OPPORTUNITY DAY Q3/2014 AAPICO HITECH PLC [AH] Financial Performance - - PowerPoint PPT Presentation

OPPORTUNITY DAY Q3/2014

The Stock Exchange of Thailand

AAPICO HITECH PLC [AH]

Financial Performance for the 3rd quarter of 2014

• Ms. Yeap Xin Rhu

December 8th, 2014

Agenda

3

1. Company Profile 2. Industry Overview 3. Financial Performance 4. Strategy and Direction

Company Profile [AH]

4

• Established in 1996 and listed on SET in 2002.
• Main businesses are the manufacturing of

automobile parts, design, produce and install assembly jigs and stamping dies, as well as car dealership and car navigation businesses.

• Comprised of 35 companies (24 subsidiaries

and 11 associates) in Thailand, Malaysia and China.

• Registered and paid-up capital of Baht 322.58

million, comprised of 322,583,844 ordinary shares at par value of Baht 1 each. AAPICO HITECH PUBLIC COMPANY LIMITED

Industry/Sector : Auto Average price : Baht 17.20* 52 weeks range : Baht 12.80 – 15.24 Market Cap : Baht 4,774 million P/E (YTD) : 14.17x* P/BV : 0.87x Dividend yield : 3.31%

* Data as of December 1st, 2014

Shareholding Structure

5

AH’s main shareholders are Mr. Yeap Swee Chuan and family holding 39.75% of total outstanding shares and Sojitz Corporation holding 15.76% of total outstanding shares.

* Data as of March 28th, 2014

Company Milestones

6

1985

Started as Ford Assembler and Distributor.

1995

Produced fuel tanks for Ford and Mazda pick ups.

1997

Established 1st JV with Sanoh Japan and a factory in Hitech Industrial Estate, Ayutthaya.

2002

Listed on SET.

2003

Purchased AAPICO Amata from Dana Corp., USA.

2004

Expanded to China with Kunshan Chaitai-Xincheng Precision Forging acquisition.

2005

Strategic partnership with Sojitz Corp., Japan

2006

Acquired Able ITS and set up AAPICO Hitech Parts

2007

Acquired KPN and renamed AAPICO Forging.

2008

Established JV with Minth Corp., China.

2009

Established AAPICO Structural Products.

2010

AAPICO 25th Anniversary and established JV with Thai Takagi Seiko.

2011

Completed Honda 3S showroom in Malaysia.

2012

Kunshan new factory in operation.

2013

Establish 4 JVs with Lemtech, Edscha, Sumino and Sodecia.

AAPICO’s Vision

7

Where do we want to go? How do we want people to remember us?

MANUFACTURING RESEARCH & DEVELOPMENT CAR RETAILING

LEAN, GREEN AND HAPPY WORLD-CLASS CORPORATION

S – Safety Q – Quality C – Cost D – Delivery E – Engineering M - Management

Happy Customers Happy Employees

Teamwork Look at problems as opportunities Love Family, Company and Country Loyalty and Honesty Mutual Respect

Happy Public

Corporate Social Responsibility

Happy Shareholders

Profitability Reasonable Dividend

Business Segment

8

Manufacturing of Automobile Parts Car Dealerships Car Navigation

1 2 3

Sales breakdown by Segment

Business Segment

9

Manufacturing of Automobile Parts Car Dealerships Car Navigation

1 2 3

OEM Automobile Parts Assembly Jigs and Stamping Dies (Project base)

Business Segment

10

Manufacturing of Automobile Parts Car Dealerships Car Navigation

1 2 3

Ford Dealer Thailand Mitsubishi Dealer Thailand Honda Dealer Malaysia

Business Segment

11

Manufacturing of Automobile Parts Car Dealerships Car Navigation

1 2 3

Global Operations

12

CHINA

Production: 2 factories Process: Forged & Machined parts Products: Connecting rods

Malaysia

Productions: 5 companies Process: Car dealership & Navigation Products: Honda, POWERMAP

Sales by Country

9M14 9M14,

9M13, 9M13 9M12,

Locations in Thailand

13

Bangkok Ayutthaya Rayong Chonburi Samutprakan

Production : 5 factories Products : Stamping Dies, Jigs, and Stamping parts, and Car navigation Production : 3 factories Products : Chassis Frames, Forged and machined parts.

