Mega Lifesciences Public Company Limited (MEGA) Financial year 2018 - - PowerPoint PPT Presentation

We care

Mega Lifesciences Public Company Limited (MEGA)

Financial year 2018

2

We care

Disclaimer

The presentation contains forward-looking statements which are based on MEGAs’ current expectations, estimates and projections about its industry, management’s beliefs and certain assumptions. These forward-looking statements are subject to various risks and

• uncertainties. No assurance is given that future events will occur or that our

assumptions are correct. Actual results may differ materially from those projected. For any further queries please contact: Email : investor@megawecare.com Telephone: +66 27694222 Ext. 4230 Fax: +66 27694244

3

We care

FY18 Financial Highlights Future Outlook Q&A

Agenda

4

We care

Distribution Business Branded Products Business

What we do…

OEM Business

Mega Lifesciences PCL

THB 3,428 mn 48.8% TH373 mn 6.7% THB 2,179 mn 73.6%

We develop, manufacture, market and sell our own brand of market leading nutraceutical products, prescription products and self medication products, mostly sold in developing countries with market leading presence in Southeast Asia and growing presence in Sub- Saharan Africa. We market, sell and distribute various branded prescription pharmaceutical products, OTC and consumer products in Myanmar, Vietnam and Cambodia. Our clients include leading domestic and international pharmaceutical and consumer goods companies. This business also includes products sold in other countries where MEGA has distribution rights for third party products. In addition to manufacturing our

• wn

branded products,

• ur

manufacturing facilities in Thailand and Australia accept various production orders from third-party customers.

*

* The information under this segment includes products where we own perpetual license to third party trademarks and new projects which are at their nascent stage.

5

We care

Gr. 6.7% Gr. 14.5%

Gr. (39.4%)

Gr. 7.8%

• Mega We Care branded products revenue grew by

6.7% YoY in FY18; mainly driven by 6.9% YoY growth in Southeast Asia.

• Maxxcare distribution business revenue was up by

14.5% YoY in FY18; driven by growth in Myanmar.

• OEM revenue which was 2.7% of overall operating

revenue was down by 39.4% YoY, given lower order book.

Revenue up by 7.8% YoY

Overall revenue growth driven by Maxxcare and Mega We Care business.

Operating revenues (THBmn)

9,597 10,342

Mega We Care Maxxcare OEM

6

We care

A closer look at revenue growth..

• Southeast Asia constituted 87% of the overall operating revenue

while Indochina contributed 79% in FY18.

• Mega We Care revenue grew by 6.7% YoY in FY18, mainly driven

by growth of 6.9% YoY in Southeast Asia.

• Mega We Care revenue as a proportion to overall operating was

52% in FY18 and 53% in FY17 while Maxxcare revenue proportion increased from 42% in FY17 to 45% in FY18. Revenue by geography (THBmn)

Mega We Care revenue Southeast Asia Africa Others

Gr.+ 6.7% Gr.+ 6.9% Gr. (2.2%) Gr.+ 17.0%

Revenue mix (%) across segments

Mega We Care Maxxcare OEM

4,064 4,344 5,417 5,078 589 576 424 496

7

We care

• Overall gross margins mostly remained steady at

44.4% in FY18 compared to 45% in FY17; slight decline in overall gross margins was mainly a result

• f change in revenue mix.
• Looking by segments:
• Mega We Care gross margin in FY18 and FY17

remained stable at 64.8%.

• Maxxcare gross margins came in at 21.5% in

FY18 compared to 22.4% in FY17; change was mainly led by principal and service mix.

• OEM gross margin was 30.2% in FY18

compared to 26.5% in FY17; improvement mainly led by customer mix.

Steady overall gross margins ….

Overall gross margins are influenced by segmental gross margins and revenue mix in the given period

Overall gross margin (%)

8

We care

• SG&A expense came in at 31.4% of operating

revenue in FY18 compared to 30.9% in FY17.

• In absolute terms, SG&A expenses were

slightly higher, growing by 9.4% YoY in FY18, mainly due to planned marketing spending and strengthening resources to support growing distribution business which is expected to leverage as revenue scales up.

Slightly higher SG&A expenses expected to ease with scale up in revenue….

