Polyplex (Thailand) PLC (PTL) February 26 th , 2018 Third Quarter - - PowerPoint PPT Presentation

Third Quarter 2017 - 2018 Financial Results & Summary Polyplex (Thailand) PLC (PTL)

February 26th, 2018

Content

• Highlights*
• Overview
• PET Industry Overview
• Polyplex Positioning
• Strategy
• Financial Performance*
• Future Outlook

* PTL consolidated basis

• This presentation may contain forward-looking statements which

are based on the Company’s current expectations and estimates about the industry, the management’s beliefs and various other

• assumptions. These forward-looking statements are subject to

various risks, uncertainties and other factors, some of which maybe beyond our control. No assurance is given with regards to future events or the actual results, which may differ materially from those projected herein.

• This presentation does not constitute an offer to sell or a

solicitation of an offer to buy or sell PTL stock and in no event shall the Company be held responsible or liable for any damages or lost

• pportunities resulting from use of this material

Highlights

Highlights

Actual Number YoY Growth Actual Number YoY Growth

Q3 FY 17-18

EBITDA* 587 MN THB Net Profit* 357 MN THB RoCE 12.05% RoE 13.85%

48% 176% 129% 156%

Q3 FY 16-17

EBITDA* 396 MN THB Net Profit* 129 MN THB RoCE 5.26% RoE 5.41%

YTD Q3 FY 17-18

EBITDA* 1,727 MN THB Net Profit* 1,059MN THB RoCE 11.85% RoE 13.71%

9% 28% 18% 19%

YTD Q3 FY 16-17

EBITDA* 1,591 MN THB Net Profit* 827 MN THB RoCE 10.05% RoE 11.56%

*Normalized for Forex gain/(loss)

Manufacturing Locations USA Mexico China Thailand Malaysia India Turkey South Korea Representative Office Warehouse Netherlands Singapore Indonesia Upcoming Manufacturing Location

• Six Manufacturing

Facilities in 5 Countries

• Multiple warehouses

and Rep offices around the world

Polyplex – A Global Local Company

Parent Company Manufacturing Location

Polyplex Group Overview

Polyplex Business at a glance

Polyester Film

Polyester Film Resin Functional/ Extrusion Coatings CPP Blown Film (PE/PP)

Core Business Upstream Integration Downstream Integration Related Diversification

PET Film Recycling BOPP

Polyplex Group Overview

Polyplex Corporate Structure

Polyplex Corporation – India (Listed) Polyplex Thailand (Listed) Polyplex USA Polyplex Turkey Polyplex Indonesia Plant Khatima, India Plant Bazpur, India

Polyplex Group Overview

55 42 58 31 44 29 35 10 9 78 81 58 58 73 29 22 18 10 6 270 865 146 100 200 300 400 500 600 700 800 900 1000

• 10

20 30 40 50 60 70 80 90 100 Base Film PET Film Resin MET Film Coated Film Base Film PET Film Resin MET Film Coated Film Base Film PET Film Resin MET Film Coated Film Base Film PET Film Resin MET Film Base Film PET Film Resin MET Film India Thailand Turkey USA Indonesia PET-Thin PET-Thick BOPP CPP Blown PP PET Film Resin Metallizer Coated Films

Capacity Layout

MN SQM for Coated Film KMT for all other films

Parent Company Capacities Upcoming Expected Capacities

Polyplex Group Overview

Polyester Value Chain

Refinery Steam Cracker Aromatics Plant

Crude Oil/ Natural Gas

PTA Plant MEG Plant Polyester Resin Plant PET Yarn PET Preform PET Film Consumer Staple Electrical Photovoltaic Window Protection Electronics Coated Film Met PET Film

Refining and Energy Upstream Petrochemicals PET Resin, Yarn and Preforms PET Film Consumer and Industrial Goods

PET Film Industry

Polyester Film Applications

Sachet Pack Ready 2 Eat Pack Spouted Pack Aroma Pack Easy Peeling Lids Can Lamination Stand Up Pouch Susceptor Film Electrical Grade Window Films Electronic Grade PV Backsheets Graphics Construction Liner Grade Optical Grade

P A C K A G I N G I N D U S T R I A L

• Growing urbanization and developing societies

Ø Growth rates 6 – 7% for more than 25 years and expected to continue at the same pace for foreseeable future

• Food packaging is consumer staple and is

recession proof to a large extent

• Low packaging cost compared to product cost
• Significantly low carbon footprint compared to rigid

packaging

• New applications keep getting invented for PET

films keeping the demand evergreen for PET films

Ø Film for LCD, multi – layered capacitors, photovoltaic cells, flexible electronics, smartphones etc.

