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Q3 2015 Financial Results 25 March 2015 Disclaimer This document - - PowerPoint PPT Presentation

Opportunity Day Q3 2015 Financial Results 25 March 2015 Disclaimer This document has been prepared by Eastern Polymer Group Public Company Limited (EPG) solely for the reference of intended recipients only. The data, information, analysis


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Opportunity Day Q3 2015 Financial Results

25 March 2015

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SLIDE 2

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Disclaimer

This document has been prepared by Eastern Polymer Group Public Company Limited (“EPG”) solely for the reference of intended recipients only. The data, information, analysis and valuations contained herein in this document have been prepared based solely on information obtained from public sources on or prior to the date hereof. EPG has neither independently verified nor in the future intended to verify such information. No representation or warranty, expressed or implied, is or will be made in relation to the accuracy or completeness of the information contained in this document or any oral information provided in connection therewith, or the data it generates and no responsibility, obligation or liability (whether direct

  • r indirect, in contract, tort or otherwise) is or will be accepted by EPG or their affiliates or by any of

their respective officers, employees or agents in relation to it. In particular, no representation or warranty is given as to the achievement or reasonableness of future projections, estimates, prospects, returns, if any. Any views contained herein are based on financial, economic, market and other conditions prevailing as at the date of this document. EPG does not intend, and therefore shall not be held liable, to update all the information contained herein this Document. Any disclosure or distribution of the information in this document, partly or wholly, to third parties other than the intended recipients without prior written consent from EPG is strictly forbidden.

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Agenda

About EPG Investment Highlights Business Overview Financial Highlights Outlook

3

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SLIDE 4

Milestones

1978 Eastern Polymer Industries Co., Ltd. was established Commencing the manufacture of rubber insulation and accessories under the "AEROFLEX" trademark 1989 Expanding the business into a plastic industry 1994 Major expansion of production plant with establishment of the International Polymer Park industrial estate (IPP) in Rayong province 1995 Establishing the joint ventures business with partners from Japan and Malaysia 1996 Entering the automotive parts industry with a major investment in truck bed liner manufacture under the "AEROLINER" and "HEROLINER" brands 2001 Business expansion in the plastic industry through acquisition of Thai Modern Plastic Plc. Establishing Eastern Polypack Co., Ltd. to manufacture plastic packaging under the "EPP" trademark. Embracing innovative "No-Drill" technology for truck bedliners for the first time in the world 2002 Expanding to overseas market by established Aeroflex Insulation (Shanghai) Co., Ltd. in China 2003 Investing in the manufacture and distribution facilities for insulation business in Tennessee, USA. 2005 Commissioned to manufacture roof ventilation, indoor lighting system and airconditioning systems for Suvarnabhumi International Airport 2006 Establishment of EPG Innovation Center Co., Ltd. 2011 Establishing the manufacture and distribution facilities for auto part business in China, Australia and USA. 2012 Establishing Aeroflex Europe GmbH in Germany. 2013 The group restructured its organization and transformed Eastern Polymer Group Public Company Limited 2014 First trade in the SET on 24th December

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Group Structure

Remarks : Group structure as of 30 Jun 2014

Eastern Polymer Group Plc

Aeroflex (AFC) Aeroflex USA (AUS) APS (APS) Aerocell Construction Material (Jiangsu) (ACM) Aeroflex (AEU) Eastern Poly Pack (EPP) Aeroklas (ARK) Aeroklas USA (ARK-USA) Aeroklas Australia (ARK-AU) Aeroklas Shanghai (ARK-SH) EPG Innovation Center (EIC) Aeroflex Polymer Technology (Shanghai) (APT) Zeon Advanced Polymix (ZAP) Tokai Eastern Rubber (TER)

Insulator Business Car Accessories Business Joint Venture

40.0% 100.0% 40.0% 40.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Other Supporting Business Plastic Packaging Business

ALP Aeroflex India (AAI)

60.0%

Aeroklas Europe (ARK-EU)

74.9%

Research and Development

20.0% 27.0% 5

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Agenda

About EPG Investment Highlights Business Overview Financial Highlights Outlook

6

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SLIDE 7

Business Overview

  • World’s best quality and

property rubber insulator (Patented EPDM technology & NBR)