SG&A as a percentage to revenue

9

We care

Net profits for FY18 came in at THB 1,206mn reflecting a growth of 8.4% YoY; adjusting for one-time gain of THB 62mn arising from sale of land in FY18, the net profit stood at THB 1,144mn, reflecting growth of 2.8% YoY; modest growth in FY18 was partly a result of relatively higher SG&A expenses to support growing distribution business which is expected to leverage as business scales up in ensuing year. Board of Directors proposed final dividend of THB 40 satang per share taking FY18 dividends to 71 satang per share representing 51.1% of FY18 net profits. New projects caused a net outflow of THB 28mn in FY18.

Net profits continue to grow…..

Figures inTHBmn

4Q17 3Q18 4Q18 YoY Gr. FY17 FY18 YoY Gr. Operating revenue

2,699 2,635 2,869

6.3%

9,597 10,342

7.8%

Gross profits

1,262 1,100 1,308

3.6%

4,320 4,591

6.3%

Gross margin (% )

46.8% 41.8% 45.6% 45.0% 44.4%

Selling and Admin. exp (SGA)

790 845 839

6.2%

2,965 3,243

9.4%

SGA (% to operating revenue)

29.3% 32.1% 29.2% 30.9% 31.4%

EBITDA

499 352 522

4.7%

1,479 1,595

7.9%

Profit before tax

455 302 470

3.4%

1,299 1,409

8.5%

Net profit

384 254 407

5.9%

1,113 1,206

8.4%

Add: New project expenses

8 7 7

na

26 28

na

Adjusted net profit

393 261 415

5.6%

1,139 1,234

8.4%

10

We care

123 135

Dec'17 Dec'18

• Operating cash remained steady at THB 919mn in FY18 compared to THB

927mn in FY17.

• Capex spending in FY18 of THB 769mn consisted, spending towards

construction of state-of-art distribution center in Myanmar and in Thailand towards construction of warehouse and rebuilding product development and quality control center. THB 258mn was spent towards investment in MEGA MSN joint venture and THB 295mn towards acquisition of ownership rights in designated pharmaceutical products in Myanmar and Ethiopia.

• In FY18, net cash outflow from financing activities was THB 177mn, mainly

arising from dividend payout of THB 615mn, partially off-set by increase in working capital loans.

Strong balance sheet and healthy cash flows

671

Cash cycle days of 135 days in Dec’18 compared to 123 days in Dec’17. Increase was mainly a result of higher inventory days driven by business growth and expected demand in 4Q18

1.Cash and bank balance includes non -restricted term deposits with banks.

Cash cycle (days) Cash flow1 THBmn Interest bearing to debt to equity stood at 0.17 times and net-debt to equity at (0.03) times as at December’18

Leverage ratios Dec'17 Dec'18 IBD to equity (times) 0.10 0.17 Net-debt to equity (times) (0.13) (0.03)

11

We care

Future Outlook... The future of our past and present ….

2014 1994

Became the largest OEM supplier of soft gel caps

• ut of Southeast Asia

Mega We CareTM Branded Products Business

MaxxcareTM Distribution Business

1985

OEM Business

Achieved leadership position in Indochina Became leading international distribution company in Myanmar, Vietnam and Cambodia

Expect to double business

Nutraceutical, OTC and prescription products Pharma and consumer products

Expect to double business

2019

12

We care

Future Outlook... Mega We CareTM branded products business

• Emerging trends in consumer health care, disease prevention than

struggling for cure is the way forward ….. a sunrise industry.

• Market leading positions in Southeast Asia and growing presence in Sub-

Saharan Africa.

• Products sold in developing countries which are underpenetrated markets

with significant growth opportunities.

• 342 unique products and 1,077 product registrations across the world.

Strong pipeline of 73 new products under registrations and 59 new products under development.

• Manufacturing capacity adequate to meet growth requirements of

ensuing 3-4 years.

• A strong balance sheet with net cash position and business generating

healthy cash flows.

• Fundamental growth drivers in place to help deliver the expected growth.

MEGA expects to grow by expansion

• f customer base

in its existing underpenetrated developing markets, launching new products, strengthening product categories, acquisitions and entering new

• countries. Create

significance in SEA and Sub-Saharan Africa.

MEGA plans to invest over 500 million baht in Thailand to rebuild R&D and quality control center, develop new technologies for medicine delivery and improve supply chain integration by constructing a new warehouse next to existing manufacturing plant. Work has begun and a capex of THB 425mn (out of total planned capex) is expected to be spent

• ver 2 years besides improvement and maintenance capex.