Production :1 factory Products : Plastic parts

Production : 2 factories Products : Stamping parts and Plastic parts

Mitsubishi Dealers: Ramindra Navanakorn Ford Dealers: Ladprao Samutprakarn

Our Partners

14

Technical Partners

Joint Ventures

Strategic Shareholder

Our OEM Customers

15

Top OEM Customer Profile

1. Auto Alliance (Thailand) Co., Ltd – a JV between Ford and Mazda. 2. SAIC-GM-Wulling Automobile – a JV between SAIC, GM and Liuzhou Wuling, based in China.

ISUZU 44% AAT 1 1 4% NISSAN 1 3% SGMW 2 4% TOYOTA 3% OTHERS - PARTS 22%

Jan-Sep 201 4

Achievements in 2014

16

Agenda

17

1. Company Profile 2. Industry Overview 3. Financial Performance 4. Strategy and Direction

0.29 0.38 0.47 0.60 0.82 0.87 0.95 0.97 0.67 1 .07 0.90 1 .45 1 .33 1 .04 0.85 0.1 6 0.1 7 0.25 0.30 0.28 0.30 0.32 0.40 0.31 0.55 0.54 0.96 1 .07 0.85 0.55 1.9

0.0 0.5 1.0 1.5 2.0 2.5 3.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 9M13 9M14

Forecast Others Passenger Car 1-Ton Pick-up/PPV

Thailand Automotive Production (Year)

18

Source: The Federation of Thai Industry (Automotive Industry Club) Unit: Million

 For Jan-Sep 2014, Thailand vehicle production volume declined year-on-year by 27%, from 1.93 million units to 1.41 million units. The production of passenger cars was 548,758 units (-36% y-o-y) and 1-Ton pick up was 845,303 units (-18% y-o-y).

Global Financial Crisis Flood

• 27.0%

Thailand Automotive Production (Qtr)

19

Source: The Federation of Thai Industry (Automotive Industry Club) Unit: Million

 In Q3’14, the vehicle production volume increased from Q2’14 by 5% to 456,435 units, but was 22.5% or 132,864 units below Q3’13. Compared to last year, the production of passenger cars and 1-Ton pick up declined by 31.5% and 13.1% respectively.

0.26 0.25 0.28 0.28 0.28 0.21 0.29 0.11 0.35 0.33 0.37 0.40 0.38 0.34 0.32 0.30 0.31 0.26 0.27 0.11 0.13 0.15 0.16 0.18 0.12 0.18 0.06 0.14 0.22 0.28 0.32 0.33 0.27 0.26 0.22 0.21 0.17 0.18

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Others Passenger Car 1 -Ton Pick up / PPV

• 22.5%

Flood 2011

Thailand Total Industry Volume (Year)

20

Unit: Million

 Thailand Total Industry Volume for Jan-Sep 2014 was 648,410 units, compared to 1,034,279 units sold in Jan-Sep 2013. Compared to last year, the passenger car sales decreased by 45% and 1-Ton pick up car sales decreased by 31%.

0.1 7 0.24 0.31 0.37 0.47 0.45 0.41 0.33 0.28 0.39 0.37 0.67 0.59 0.45 0.31 0.1 0 0.1 3 0.1 8 0.21 0.1 9 0.1 9 0.1 7 0.23 0.23 0.35 0.36 0.67 0.63 0.50 0.27

0.9

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 9M13 9M14

Forecast Others Passenger Car 1-Ton Pick up/PPV

Global Financial Crisis Flood

• 37.3%

Source: The Federation of Thai Industry (Automotive Industry Club)

Thailand Total Industry Volume (Qtr)

21

Unit: Million

 Total industry volume declined by 4.3% compared to Q2’14 to 207,499 units in Q3’14 and was 29.3% below the sales volume of 293,484 units in Q3’13. Both passenger sales and 1- ton pick up car sales declined year-on-year by 38.3% and 20.4% respectively.