  • Well-established

expansion platform to capture international

  • pportunity
  • Innovative ODM player

recognized by world’s leading auto makers

  • Leading trend setter in high

quality commercial car accessories

  • Patented non-drilled

technology

  • Leading ODM player with

capability in designing innovative products

  • Outstanding production

technology with world class standard recognition

Construction Material Auto parts Packaging

7

1,946 2,044 2,134 1,726 1,962 2,590 2,282 1,758 1,720 2,116 2,177 1,650

2012 2013 2014 9M 2015

Revenue Contribution (TH mm)

EPP AEROKLAS AEROFLEX

Source: Company Remarks: Fiscal Year Ended 31 March

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Capacity (as of 1H 2015)

EPDM + Other 20,000 tons/ year

Products

Rubber insulator (EPDM & NBR) Aero Acoustic & Aero-roof Tape, rigid foam, flexible duct, etc.

9M 2015 Revenue breakdown by region

Production facilities = 6

Thailand, USA, Germany, India, China (2) Licensing = 2 Russia, Switzerland

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Domestic 29% International 71%

Source: Company Remarks: Fiscal Year Ended 31 March

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Geography Actively Engaged Year Market Shares (%) World

  • World

Thailand

  • Thailand (1978)

USA

  • USA (2010)

Asia

  • Japan (2002)
  • Philippines (1985)
  • Vietnam (1999)
  • Indonesia (2001)

Others

  • Germany (2013)
  • Switzerland (2006)
  • Russia (2012)

International Expansion Platforms Well Established Platforms to Capture Growth in Potential Markets Types of Platform Country Number

Main Production Plant

Thailand 1

Wholly Owned Subsidiary

USA 1 China 1

Joint Venture

China 1 India 1 German 1

Licensing

Switzerland 1 Russia 1

Distributor/Agent

Worldwide 78

Source: Company

Others 96% Others 70% Others 80%

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SLIDE 10

Products

Bed liner (HDPE), deck cover (PC ABS), canopy (ABS Alloy), side step (Polymer Alloy) Soft cover, truck body, U-Box

Capacity (as of 1H 2015)

Bed liner 800,000 pieces/ year Deck cover 24,000 sets/ year Canopy 24,000 sets/ year Side step 100,000 pairs/ year

9M 2015 Revenue breakdown by region

Distribution

Owned brand = Aeroklas ODM with leading car manufacturers Production Facilities = 2 Thailand, China

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Domestic 45% International 55%

Source: Company Remarks: Fiscal Year Ended 31 March

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Product Performance Company Highlights

  • One of the trend setter in commercial car accessories

industry

  • Accepted by most of the reputable world leading

automaker companies 1 2

Patented No drilling Installation “Bed Liner” Patented Double ABS Alloy “Canopy” Light Weight Plastic “Side Step”

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Thailand (1) USA (1), Germany (1), China (1), and Australia (1)

Penetration Rate (%) Invented Year Historical Revenue (THB mm) World Market Share (%) Bed Liner (ODM & OBM)

1995

Deck Cover (ODM & OBM)

2004

Canopy (ODM & OBM)

2006

Side Step (ODM & OBM)

  • Applicable to
  • Pick up
  • Truck
  • SUV

2015

Source: Company Remarks: Fiscal Year Ended 31 March

11

838 385

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Products

Plastic cups: PS (GPPS, HIPS,K-Resin), PET, PP Food container, snack package Plastic sheet

Capacity (as of 1H 2015)

Plastic food packaging 24,000 tons/ year Plastic sheet 5,000 tons/ year

Distribution

Wholesalers, Made-to-order clients, and International clients. Production Facilities = 1 Thailand

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9M 2015 Revenue breakdown by region

Domestic 87%

International 13%

Source: Company Remarks: Fiscal Year Ended 31 March

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Company Highlights

  • Offers vast variety of products with full range of materials

including GPPS/PP/PET cup

  • Outstanding technology and innovation enables EPP to

provide well-designed products that fit with end-users lifestyle

  • Premium products with finest quality accepted by many

leading domestic/international companies 1 2

Well-designed Plastic Cups for Customer Innovative Product Design with High Quality

3 Products Performance

Plastic food packaging Plastic sheet

1,360

Fiscal Year Ended March (THB mm)