Improvement and maintenance capex to be incurred in addition to aforementioned capex.

Notwithstanding tremendous future opportunity. Due to the nature of the industry and the markets we are in, growth may not be a straight line up but with occasional disruptions that may be caused by economic, political and other factors.

13

We care

Future Outlook... MaxxcareTM distribution business

MEGA expects to capture the strong growth potential offered by Myanmar, given MEGA’s leadership position as a distributor of pharma and consumer products and providing world class distribution service to our customers.

MEGA now has a state-of-art, first of its kind, own distribution center in Myanmar which got commercialized in 3Q18. Work on a new office space has begun and is expected to come up by 2019. An approximate outlay of THB 150mn may be spent in 2019.

Notwithstanding tremendous future opportunity. Due to the nature of the industry and the markets we are in, growth may not be a straight line up but with occasional disruptions that may be caused by economic, political and other factors.

MYANMAR

• Largest market with significant historic growth and future opportunities …
• Pharma market size at 1/10 of Thailand.
• Leading multinational and regional companies as its principals.
• Infrastructure and capabilities in place to support future growth in business:
• Coverage to more than 85% of geographical area.
• Access to more than 40,000 outlets.
• More than 1,800 employees.
• Robust information system and market intelligence in place.

VIETNAM AND CAMBODIA TO GROW WITH INDUSTRY.

14

We care

Investment promoting sustainable growth and enhancing competiveness…

MEGA Lifesciences enters into JV with MSN Laboratories to start a world class pharmaceutical manufacturing plant in Myanmar

THB 473 mn 6.7% THB 2,179 mn 73.6%

MEGA Lifesciences Public Company Limited enters into 50:50 Joint venture with MSN Laboratories Private Limited (India) to start a world class pharmaceutical manufacturing plant in Myanmar to manufacture active pharmaceutical ingredients (API) and finished products.

Joint venture

This Joint venture is part of our commitment to provide best in class new innovative and quality medicines at affordable prices to our customers in under-developed markets while keeping us competitive in the ever changing market landscape. Construction of manufacturing plant to begin in 2019 and start producing by 2022 Initial project cost of USD 36mn to be equally funded over 2018/22 by internal accruals/IPO funds and debt

MSN to bring scientific know-how and manufacturing capabilities while MEGA to leverage on its geographic presence, marketing and regulatory strength…

The project

First of its kind manufacturing plant in Myanmar, reinforcing our long term commitment to the country and ASEAN Access to advanced/sophisticated pharma products relating to

• ncology (cancer), diabetes

amongst others which is difficult to have.. Sell best quality products at affordable prices in under- developed markets

Benefits

15 

Acquisition at best value



Net cash



Low cost of funding



Healthy operating cash flows averaging over 104% of net profits



Improved return on equity



Steady dividend payouts



Steady cash cycle



Insignificant forex exposure to revenue



Insignificant inventory and bad debts write-off



Low effective tax rates



Received best tax payer award



EPS CAGR of 22% during 2014- 18



Dividend payouts averaging

• ver 52% of net profits

Strong fundamentals..….

Figures in THBmn

2014 2015 2016 2017 2018

Strategic and balance sheet:

Acquisitions (price to sales mtpl) na na 1.5 na 1.8 Net cash/(debt)

714 748 547 662 174

Net finance (cost)/income

16 (8) (10) (21)

Cost of debt (% per annum)

1.4 1.3 3.4 3.8 5.8

Operating cash flow

614 609 1,250 927 919

Operating cash to net profits (%)

112.1 87.6 157.2 83.3 80.3

Return on equity (%)

14.3 16.7 17.6 22.4 22.0

Dividend payout (% to net profits)

55.3 49.7 51.2 54.4 51.1

Cash cycle (days)

121 129 121 123 135

Efficiency:

Net forex gain/loss to revenue 0.2% 0.6% 1.0% 0.7% 0.1% Bad debts to revenue 0.0% 0.4% 0.1% 0.1% 0.0% Provsisions for inventory to revenue 0.2% 0.2% 0.4% 0.3% 0.0% Corporate tax rates to PBT 14.1% 16.0% 14.8% 14.3% 14.4%

Earning per share (THB) 0.6 0.8 0.9 1.3 1.4

16

We care

Time for your questions

If we aren’t able to answer your question due to limited time at this forum or for some reason you couldn’t ask your question, you are welcome to call us or send E-mail.