0.09 0.09 0.09 0.12 0.11 0.09 0.11 0.05 0.16 0.15 0.18 0.19 0.18 0.15 0.12 0.14 0.11 0.10 0.10 0.07 0.09 0.09 0.11 0.11 0.09 0.11 0.06 0.10 0.16 0.19 0.22 0.20 0.15 0.15 0.13 0.09 0.09 0.09

0.0 0.1 0.1 0.2 0.2 0.3 0.3 0.4 0.4 0.5 0.5

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Others Passenger Car 1 -Ton Pick up/PPV

• 29.3%

Source: The Federation of Thai Industry (Automotive Industry Club)

0.18 0.18 0.24 0.33 0.44 0.54 0.69 0.78 0.54 0.90 0.74 1.03 1.13 0.85 0.84 1.0

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 9M13 9M13

Total Export Volume (Year)

22

Unit: Million

 Total export volume of the first nine months of 2014 was 838,952 units, which was 1% lower than the export volume in Jan-Sep 2013.

Global Financial Crisis Flood

• 1.0%

Source: The Federation of Thai Industry (Automotive Industry Club)

Agenda

23

1. Company Profile 2. Industry Overview 3. Financial Performance 4. Strategy and Direction

Financial Highlights

• Revenues were 8.% below last year, lower

than the industry decline of 27%, thanks to growth in car dealerships in Malaysia.

• Gross margin % declined y-o-y, mainly due

to high level of fixed costs and increases of sales in car dealerships.

• SG&A decreased y-o-y, in line with lower

sales in automotive parts segment.

• Income from associates decreased y-o-y,

mainly from Hyundai and recent JVs.

• Interest and tax expenses declined, due to

lower debt and lower taxable income.

• Net profit margin in Jan-Sep 2014 was

3.0% compared to 4.9% in Jan-Sep 2013.

24

Jan-Sep 2014 Highlights

In Million Baht

Jan-Sep 2012 Jan-Sep 2013 Jan-Sep 2014 Revenues

Growth%

11,783

+34%

12,659

+7%

11,599

• 8%

GM

GM%

761

6.8%

915

7.5%

499

4.5%

SG&A 688 652 566 Associate 193 197 108

• Int. & Tax

258 239 176 Net Profit

NP%

550

4.6%

623

4.9%

353

3.0%

ROE (%)*

• 2.8%

19.1% 6.5% ROA (%)*

• 0.9%

7.3% 2.9% D/E (x) 1.24 0.91 0.67

* ROE and ROA is calculated based on 12 months trailing.

9,513 7,366 11,758 10,786 16,811 16,998 12,659 11,600 230 (116) 394 (392) 927 634 623 353 (3,000) 2,000 7,000 12,000 17,000 22,000 2008 2009 2010 2011 2012 2013 9M13 9M14

Total Revenues Net Profit

Revenues & Net Profit : YTD Jan-Sep

25

Net Profit % 2.4%

• 1.6%

3.4%

• 3.6%

5.5% 3.7% 4.9% 3.0% Sales Growth%

• 2%
• 23%

+60%

• 8%

+56% +1% +7%

• 8%

Note: 2013 results included Bt.903 m. insurance income and Bt.852 m. impairment loss; 2012 results included Bt.145 m. insurance income.

Global Financial Crisis Flood

Unit: Million Baht

3,173 4,049 4,561 5,028 4,685 4,047 3,927 4,338 3,692 3,869 4,039 12,659 11,600

• 2,000

4,000 6,000 8,000 10,000 12,000 14,000

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 9M13 9M14

Auto Parts Dealers Other income Insurance

Total Revenues : AAPICO Group

26

 Q3 Revenues increased 4% q-o-q, in line with the industry wide growth of 5%., attributable to higher sales in auto parts segment.  Compared to last year, sales grew 3%, driven by growth in car dealerships in Malaysia.

 For Jan-Sep 2014, total revenues were 8% lower than Jan-Sep 2013, which was better than the industry decline of 27%, supported by higher sales in car dealerships in Malaysia.