South East Asia

13

303

Source: Company Remarks: Fiscal Year Ended 31 March

5%

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1978

Aeroflex – EPDM Generation 1 Density 120 kg/cm3

Never Ending Innovations – EIC

Innovative Product Milestones

AEROFLEX AEROKLAS EPP

1978

Everseal Tape

2000

Prefoam Tube/sheet

1985

Aeroseal Glue

2004

Aerofix

2005

Aero-roof

2013

Aero Acoustic

1995

No Drilling Installation Liner

2003

Cargo Liner

2004

Deck Cover

2006

PC Alloy Deck Cover

2006

Double APS Alloy Canopy

2015

Plastic Side Step

2014

Sport Bar ABS

2002

First GPPS Plastic Cup in Thailand

2005

The Finest Microwavable Frozen Food Container

2010

First PET Plastic Cup in Thailand

  • Continuously focus and spend on R&D at

the extensive rate of ~1% of revenue which higher than world average

1 2

  • EIC is one of the best material research center

in Asia

  • High quality and experienced working team

 14 PHDs from department of materials science  2 polymer experts

  • Certified by international standards

3

  • Variety and high quality equipment and

testing machines

  • Capable to provide testing service more

than 300 tests

2007

Newly innovated Cup

2015

Bowl Liner

2014

Aeroflex – EPDM Generation 9 Density 50 kg/cm3 Continuously Development of EPDM for 12 generations

2017

Aeroflex –EPDM Generation 11 Density 35-40 kg/cm3

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Joint Venture

Business Manufacture anti-vibration rubber , resin hoses and sound proof parts for automotive Shareholding Structure Product Types Fuel Hose Sound Proof Anti-Vibration Rubber Liquid Engine Mounting Business Manufacture intermediate rubber compound mix for producing automotive parts Shareholding Structure Product Types Rubber Compound Sheet Rubber Compound Ribbon

Source: Company

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Agenda

About EPG Investment Highlights Business Overview Financial Highlights Outlook

16

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Investment Highlights

Well-established Global Platforms for International Expansion Strong Brand Recognition as World Class Quality Product Innovation-oriented Organization

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High Growth High Margin

Premium World Class Polymer and Plastic Converter

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  • EIC is one of the best

material research center in Asia

Innovation - oriented Organization

  • Widest service

temperature range

  • Lowest thermal

conductivity

  • Non-flammable and

environmental friendly

  • The rubber insulator with

sound absorption property

  • Safe and non-toxic roof

insulator

  • Lower logistic cost from

lighter weight and more stocking space

  • To preserve the

production formula

  • Stronger and lighter than

traditional canopy

  • The first canopy with the

weather protection property

  • The first no drilling

installment liner

  • Light weight liner for

energy saving

  • Full production process

and continuously developed production technology

  • The finest microwavable

food container in Thailand

  • Lower logistic cost from

more stocking space

  • Lower cost of

production from

  • ≥ PHDs
  • Certified by

international standard (DIN, ASTM, ISO, EN and JIS)

  • High quality

equipment and testing machines

  • Co-design with international companies
  • Highly experienced international team members

(> 100 members) with local market understanding

  • Continuously

developed production technology

  • Capability of producing

sophisticated products and able to maintain profit margin

  • All of production

process are under control of expertise from reputable international companies

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Strong Brand Recognition as World Class Quality Product

Green Label Certification

  • A well-recognized international brand name

almost 100 countries spreading across 7 continents

  • A superior product’s quality and highly

accepted in HVAC&R industry

  • One of a few rubber insulator whose

properties are qualified almost 100 countries standard

Lloyd’s Register Certification RoHS Certification FM Global Approved DNV Certification

  • Reputable commercial car accessories

brand in EU and US market

  • One of the leading trend setter in

commercial car accessories industry

  • One of a few canopy supplier to Ford motor

company

ISO 14001 TS16949 / ISO9001 ABE Certification Thai Owned Brand 2002 Thai Owned Design 2003 The Best Export 2006 OHSAS 18991

  • World class quality standards
  • The exclusive plastic cup supplier to various

world leading companies

  • Internationally recognized innovative product

design

ISO 9001/2008 NAC TIS 18001 ISO 14001 ISO 9001/2008 UKAS ISO

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Well-established Global Platforms for International Expansion