• High technological barriers to entry in the industrial

uses of PET film

Ø High and complex technical specifications Ø High risk perception owing to very high ratio of final product cost to PET film cost

PET Film Industry

PET Film Industry Structure

• Polyplex: World Leader in PET Film Production

ØGlobally 5th largest producer of PET film ØLargest producer in SEA ØLargest producer in Greater Europe

Others, 24% 42% 11% 9% 7% 7% Top 5, 76% China India South Korea Japan USA Others, 54% 7% 6% 5% 5% 4% 4% 4% 4% 4% 3% Top 10, 46% Jiangsu Shuangxing Toray Advanced Uflex Industries SKC Polyplex Mitsubishi DuPont-Teijin Jiangsu Sanfangxiang Hengli Group Kolon Industries

Producer wise estimated Production 2017 Country wise estimated Production 2017 Oligopolistic Technologically Advanced

PET Film Industry

Polyplex: At the forefront of Evolution of PET Technology

Specification Unit 2003 2005 2010 2019 Line Speed Meters per min 400 460 550 650 Final Width Meters 7.2 8.7 8.7 10.6 Layers NA ABA ABC ABA ABC Polyplex Investment NA 1st ever in the world 2nd ever in the world 1st ever to

• perate at

> 500 mpm with DMC 1st ever in the World

Layer 1 Layer 2 Layer 3

Polyplex: Leading Player in the industry

Enviable Positioning

• Only player with manufacturing presence in Southeast Asia, India, Greater

Europe and North America

• Widest Product Range

ØPolyester, Polypropylene, Polyethylene ØExtrusion Coating, Silicone coating, offline coating, Aluminum coating

• Polyester film line with integrated resin production
• Profitable mix of specialty and standard products

ØGrowing portfolio for specialty (bottom line focus) ØGrowing capacity for standard (topline focus)

• One of the largest customer bases in the industry

Polyplex: Leading Player in the industry

Production Quantities: Base Film

All plants running at full capacity for last few years; the increase in production in FY 17 – 18 attributable to debottlenecking of plants in Turkey and USA Increase in production in FY 19 – 20 attributable to commissioning of the line in Indonesia and optimization of the line at the USA Ramp up of the Indonesia line will conclude by FY 21 – 22

FY 15 – 16, FY 16 – 17: Actual FY 17-18 : Actual for YTD Q3 FY 17 – 18, Projection for Q4 FY 17 – 18 FY 18 – 19, FY 19 – 20, FY 20 – 21, FY 21 – 22: Projection

120 120 127 128 163 164 167 20 18 20 20 21 21 21 9 9 9 9 9 9 9 2 3 3 7 8 8 8 50 100 150 200 250 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 KTPA Blown Film CPP Plain Thick PET Thin PET

Polyplex Thailand Overview

Specialized Products & Applications

• In 2013-14 product differentiation withstood the negative cyclical effects
• Strategy to increase specialized products & applications over the next few years to further hedge

against market cyclicality

Polyplex Thailand Overview

• 100

200 300 400 500 600 700 800 FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 MN THB/ annum

Net Margin from High Value Add and Specialty (HVAS) Films

0% 10% 20% 30% 40% 50% 60% 70% 80% 500 1,000 1,500 2,000 2,500 FY 12-13 FY 13-14 FY 14-15 FY 15-16 FY 16-17 FY 17-18 MN THB/ annum

EBITDA* v/s Net Margin from HVAS

EBITDA (normalized) Net Margin from HVAS as % of EBITDA

* Normalized for Forex gain/(loss) and any one time exceptional items (impairment loss in 2015-16)

Revenue Breakup

• Evenly divided Revenue streams from various markets help mitigate market, FX and operational risks
• Increasing revenue stream coming from specialty/ value added products mitigates the risk of

commodification of the lower end of the market and keeping the operational margins intact

Polyplex Thailand Overview

31% 34% 31% 4%

FY 16-17

Asia North America Europe Others 39% 30% 28% 3%

FY 20-21 Expected

Asia North America Europe Others

Strategy

We believe in creating value by forging strong partnerships with our stakeholders

• Organic growth with

strong focus on margins

• Maximize returns

through improvement and investment in value added products

• Enhance shareholder

value by making right investment choices

• Create platform for future

growth – keep scouting for valuable investment

• pportunities

Investor Centric

• One stop shop for

chosen products/ applications

• Leverage R&D

Capabilities across Polyplex Group

• Driving innovation

through joint product/ application development

• Onshore/ nearshore

producer: being close to customers

Customer Centric

• Driving innovation

through joint product/ application development and cost reduction

• Develop a few valuable

suppliers instead of hunting value with many low-priced suppliers – quality is paramount for Polyplex

