Malee Group Public Company Limited Q 3 /2018 Opportunity Day 2 3 - - PowerPoint PPT Presentation

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Malee Group Public Company Limited Q 3 /2018 Opportunity Day 2 3 - - PowerPoint PPT Presentation

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Malee Group Public Company Limited Q 3 /2018 Opportunity Day 2 3 November 2018 Disclaimers The information contained herein is intended to represent the Companys operating and financial position at a given point in time and may also contain

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Malee Group Public Company Limited

23 November 2018

Q3/2018 Opportunity Day

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Disclaimers

The information contained herein is intended to represent the Company’s operating and financial position at a given point in time and may also contain forward looking information which only reflects expectations based on the prevailing geo-political, economic and non-controllable

  • factors. Such information has been obtained from sources

believed to be most reliable and the means in analyzing and preparation of such information for disclosure are based on approve practices and principles in the investment industry. The views are based on assumption subject to various risks and uncertainties and no assurance is made as to whether such future events will

  • ccur. No assurance is made as to the accuracy or

completeness of information presented in this document. Please note that the Company has agreed that any all information in connection with CMG products and manufacturing activities shall be kept strictly confidential and not be disclosed to any third party.

2

Malee Group Public Company Limited

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3 Malee Group Public Company Limited | CONFIDENTIAL

Company Overview Business Update Results of Operations and Profitability Forward Looking

3

AGENDA

Malee Group Public Company Limited

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4 Malee Group Public Company Limited | CONFIDENTIAL

4

Malee Group Public Company Limited

49% 65%

Formerly named Agri Sol Co., Ltd.

Group Structure

100% 49%

49%

100%

Malee Enterprise Co., Ltd. (MEC)

“Domestic Sale and Marketing”

Malee Group Plc A leading manufacturer, distributor, and exporter of fruit juices, beverages, and canned fruits. 100%

Malee Capital Co., Ltd. (MCC)

“Investment Business”

Malee International Co., Ltd. (MIC)

“International Trading”

Monde Malee Beverage Corp. (MMBC)

“Beverage Business in Philippines”

Mega Malee Co., Ltd. (MMC)

“Natural Health Drinks”

Malee Applied Sciences Co., Ltd. (MAS)

“Innovation Research &

Development”

100%

JV partner: Monde Nissin Corp JV partner: Mega Lifesciences Plc.

Subsidiary

JV/ Associate Malee Kino (Thailand) Co., Ltd. (MKT)

“KINO Products & NPD in Thailand”

51%

Partner: Kino International Pte. Ltd.

PT Kino Malee Indonesia (KMI)

“MALEE Products & NPD in Indonesia”

Overseas Entity Long Quan Safe Food JSC (LQSF)

“Distribute and export beverages in Vietnam and neighboring countries”

Tan Quang Minh Manufacture and Trading Co., Ltd. (TQM)

“Manufacture of beverages for Vietnam and neighboring countries”

100%

Formerly named Malee Harvest Co., Ltd.

100%

PT Kino Malee Trading (KMT)

“Trading Business in Indonesia”

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5 Malee Group Public Company Limited | CONFIDENTIAL

Stock Symbol: MALEE Industry and Sector: Agro & Food Industry / Food and Beverage

  • No. of Listed Shares: 280,000,000 Shares

Registered Capital: THB 140,000,000 Paid-up Capital: THB 140,000,000 Par Value: THB 0.50 per Share Listing Date: 13 March 1992 Foreign Limit: 49% (available 47.1%) Dividend Policy: Not less than 50% of the net profit from normal operation according to consolidated financial statements after deduction of tax revenue and legal reserve. However, actual payments will depend on cash flows and investment plans of the Company’s and its affiliates as well as other necessities as the Board of Directors deems appropriate. Market Capitalization: 2,254MB or 68MUSD Free Float: 48.63%

5

Malee Group Public Company Limited

Shareholding Structure & Share Information

Abico Holdings Plc 26.8% Kamolchat Jeungrung- reungkit 17.3% Thai NVDR, 3.4% Others 52.5%

Share Information

(As of 20 November 2018)

Shareholding Structure

(As of 8 May 2018)

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6 Malee Group Public Company Limited | CONFIDENTIAL

6

Malee Group Public Company Limited

1981 1992 1995 1998 2016 1978

The Company expanded its production base on the land of 30 rais in Sampran District, Nakhon Pathom Province. In April 1995, Abico Holdings Plc acquired 40% from the existing shareholders. On 3 March 1992, MALEE was listed

  • n

the Stock Exchange

  • f

Thailand (SET).