Main Production Plant of AFC, ARK and EPP

  • Thailand / 3

AFC’s Subsidiary

  • USA / 1
  • China / 1

AFC’s Joint Venture

  • India / 2
  • China / 1
  • Germany / 1

AFC’s Licensing

  • Russia / 1
  • Switzerland / 1

ARK’s Subsidiary

  • China / 1
  • Australia / 1
  • USA / 1

TER/ ZAP

  • Japan / 2

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Global exporter covering more than 100 countries worldwide Fully integrated production plants in world strategic locations to serve high demand markets Partnership with world leaders of each business Co-operation with local partners to penetrate in upcoming potential market Penetrate into new markets by converting distributors into production plants Distribute products across the world through more than 500 distributors For adding value to products and companies

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High Margin

  • Leading in innovative products
  • Effective cost control in logistics,

raw materials from innovative process

  • Continuous development for better

efficiency

  • Competitive advantage from

globally registered patents

  • Strong market positioning
  • Widely covered distribution

network to save logistics cost Well-established Global Platforms for International Expansion Strong Brand Recognition as World Class Quality Product Innovation-oriented Organization

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High Growth

  • R&D platform creates breakthrough

value - added products, engineered materials and advanced technologies

  • Variety of product to penetrate in

new markets

  • High quality and high standard

products are well – accepted in international markets

  • Capability and high production

standard enabling the expansion with world’s leading automakers

  • Production plant in strategic

locations to expand into potential markets Well-established Global Platforms for International Expansion Strong Brand Recognition as World Class Quality Product Innovation-oriented Organization

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Agenda

About EPG Investment Highlights Business Overview Financial Highlights

23

Outlook

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Profit and Loss 2012A 2013A 2014A 12-14 CAGR 9M/2014 9M/2015 % YoY Q3/2014 Q3/2015 % YoY (Million Baht) Revenue from sales 5,627.8 6,750.2 6,591.8 8.2% 4,993.8 5,134.1 2.8% 1,633.7 1,668.7 2.1% AEROFLEX 1,946.4 2,043.9 2,133.6 4.7% 1,608.9 1,726.2 7.3% 494.5 569.5 15.2% AEROKLAS 1,961.8 2,590.2 2,281.5 7.8% 1,721.2 1,757.8 2.1% 600.7 542.9

  • 9.6%

EPP 1,719.6 2,116.1 2,176.7 12.5% 1,663.7 1,650.1

  • 0.8%

538.6 556.4 3.3% Cost of goods sold 4,048.7 4,923.8 4,870.2 9.7% 3,706.4 3,821.6 3.1% 1,256.9 1,243.8

  • 1.0%

Gross Profit 1,576.5 1,826.4 1,721.6 4.5% 1,288.1 1,313.0 1.9% 377.5 425.1 12.6% SG&A 1,169.2 1,202.0 1,145.5

  • 1.0%

837.0 815.6

  • 2.6%

272.7 280.3 2.8% Operating Profit 407.3 624.4 576.1 18.9% 451.1 497.4 10.3% 113.0 144.8 28.1% Equity Profit Sharing 211.0 337.2 305.7 20.4% 244.3 145.0

  • 40.6%

73.8 45.4

  • 38.5%

EBIT 681.5 1,091.0 1,040.8 23.6% 857.5 653.8

  • 23.8%

227.8 198.3

  • 12.9%

EBITDA 696.8 982.9 1,016.7 20.8% 785.6 869.2 10.6% 234.6 268.4 14.4% EBITDA incl. equity sharing 907.8 1,320.1 1,322.4 20.7% 1,031.8 1,014.2

  • 1.7%

308.4 313.8 1.8% Net Profit 480.3 787.2 630.6 14.6% 531.5 449.5

  • 15.4%

116.0 147.6 27.2% Ratios 2012A 2013A 2014A 9M/2014 9M/2015 Q3/2014 Q3/2015 Gross Profit Margin 28.0% 27.1% 26.1% 25.8% 25.6% 23.1% 25.5% EBITDA Margin 12.4% 14.6% 15.4% 15.7% 16.9% 14.4% 16.1% EBITDA Margin incl. equity sharing 16.1% 19.6% 20.1% 20.7% 19.8% 18.9% 18.8% Net Profit Margin 8.5% 11.7% 9.6% 10.6% 8.8% 7.1% 8.8% 24