Supplier Centric

• Maintaining safe working

environment

• Training and skill

development

• Rightsizing and retaining

the best talent with career growth and benefits

• QoL activities

Employee Centric

• CSR activities
• Environment protection

through investments in waste reduction, recycling and energy saving

Community Centric

Polyplex Thailand Overview

Medium Term Objectives

Profitable Growth Vertical startup Environment Protection Production capacity Product capability

• Growth of topline coupled with a healthy growth in bottom line

Profitable Growth

• Vertical startup of the Indonesia plant and Blown Film line with target to

achieve 100% CUF within 1 year

• Target to achieve 10% production over nameplate capacity for Indonesia

line within 3 years Vertical startup of new investments

• Energy conservation initiatives to reduce the carbon footprint of the

manufacturing process

• Increase plastic recycling capacity to reduce environmental impact of
• perations

Environment Protection

• Downstream: USA :- Metallizer, Silicone coater; Indonesia: offline coater
• Debottleneck PET film lines in Turkey and Thailand to increase production;

Blown Film in Thailand Enhancing Production capacity

• Invest in technologies and R&D effort which would allow production of

versatile products from assets all across the group Product capability

Polyplex Thailand Overview

• Over 6X growth since

downturn in 2013

• Supernormal profits

in 2010-11 due to industry upcycle

• Growth led by

planned expansions and capacity in new regions

1,196 1,657 1,426 4,274 1,838 724 374 1,013 1,858 2,025 2,303 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

• 500

1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 MN THB Normalized EBITDA As % of Revenue

Polyplex Thailand Financial Performance

EBITDA* Trend (PTL Consolidated basis)

* Normalized for Forex gain/(loss) and one time exceptional items (impairment loss in 2015-16)

EPS (PTL Consolidated basis)

• EPS back on positive

trend post downturn in 2013

• Supernormal profits

in line with the industry wide trend in 2010-11

• The Rights issued in

2016 resulted in dilution of EPS – the improvement would have otherwise been more impactful

1.07 1.14 1.22 4.82 1.85 0.28 (0.12) (0.11) 0.37 1.18 1.57 (1.00)

• 1.00

2.00 3.00 4.00 5.00 6.00 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 THB/ share

Normalized* EPS (annualized)

Polyplex Thailand Financial Performance

* Normalized for Forex gain/(loss) and one time exceptional items (impairment loss/DTA reversal in 2015-16)

EBITDA vs EPS

Normalized* EBITDA (On PTL consolidated basis) in ‘000 THB Normalized* EPS in THB/ Share

0.14 0.38 0.40 Q3 16-17 Q2 17-18 Q3 17-18 395,896 574,264 587,190 Q3 16-17 Q2 17-18 Q3 17-18 1,591,630 1,727,249 YTD Q3 16-17 YTD Q3 17-18 0.94 1.18 YTD Q3 16-17 YTD Q3 17-18

Polyplex Thailand Financial Performance

* Normalized for Forex gain/(loss) and one time exceptional items (impairment loss/DTA reversal in 2015-16)

ROCE D/E

(Net of Cash)

ROCE vs D/E

• ROCE improvements owing to

management focus on cost

• ptimization and improvement in

CUF of investments in 2011-13, as well as improvement in market situation in the last few quarters

• D/E ratio declining due to

strategic decision to Ø Consolidate previous investments Ø Maintain higher liquidity Ø Prepare for next phase of investment

• Continue to make smaller

investments across the board for improving value additions and cost & energy saving

Polyplex Thailand Financial Performance

2.27% 7.40% 9.60% 11.85% FY 14-15 FY15-16 FY 16-17 FY 17-18 (annualized) 0.79 0.59 0.26 0.18 31.3.2015 31.3.2016 31.3.2017 31.12.2017

Saracote– 2nd line in Thailand Investment Size: $2.3Million Capacity: 50 MN SQM Funded through: Internal Cash Flows Expected Start Date: June 2019

Look to the future

Blown PP – 2nd line in Thailand Investment Size: $4.4 Million Capacity: 4,200 TPA Funded through: Internal Cash Flows Expected Start Date: June 2018 Replacement Metallized Film Line - USA Investment Size: $3.4 Million Capacity: 6,000 TPA Funded through: Internal Cash Flows Expected Start Date: June 2018