2017

On 15 May 1998, the Company’s name was changed to Malee Sampran Plc.

2018

  • In Q1/2016,

MALEE, together with Monde Nissin Corp (MNC) set up a joint venture company in the Philippines named Monde Malee Beverage Corporation (MMBC)

  • On 12 May 2016, the Company’s name

was changed to Malee Group Plc

  • On 22 August 2016, the Company signed

a JV agreement with Mega Lifesciences Plc (MEGA) to set up Mega Malee Co.,

  • Ltd. (MMC), in order to develop natural

health-focused RTD products.

  • On 12 January 2017, the

Company set up a new subsidiary named Malee Applied Sciences Co., Ltd. (MAS)

  • On 30 October 2017, MCC

signed a joint venture agreement with PT Kino Indonesia tbk (KINO) to set up 2 joint venture companies in Thailand and Indonesia.

Milestones

On 2 February 1978, Malee Sampran Factory Co., Ltd. was established with capital of 10MB as a manufacturer and distributor of canned food and canned fruits. On 27 April 2018, MCC has completed its acquisition

  • f

65%

  • wnership in Long Quan

Safe Food JSC (LQSF), which owns Tan Quang Minh Manufacture and Trading Co., Ltd. (TQM), a manufacturer and distribution

  • f

consumer products in Vietnam.

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7 Malee Group Public Company Limited | CONFIDENTIAL

1,600 1,682 1,537 1,931 2,140 2,357 2,615 2,706 2,822 2,964 2,736 2,052 2,405 2,021 1,546 898 1,510 1,737 1,603 2,065 2,567 3,578 3,180 1,840 111 (39) 261 185 311 851 481 500 539 825 535 37 (93) (295) 131 106 228 646 283 307 331 530 286 (129)

  • 1,000

1,000 2,000 3,000 4,000 5,000 6,000 7,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 9M/2018 Unit: Baht Million

CMG Sales Branded Sales EBITDA Net Profit 7

Malee Group Public Company Limited

Historical Performance

CMG: Contract Manufacturing

  • Prior to 2009, major contribution of CMG was from

canned fruits.

  • Discontinued the canned pineapple production in

2009 and canned sweet corn in 2013. 2016: Historical Highest Sales 2012-2013: Benefit from the great flood in Thailand 9M/2018 Sales: 3,892MB

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8 Malee Group Public Company Limited | CONFIDENTIAL

Malee Tropical Malee 100% HPP Fruit Juice

Daily Nutrition Functionality Tactical

Malee 100% UHT Fruit Juice Malee 100% Pasteurized Fruit Juice Malee Coco Malee Nutrient Malee Healti Plus Malee Food Service Malee Canned Fruit

OTHERS

Canned Fruit Dairy Product Other Beverages

First Choice Farmer

Chokchai Farm

TurBusta Maxx (RTD Coffee) Malee Light

Malee Brand Portfolio

8 UHT Pasteurize Malee i-Corn

Malee Group Public Company Limited

Milk Tablet Fizza Salty Lemon (Carbonated)

Others

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9 Malee Group Public Company Limited | CONFIDENTIAL

New Products Highlights: High-end Product

9 Malee Group Public Company Limited

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10 Malee Group Public Company Limited | CONFIDENTIAL

New Product Highlights: Mass Product

10

Malee Group Public Company Limited

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11 Malee Group Public Company Limited | CONFIDENTIAL

New Products Highlights: DR.DRINK from Mega Malee

11

Malee Group Public Company Limited

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12 Malee Group Public Company Limited | CONFIDENTIAL

Hair Care Products

New Products Highlights: Personal Care Products from Malee Kino

12

Malee Group Public Company Limited

Facial Cleanser Products Oral Care Products

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13 Malee Group Public Company Limited | CONFIDENTIAL

Subsidiary/Joint Venture Portfolio

13

Malee Group Public Company Limited

LQSF

(Vietnam)

MAS

(Thailand)

MMBC

(Philippines)

Mega Malee

(Thailand)

Food and Beverages – to be launched in Q1/2019

Kino Malee

(Indonesia)

Malee Kino

(Thailand)

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14 Malee Group Public Company Limited | CONFIDENTIAL

Company Overview Business Update Results of Operations and Profitability Forward Looking

14

AGENDA

Malee Group Public Company Limited

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15 Malee Group Public Company Limited | CONFIDENTIAL

Domestic Beverage Market: MAT September 2018

Demand loss remained the key issue across categories. Additionally, tax increase put pressure on consumption and limited category growth. However, value-added products continued to perform well and helped to ease loss.