Unit: Million Baht

9M12, 79% 9M12, 21% 9M13, 73% 9M13, 27%

9M14, 62% 9M14, 38%

Auto Parts Dealers

2,469 3,032 2,943 3,559 3,295 2,919 2,708 2,139 2,336 2,086 2,487 8,922 6,909 613 324

• 2,000

4,000 6,000 8,000 10,000 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 9M13 9M14

Sales EBIT

Performance : Automobile Parts

27

Unit: Million Baht

 For Jan-Sep 2014, auto parts sales were 22.6% below last year, compared to the industry decline of 27.0%. For Q3’14, sales increased 19% q-o-q, driven by industry growth and project sales, however, Q3 sales were 8% below last year.  EBIT for Jan-Sep 2014 decreased y-o-y, largely due to lower sales. As percentage of sales, EBIT margin dropped to 4.7% of sales, compared to 6.9% of sales for Jan-Sep 2013.

TH 92% CN 8%

Jan-Sep 201 4

534 902 1,361 1,320 1,248 983 1,104 1,231 1,238 1,548 1,416 3,335 4,202 52 98

• 1,000

2,000 3,000 4,000 5,000 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 9M13 9M14

Sales EBIT

Performance : Car Dealerships

28

Unit: Million Baht

 For Jan-Sep 2014, car dealerships sales grew 26%, driven by strong growth in Malaysia (+45%). Thailand sales were in line with last year. For Q3’14, sales slightly down 9% q-o-q but were still 28% higher than last year.  EBIT for Jan-Sep 2014 increased Baht 46 million y-o-y, driven by higher sales. EBIT margin also improved to 2.3% of sales, compared to 1.6% of sales for Jan-Sep 2013.

TH 33% MY 67%

Jan-Sep 201 4

2.1% 4.5% 5.4% 5.8% 6.2% 5.0% 3.7% 1.1% 4.4% 3.3% 3.2% 5.0% 3.6% 7.7% 10.8% 10.5% 10.7% 10.0% 10.4% 8.5% 6.3% 9.2% 7.9% 7.6% 9.7% 8.2%

0.0% 4.0% 8.0% 12.0% 16.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 9M13 9M14

EBIT% EBITDA%

243 436 478 538 470 422 334 274 341 305 307 1,226 953

• 200

400 600 800 1,000 1,200 1,400 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 9M13 9M14

EBIT Insurance/Impairment Depreciation

EBITDA

29

Unit: Million Baht or as % of revenues

3.2% 6.8% 3.8% 7.5% 6.1% 4.7% 3.8% 0.3% 4.2% 2.8% 2.3% 4.9% 3.0%

0.0% 3.0% 6.0% 9.0% 12.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 9M13 9M14

Net Profit% Net Profit% (excl. insurance/impairment)

100 276 174 377 284 189 150 11 154 107 92 623 353

• 200

400 600 800 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 9M13 9M14

Net Profit (Core) Associate Income Insurance/Impairment

Net Profit

30

Unit: Million Baht or as % of revenues

9.0% 7.1% 8.0%

• 9.5% -9.1% -3.5% -2.7%

18.7% 21.4% 19.1% 18.5% 11.6% 9.0% 7.5% 6.4%

• 80%
• 60%
• 40%
• 20%

0% 20% 40% 60% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 ROE (In the Quarter) ROE (Seasonally adjusted)

Return on Equity

31

 Return on Equity (ROE) decreased to 6.4% in Q3’14, compared to 7.5% in Q2’14, due to lower profit, in line with the slowdown of automotive industry. The ratio in Q3’13 at 18.5% included positive impact of the tax rebate scheme for first-time car buyer.

3.6% 2.8% 3.0%

• 3.4% -2.9% -1.1% -0.9%

6.7% 8.0% 7.4% 7.6% 5.0% 4.0% 3.3% 3.0%

• 30%
• 20%
• 10%

0% 10% 20% 30% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 ROA (In the Quarter) ROA (Seasonally adjusted)

Return on Assets

32

 Return on Asset (ROA) as of Q2’14 was 3.0%, compared to 3.3% as of Q2’14 and 7.6% as of Q3’13. Lower profit was the main reason of the ratio decline.