Greenfield– Indonesia Film Plant, Chips Plant & Metallizer Capital Investment: $80 MN Funded through: D:E of 2:1 Equity Structure: fully owned subsidiary of PTL Capacity: 44 KTPA for Film, 87 KTPA for Chips, 6 KTPA for Metallizer

Expected Start Date: H2 - 2019

Future Investment Plan

Greenfield Investment: Indonesia

Specification Unit Value Remarks Line Speed Meters per min 650 Fastest ever Final Width Meters 10.6 Widest ever Layers NA ABC Varied surface properties Thicknes s Range µ 8 – 125 Varied applications Production Capacity KTPA 44 Most productive ever Other special features NA NA Direct Melt Casting

Layer 1 Layer 2 Layer 3

Future Investment Plan

Global Demand and Supply

85% 70% 73% 76% 81% 85% 91% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 2011 2016 2017 2018 2019 2020 2021 KMTPA Global Capacity Global Demand CUF (%)

• Expected demand growth in next 5

years: 6 - 7%

• China, India and SEA will be the main

drivers for this growth

• Current CUF (73%) shows some

spare capacity in the industry

• CUF is likely to reach 85% (close to

full utilization) by 2020.

• Indonesia investment expected to

reap the benefits of a favorable demand supply situation for 1.5 - 2 years right after the startup of the line (H2 2019)

PET Film Industry Outlook for future

Main Regions of Operation

North America

• Mature Market with stable demand
• Stable pricing with customers valuing

the differentiating value proposition (in terms of products and services)

• Onshore producers command premium
• ver offshore producers
• Tariff barriers especially for imports

from India and China

Asia Pacific

• Fastest growing region (industrial and

packaging films alike)

• Indonesia – the largest market in SEA

and Oceania

• Highly competitive due to overcapacity

in China and India leading to volatility in pricing and margins

• Most of the low priced imports from

China

Greater Europe

• Europe, Turkey and CIS countries
• Mature market
• Stable pricing with customers valuing

the differentiating value proposition (in terms of products and services)

• Onshore producers command premium
• ver offshore producers
• Growth driven by Turkey and other

Eastern European nations

• No tariff barriers except Turkey

PET Film Industry Outlook for future

RM and Film Prices Trend Outlook

• All the numbers mentioned in the graphs above are from

the industry reports

• The main RM for PET film: PTA and MEG

Ø Prices of PTA and MEG move in tandem with crude oil prices Ø Crude oil likely to stay $ 65 – 75/ bbl (industry reports) for 2018

• PET film prices move in tandem with RM (PTA and MEG)

with a lag of 2 – 3 months

0.97 1.03 0.98 0.99 0.93 1.05 1.13 1.13 0.00 0.50 1.00 1.50 2.00 2.50 Q4 FY 15- 16 Q1 FY 16- 17 Q2 FY 16- 17 Q3 FY 16- 17 Q4 FY 16- 17 Q1 FY 17- 18 Q2 FY 17- 18 Q3 FY 17- 18 EUR/ KG

Europe

PET Film (12 Mic.) PTA MEG VA Over PTA & MEG

1.77 1.72 1.70 1.67 1.55 1.58 1.65 1.57 0.00 0.50 1.00 1.50 2.00 2.50 3.00 Q4 FY 15- 16 Q1 FY 16- 17 Q2 FY 16- 17 Q3 FY 16- 17 Q4 FY 16- 17 Q1 FY 17- 18 Q2 FY 17- 18 Q3 FY 17- 18 USD/ KG

USA

PET Film (12 Mic.) PTA MEG VA Over PTA & MEG 0.47 0.51 0.52 0.53 0.60 0.57 0.53 0.67 0.00 0.50 1.00 1.50 2.00 Q4 FY 15- 16 Q1 FY 16- 17 Q2 FY 16- 17 Q3 FY 16- 17 Q4 FY 16- 17 Q1 FY 17- 18 Q2 FY 17- 18 Q3 FY 17- 18 USD/ KG

Far East

PET Film (12 Mic.) PTA MEG VA Over PTA & MEG

PET Film Industry Outlook for future

Conclusion

• Industry continues to remain lucrative with 6 – 7% growth rate for the last

25 years and a similar growth rate for foreseeable future

• Polyplex has been engaged in stabilizing and scaling up the investments

made in 2013

• Continued focus on cost reduction to effect healthy margins; evident from

the YoY healthy increase in EBITDA from 2013 – 14 onwards

• Increasing value add sales and continued downstream investments to

support bottom line

• Indonesia investment rightly timed to benefit from a likely industry upcycle

in 2019 – 2021. This will also enhance the global reach of the group

Conclusion