Value-added trend of Pasteurized Milk (Lactose free) and Less sweet offset loss from demand issues of Soy Milk and UHT milk. Higher price according to sugar tax and tea tax resulted in volume

  • decline. However,

Healthy brands (Less Sweet/ No sugar) performed well. Demand loss across key brands, while positive trend

  • f herbal brands

was observed Demand loss

  • esp. in casual

healthy drink. Demand loss across segments. Increasing price across key brands according to sugar tax impacted on consumption leakage. No Sugar flavors and Sugar Free continued to expand. Meanwhile, regular flavors were stagnant Heavy promotion on big packs was a source of growth across key brands.

Source: Nielsen

Beverage – Sort by Category Size (Value)

Major brands expanded distribution in CVS.

Beverage – Sort by Category Size (Volume)

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16 Malee Group Public Company Limited | CONFIDENTIAL

Domestic RTD Fruit Juice Market

16

Source: Nielsen

MAT Sep 2018 Market Value of 11,721MB, a Decrease of 10% YoY

Malee Group Public Company Limited

Premium Market (100% RTD Fruit Juice) 4,232MB 36% Medium Market (40- 99% RTD Fruit Juice), 1,100MB, 9% Economy Market (20-39% RTD Fruit Juice) 2,521MB 22% Super Economy Market (<19% RTD Fruit Juice) 2,094MB 18% Others 1,775MB 15% (-14% YoY) (-10% YoY) (-11% YoY) (-5% YoY) (-5% YoY)

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17 Malee Group Public Company Limited | CONFIDENTIAL

Domestic RTD Premium Fruit Juice UHT Market Share

17

MAT Sep 2018 Market Value of 3,939MB, a Decrease of 15% YoY

Tipco 28% Malee 20% Unif 12% Doi Kham 21% Cocomax 8% Others 11%

MAT Jun 2017 MAT Jun 2018

Source: Nielsen

Malee Group Public Company Limited

Tipco 29% Malee 20% Unif 13% Doi Kham 19% Cocomax 8% Others 11%

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18 Malee Group Public Company Limited | CONFIDENTIAL

52% 45% 46% 49% 59% 47% 53% 48% 55% 54% 51% 41% 53% 47% 2015 2016 2017 Q3/17 Q3/18 9M/17 9M/18

CMG Brand

Sales Structure

18 CMG: Contract Manufacturing

Domestic : International Business Brand : Contract Manufacturing

  • Domestic Sales
  • Q3/2018 :
  • 20% YoY
  • 9M/2018:
  • 2% YoY
  • Export Sales
  • Q3/2018 :
  • 18% YoY
  • 9M/2018:
  • 27% YoY

Malee Group Public Company Limited

  • Brand Sales
  • Q3/2018 :
  • 4% YoY
  • 9M/2018:

+0.5% YoY

  • CMG Sales
  • Q3/2018 :
  • 35% YoY
  • 9M/2018:
  • 21% YoY

72% 61% 64% 69% 68% 62% 68% 28% 39% 36% 31% 32% 38% 32% 2015 2016 2017 Q3/17 Q3/18 9M/17 9M/18

Export Domestic

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19 Malee Group Public Company Limited | CONFIDENTIAL

9M/2018 Export Branded Sales by Country

19

  • 9M/2018 Export branded expanded

c.20% YoY due to sales recognition from LQSF, a new subsidiary in Vietnam.

  • If excluding LQSF, 9M/2018 Export

branded would drop c.20% YoY, mainly due to flood and sub- distributor changeover in Cambodia, weak sales in China, expired coconut water sales last year, and strong Thai baht compared to the Company’s major export markets.

Malee Group Public Company Limited

Cambodia 26% China 12% Philippines 3% Hong Kong 6% Myanmar 5% Vietnam (LQSF) 33% Others 15%

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20 Malee Group Public Company Limited | CONFIDENTIAL

Company Overview Business Update Results of Operations and Profitability Forward Looking

20

AGENDA

Malee Group Public Company Limited

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21 Malee Group Public Company Limited | CONFIDENTIAL

331 530 286 78 (124) 257 (129)

(130) (30) 70 170 270 370 470 570

2015 2016 2017 Q3/17 Q3/18 9M/17 9M/18

Net Profit

Unit: Million Baht

  • 260%

YoY

  • 150%

YoY

  • Q3/2018 Net profit dropped mainly due to 1) sales decrease; 2) higher cost per unit

as a result of lower utilization rate; 3) higher depreciation; 4) higher excise tax and sugar tax following the Excise Act, B.E. 2560; 5) higher selling expenses from multiple new products launch; 6) sales compensation for branded products; 7) higher R&D expense; 8) higher audit fees and consultant fees from new businesses establishment; and 9) higher finance costs due to higher borrowings as a result of previous investments in machinery, subsidiaries, and joint ventures.