Interest Coverage Ratio

33

3.80 3.16 3.30 (0.25) (0.26) 0.61 0.70 4.34 5.00 4.77 4.69 3.59 3.17 2.94 2.87

• 10.0
• 5.0

0.0 5.0 10.0 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Interest Coverage Ratio (In the Quarter) Interest Coverage Ratio (Seasonally adjusted)

 Interest Coverage Ratio decreased from 4.69x as of Q3’13 and 2.94x as of Q2’14 to 2.87x as of Q3’14. The ratio decline was mainly due to the decrease of profit, which was more than the lower financing costs.

Capital Structure

34

Unit: Million Baht

Interest-bearing Debt

Total bank debt decreased Baht 558 million during Q3, mainly in short-term, to Baht 3.8 billion as of Sep’14, compared to Baht 4.9 billion as of Sep’13.

Net interest-bearing debt to equity ratio as end of Sep’14 declined to 0.67x, in line with the plan to reduce bank

• loans. Total debt to equity ratio as of Sep’14 declined to

1.12x compared to 1.41x in Sep’13.

Short

• term

19% CP- LTD 37% Long- term 47%

0.93 1.20 1.07 1.00 0.97 0.91 0.85 0.78 0.77 0.67 1.36 1.72 1.74 1.64 1.52 1.41 1.25 1.23 1.18 1.12

• 0.4

0.8 1.2 1.6 2.0

• 1,000

2,000 3,000 4,000 5,000 6,000 2010 2011 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Cash & Current Inv. Debt Equity D/E (L-C)/E

1,649 1,145 1,237 734 387 491 387

• 200

400 600 800 1,000 1,200 1,400 1,600 1,800 2010 2011 2012 2013 2014F 9M13 9M14

Capex Forecast

Capital expenditures

35

Capital expenditures for the first 9 months

• f 2014 were Baht 387 million, compared to

Jan-Sep 2013 capex at Baht 491 million. Lower capex was in line with the investment plan for the year 2014. Capital expenditures in Q3’14 were Baht 157 million compared to Baht 143 million in Q3’13.

167 181 143 243 197 34 157

• 50

100 150 200 250 300 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14

Capex

CAPEX (Annual)

CAPEX (Quarter)

450

Agenda

36

1. Company Profile 2. Industry Overview 3. Financial Performance 4. Strategy and Direction

Thailand Automotive Outlook

37

0.5 0.6 0.8 0.9 1.1 1.2 1.3 1.4 1.0 1.6 1.5 2.5 2.5 1.4 0.5 2.2 2.6 3.0

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Production Forecast Domestic Export

Source: The Federation of Thai Industry (Automotive Industry Club)

Global Financial Crisis Flood

Source: The Federation of Thai Industry (Automotive Industry Club)

 The forecasted vehicle production volume for 2014 had been revised down, from 2.1 million units to about 1.9 million units, with estimated full year domestic car sales at around 900,000 units and export car sales at around 1,000,000 units.

Business Strategy

38

To be a leading automobile parts manufacturer in Asia, a Thailand footprint for world-class global manufacturer.

ASIA

EUROPE

AMERICA

JAPAN

CHINA INDIA

THAILAND MALAYSIA PHILLIPPINES INDONESIA

Finance Strategy

39

Profita- bility Liquidity Equity

Maximize shareholder value

Shareholder portfolio and generate return to shareholders Portfolio diversification Cash flow management Improve profitability through margin management

Disclaimer

40

Some statements made in this material are forward-looking statements with the relevant assumptions, which are subjected to various risks and uncertainties. These include statements with respect to our corporate plans, strategies, and beliefs and other statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, “intend”, “estimate”, “continue”, “plan” or other similar words. The statements are based on our management’s assumptions and beliefs in light of the information currently available to us. These assumptions involve risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Please note that the company and executives/staffs do not control and cannot guarantee the relevance, timeliness, or accuracy of these statements. AAPICO HITECH PLC ir@aapico.com Tel: 66 (0) 2613-1504