Financial Results

Remarks: Fiscal Year Ended 31 March

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SLIDE 25

(Million Baht) 2012A 2013A 2014A Q3/2015 Current Asset 4,623.1 3,363.5 3,094.4 4,729.5 Non - Current Asset 6,494.6 7,323.4 7,804.6 7,938.7 Total Asset 11,117.7 10,686.9 10,899.9 12,668.2 Interest bearing debt 5,607.3 6,598.3 6,251.7 3,736.2 Current Liabilities 5,577.1 6,074.5 5,665.4 3,340.6 Non - Current Liabilities 918.8 1,489.0 1,451.1 1,263.3 Total Liabilities 6,495.9 7,563.5 7,116.5 4,603.9 Paid Up Capital 2,100.0 2,100.0 2,100.0 2,800.0 Retained earnings 1,860.8 391.7 959.3 1,209.5 Total Equity 4,621.8 3,123.4 3,782.5 8,064.3 Ratios 2012A 2013A 2014A Q3/2015 ROE 10.4% 25.2% 16.7% 1.8% ROA 4.3% 7.4% 5.8% 1.2% D/E 1.4 2.4 1.9 0.6

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Financial Results

Remarks: Fiscal Year Ended 31 March

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Q3 and 9M 2015 Financial Results

AEROFLEX Revenue AEROKLAS Revenue EPP Revenue 26

9M/2015 revenue grew by 7.3%, from international expansion, especially USA market. 9M/2015 revenue grew by 2.1% due to growth in Australian market. Revenue of EPP in 9M/2015 was in line with slow Thai economic situation but in Q3/2015, the revenue increased by 3.3% due to stronger consumption in new year season.

Million baht

1,609 1,726 494 569 2014 2015 9M Q3 1,721 1,758 601 543 2014 2015 9M Q3 1,664 1,650 539 556 2014 2015 9M Q3

Remarks: Fiscal Year Ended 31 March

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Q3 and 9M 2015 Financial Results

27

9M/2015 COG grew by 3.1%, in line with growth of revenue. 9M/2015 SG&A decreased by -1.6%, due to better expense control. Q3/2015 SG&A increased due to expenses related to IPO, promotion expenses and remunerations.

COGS SG&A

3,706 3,822 1,257 1,244 2014 2015 9M Q3 829 816 265 280 2014 2015 9M Q3

Remarks: Fiscal Year Ended 31 March

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Capital Expenditure

2015E 2016E 2017E Total

  • THB 300 mm

THB 300 mm THB 600 mm THB 566 mm THB 300 mm THB 100 mm THB 966 mm THB 250 mm THB 100 mm THB 400 - 500 mm THB 850 mm

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Remarks: Fiscal Year Ended 31 March

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Agenda

About EPG Investment Highlights Business Overview Financial Highlights

29

Outlook

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Outlook

  • Benefit from lower raw material costs thanks to decreased oil price will

be partly reflected in Q4 2015 for EPP and Q1 2016 for AEROFLEX and AEROKLAS.

  • Although the trend of car industry is yet to recover, it is expected that

AEROKLAS would generate growth from the start of side step and two new models of canopy production in Q1-2016. The utilization rate and depreciation expense should improve.

  • Debt repayment from IPO proceed of 3 billion baht will lower D/E ratio

significantly and will save finance cost.

  • AEROKLAS’ acquisition of TJM would make AEROKLAS to become a

fully integrated automotive accessory: 1.Acquire Top-tier assets 2. Immediate enhancing value 3.Relize significant synergies

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  • TJM brand is widely recognized by world class

automotive manufacturers

  • Being recognized as the first company in Australia to

manufacture and distribute quality 4WD equipment

  • Being a partnership with world class automotive part

makers in various countries

About TJM Acquisition

1.1 Automotive part retail shop in Australia with 58 brand distributions nationwide 1.2 Strong Brand Recognition in Australia and USA 31

(1) Acquire Top-tier-asset (2) Immediate Enhancing Value

  • Enhance AEROKLAS income portion from retail

(3) Realize Significant Synergies

  • Robust sales growth
  • Enhanced profit margin
  • Business model for future expansion
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Q&A