  • In Q3/2018, Domestic branded sales dropped c.15% YoY, mainly due to the drop in

fruit juice sales following the slowdown in fruit juice market, plus high sales base last year resulted from new packaging launched.

  • Domestic CMG decreased c.25% YoY, mainly due to higher excise tax and sugar

tax as well as high sales base last year.

  • Export branded sales grew by c.40% YoY, mainly resulted from LQSF
  • consolidation. If excluding LQSF, sales would drop c.20% mainly due to flood in

Cambodia causing transportation difficulty, weak sales in China, and strong Thai baht compared to the Company’s major export markets.

  • Export CMG sales dropped c.50% YoY, due to a customer ending the distribution

contract with some retailer and Thai Baht strengthening.

Financial Highlights

21

Malee Group Public Company Limited

5,389 6,541 5,916 1,500 1,205 4,384 3,892

1,000 2,000 3,000 4,000 5,000 6,000 7,000

2015 2016 2017 Q3/17 Q3/18 9M/17 9M/18

Sales Revenue

Unit: Million Baht

  • 11%

YoY

  • 20%

YoY

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22 Malee Group Public Company Limited | CONFIDENTIAL

6.1% 8.1% 4.8% 5.1% (10.2%) 5.8% (3.3%)

  • 12.0%
  • 7.0%
  • 2.0%

3.0% 8.0% 13.0%

2015 2016 2017 Q3/17 Q3/18 9M/17 9M/18

%Net Profit Margin

31.4% 32.2% 28.7% 29.7% 20.7% 29.6% 23.6%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%

2015 2016 2017 Q3/17 Q3/18 9M/17 9M/18

%Gross Profit Margin

Profitability Margin

22

  • Lower Q3/2018 %GPM YoY was mainly due to 1) higher cost per unit

as a result of lower utilization rate; 2) higher depreciation; and 3) higher excise tax and sugar tax following the Excise Act, B.E. 2560.

  • Higher Q3/2018 selling expenses to sales YoY was mainly due to

multiple new products launch, sales compensation for branded products, and selling expenses recognition from LQSF which recorded selling expenses to sales of 34.7%.

  • Higher Q3/2018 administrative expenses to sales YoY was mainly due

lower sales but higher R&D expense as well as higher audit fees and consultant fees from new businesses establishment.

  • Lower Q3/2018 %NPM YoY was mainly due to the same reasons as

lower net profit.

Malee Group Public Company Limited

17.4% 14.4% 14.8% 15.7% 22.2% 14.5% 17.5% 7.0% 7.1% 8.8% 7.7% 11.2% 8.6% 10.6%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

2015 2016 2017 Q3/17 Q3/18 9M/17 9M/18

%SG&A to Sales

%Admin/Sales %Selling/Sales

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23 Malee Group Public Company Limited | CONFIDENTIAL

Statements of Financial Position

23

  • Higher total assets were mainly due to LQSF’s assets

recognition of 256MB whose major assets were PPE of

  • 169MB. In addition, the Company recognized goodwill

from acquiring LQSF of 244MB.

  • Higher liabilities were mainly due to an increase in loans

from financial institutions for the Company’s investments and working capital as well as LQSF’s liabilities recognition of Baht 158MB.

  • Decreased equity of parent Company's shareholders

mainly was due to 1) consolidated operating loss during the first half of the year of 129MB; 2) transaction of treasury shares from shareholders’ equity for financial management of 114MB; and 3) dividend payment for the second half of last year’s operating results 69MB.

