firm” Project ►Reap benefits from projects implemented in 2018 ►Increase efficiency through new cullet treatment lines ►New lighter weight bottles ►OEM-PC initiatives

Key Activity Highlights

• Invest in Channel – Vending Machine Business TH
• Increase R&D Capabilities - Osotspa Innovation Center (OIC)
• Complete new Glass Factory under BOI – SGA2 (Aug19)
• Complete new Talcum Plant (4Q19)
• Complete Myanmar New Plant, RTM, Portfolio strategy (4Q19)
• New Countries / Businesses (4Q19)
• Progress cost saving program for margin expansion and cost

efficiencies through “Fit Fast Firm”

• Technology: Robotics for accounting process
• Distribution and Warehouse (4Q19)
• Next step Net Revenue Management (4Q19)
• Extend portfolio – Babi Mild Sweet Almond
• Revitalize using idol marketing – Twelve Plus
• Capture Premium Segment – Organik by Babi Mild
• Enter Facial and Skincare Category - Plantstory
• Adopt New Distribution Channel – E-commerce
• Embrace New trend and New packaging – Olé Boost

and Olé Mini Sugar Free

• Grow Herbal Variant – Chalarm Black Galingale
• Extend Segmentation – Som In-Sum
• Strengthen Consumer Base - M-Point Loyalty Program
• Target New Trend – Shark Natural Caffeine / No Sugar
• Start New Channel – Osotspa Delivery
• Continue Growth – C-Vitt Capacity Expansion
• Expand Distribution Channel – C-Vitt Tetra Pack
• Add New Variant – Peptein Plus
• Respond New Healthy Trend – Vplus
• New Benefits (4Q19)

2019 Highlights

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Energy Drinks Functional Drinks Strategic Moves Personal Care and Others

Beverage

M-150

Line Official Account

2.3 Million

users

LIPO Shark C-Vitt Calpis Peptein

SA SAMURAI

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Consumers become more HEALTH-CONSCIOUS, They eat right and exercise often. V PLUS targets to URBANIST age range 18-35 years old who have ACTIVE LIFSTYLE & EXCERCISE at least once a week.

Fitness Sport venue Park

Uplift Personal Care Portfolio to Drive Growth

Secure leadership of Babi Mild with strengthened core + innovation Drive Twelve Plus to be famous for fragrance Enter growth Face Care category with active natural brand

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ROJANA INDUSTRIAL PARK, AYUTTHAYA

SGA2 HEAT UP CEREMONY

FOR THE CONSTRUCTION OF NEW GLASS PLANT

Osotspa Innovation Centre

Technical Expertise Capabilities & Structure Innovation & Category Strategy

To develop high quality infrastructure as a center of expertise and ensure cross-functional efficient structure with technical expertise to support innovation capabilities and build innovation pipeline align with strategy roadmap

Background Locations

• Huamark - R&D Lab
• Innovation Center at Thailand Science Park (Rangsit) – Pilot Plant
• Ladkrabang – Personal Care Lab and Pilot Plant

Expertise

Product, Process and Packaging Design and Regulatory Compliance with highly competent staff

• Beverage
• Confectionery
• Powder, Gel, Emulsion
• Packaging Material
• Herbal

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Vending Machine

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Rationale Investment To capture the growth opportunities in one of the fastest growing retail channel “Vending Machine … Convenient, Intelligent, Efficient and Innovative” Company Background ▪ To acquire 51% shares of Asia Vending Machine Operation Company Limited (AOC), a subsidiary of Fuji Electric at 25.5 mBaht ▪ Started business in Thailand in 2016 ▪ Expert in vending machine technology, operation and management ▪ Market share : #3 in terms of total vending machines (approximately 2,000 machines) ▪ Product : beverage, food and snack products ▪ Location : factories, office buildings, universities, residentials Partnership Thai Market Leader in Energy Drink and Functional Drink Strong Marketing and Sales World Leading Vending Machine Manufacturer and Operator R&D, Technical and Operating Expertise

+

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Thank you

Investor Relations Email: ir@osotspa.com Tel: 02-351-1152 Website: www.osotspa.com