Malee Group Public Company Limited

3,042 3,640 4,390 4,567

0.0% 50000.0% 100000.0% 150000.0% 200000.0% 250000.0% 300000.0% 350000.0% 400000.0% 450000.0% 500000.0%

2015 2016 2017 Q3/18

Total Assets

Unit: Million Baht

1,788 2,061 2,778 3,226

0.0% 50000.0% 100000.0% 150000.0% 200000.0% 250000.0% 300000.0% 350000.0%

2015 2016 2017 Q3/18

Total Liabilities

Unit: Million Baht

1,250 1,575 1,612 1,295

0.0% 20000.0% 40000.0% 60000.0% 80000.0% 100000.0% 120000.0% 140000.0% 160000.0% 180000.0%

2015 2016 2017 Q3/18

Equity

Unit: Million Baht

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24 Malee Group Public Company Limited | CONFIDENTIAL

  • Lower current ratio and quick ratio was mainly due to a decrease in trade

receivables and inventories but an increase in short-term loans for the use

  • f the Company’s working capital as well as higher current portion of long-

term and investments from the Company’s investments.

  • Increased IBD/E was mainly due to an increase in loans as well as LQSF’s

loans recognition of 96MB. Meanwhile, shareholders’ equity decreased from consolidated loss during the first nine months of the year of 129MB, shares buyback of 114MB, and dividend payment 69MB.

  • Increased D/E was the same reason as higher IBD/E, plus LQSF’s total

liabilities recognition of 158MB.

Liquidity

24

  • Higher cash cycle days was mainly due to longer Inventory days and

collection days.

  • Longer inventory days was mainly due to a new crop season for canned

fruit production.

  • Longer collection days was mainly due to higher portion of branded sales

whose trade terms are longer than CMG sales.

  • Improved payment days was mainly due to higher portion of long credit

term suppliers .

Malee Group Public Company Limited

1.13 0.95 0.91 0.79 0.66 0.50 0.46 0.38

30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 110.0% 120.0%

2015 2016 2017 Q3/18

Current Ratio (x) Quick Ratio (x)

0.68 0.75 1.13 1.90 1.43 1.31 1.72 2.49

0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0% 350.0% 400.0% 450.0% 500.0%

2015 2016 2017 Q3/18

D/E (x) IBD/E (x)

43 32 34 36 57 45 47 49 76 64 80 88 90 77 93 101

0.0% 5000.0% 10000.0% 15000.0% 20000.0% 25000.0% 30000.0%

2015 2016 2017 Q3/18 Cash Cycle Days

  • Avg. Inventory Days
  • Avg. Collection Days
  • Avg. Payment Days
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25 Malee Group Public Company Limited | CONFIDENTIAL

Return to Shareholders

25

  • The Company has a policy to pay dividends at the rate of

not less than 50% of its net profit from normal operation, according to consolidated financial statements after deduction of tax revenue and legal reserve. However, actual payments will depend on cash flows and investment plans of the Company’s and its affiliates as well as other necessities as the Board of Directors deems appropriate.

  • No dividend payment for the operating results during 1

January – June 2018 due to the Company’s operating losses.

Unit: Baht

  • Lower ROA was resulted from operating loss during the

first 9 months of this year.

  • Lower ROE was mainly due to operating losses during the

first 9 months of this year as earlier explained.

Malee Group Public Company Limited

0.750 0.525 0.555 0.600 0.950 0.550 0.000

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%

2012 2013 2014 2015 2016 2017 H1/2018

Dividend per Share

Remark: - Adjusted at par value of Baht 0.50 which is effective on 16 May 2017

  • In H1/2017, the Company paid dividend of Bt 0.30 per share

14.8% 20.4% 8.8% (2.8%)

  • 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

2015 2016 2017 9M/2018

ROA

29.3% 37.5% 17.9% (7.0%)

  • 10.0%
  • 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

2015 2016 2017 9M/2018

ROE

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26 Malee Group Public Company Limited | CONFIDENTIAL

Company Overview Business Update Results of Operations and Profitability Forward Looking

26

AGENDA

Malee Group Public Company Limited

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27 Malee Group Public Company Limited | CONFIDENTIAL

Forward Looking

27

Malee Group Public Company Limited

  • Operating results to remain under pressure in Q4 but should improve QoQ
  • Turnaround in 2019 with target sales growth of 5-10% driven by:
  • Continuation of the current product roll-out
  • Product portfolio renovations
  • New product development
  • New sales business model
  • Securing new customers
  • Our turnaround strategies:
  • Growing production volume
  • Intensified cost reduction measures
  • Cash flow management
  • No investments/ focus on the businesses we have built.
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28 Malee Group Public Company Limited | CONFIDENTIAL

Share Endorsements

28

“Very Good” Level of CG Scoring

Malee Group Public Company Limited

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Thank You

For more information, please visit our website at http://www.malee.co.th

  • r contact us at ir@malee.co.th. Tel: +66 2080 7899 Ext 1137