SCI ELECTRIC PUBLIC COMPANY LIMITED Investor Presentation as of 3Q15 - - PowerPoint PPT Presentation

1

SCI ELECTRIC PUBLIC COMPANY LIMITED

Investor Presentation as of 3Q15

November 2015

For further information, please contact investor relations unit (ir@sci-groups.com) or visit our website at www.sci-mfgr.com

Content

Section 1 Company Background 3 Section 2 Our Business 9 Section 3 Industry Outlook 18 Section 4 Financial Highlights 24 Section 5 Future Projects/ Investments 30

2

3

For further information, please contact investor relations unit (ir@sci-groups.com) or visit our website at www.sci-mfgr.com

Company Background

Company Background

• Founded as a manufacturer of small electrical appliances

1966

• Moved from manufactured small electrical appliances to electrical switch boards,

cable trays, fuses, and relays 1976

• Increased capital to 76.4 million Baht to cope with business growth and for

investment in manufacturing of transmission line tower and telecommunication tower under a subsidiary of Ajikawa & SCI Metal Tech Co., Ltd. with know-how support from AG Ajikawa Corporation (Japan) who also invested 13.8% of the Company’s capital 1988-2002

• Founded SCI Electric Manufacturer Company with 1 million Baht registered

capital and Phruttinarakorn family was a major shareholder

• Capacity expansion and relocation of manufacturing facilities to Bangbor,

Samutprakarn 1987

• Expanded business to Lao PDR to begin with mini hydro-power project and

granted a permission to build and operate a 3.2 MW hydro-power plant 2006-2010

• Registered Tadsalen Power Company in Lao PDR

2009

• Signed 30 years concession agreement with Lao PDR government

2012

4

Company Background

• COD of Tadsalen 3.2 MW hydro-power plant in Lao PDR and granted a USD 94

million project of power distribution system in 4 major cities in Lao PDR by EDL

• Founded SCI Holding Company for investment hydro-power plant and other

renewable energy projects (100% shares in Tadsalen Power Company)

• Increased capital from 76.4 million Baht to 165 million Baht in right offering (RO)

to restructure the company group structure. AG&SCIMT became SCI subsidiary after merged with WCP 2013

• Increased capital from 397.5 million Baht to 562.5 million Baht in right offering

(RO)

• Increased capital to Baht 750 million at par value Baht 1.00 each to offer 187.5

million shares in the initial public offering (IPO) and to listed on the Thailand Stock Exchange (SET) 2015

• Was awarded the 115 kV power transmission line project in Lao PDR

2009-2012

5

Company Structure

SCI Electric Public Company Limited (SCI)

• Registered / Paid-up capital 750 Million Baht
• Business : Switch board and cable tray and

power transmission and distribution turnkey project Ajikawa & SCI Metal Tech Co., Ltd. (AG&SCIMT)

• Registered Capital 108 Million Baht
• Paid-up Capital 99.6 Million Baht
• Business : Investment on renewable

power plant

• Registered / Paid-up capital 108 Million

Baht

• Business : Transmission line tower and

telecom tower manufacturer and galvanizing service provider

SCI Holding Co., Ltd. (SCIH)

• Registered in Lao PDR
• Registered / Paid-up capital 3.3 MUSD
• Business : Hydroelectric power plant in

Lao PDR

Tadsalen Power Co., Ltd. (TAD)

99.998% 99.96% 100%

6

65% 3% 2% 4% 1% 25%

70%

Phruttinarakorn Family Yanisrangkul Family Pheanvitayaskul Family AG Ajikawa (Thailand) Co., Ltd. Others Free Float

Shareholder Structure

7

750MShares

*Phruttinarakorn family, Yanisrangkul family and Pheanvitayaskul family are related family

Board of Directors

Name Position 1. Noppol Milinthanggoon Chairman of the Board / Independent Director 2. Pranee Phasipol Chairman of the Risk Management Committee/ Independent Director / Remuneration Director 3. Chattong Tippayakalin Risk Management Director / Independent Director 4. Chaovana Viwatpanacharti Risk Management Director / Independent Director 5. Sumeth Chailertvanitkul Chairman of the Remuneration Committee / Independent Director 6. Aunada Phruttinarakorn Director / Remuneration Director 7. Kriangkrai Pheanvitayaskul Director 8. Thanawat Yanisrangkul Director 9. Sirichai Phruttinarakorn Director 10. Vichai Yanisrangkul Director

8

9

For further information, please contact investor relations unit (ir@sci-groups.com) or visit our website at www.sci-mfgr.com

Our Business

Products and Services

1.2 Cable Tray and SUPPORTING SYSTEM

• Manufacture cable tray for use in private buildings, factories and electric

railway systems.

10

• 2. Transmission &

Telecom Tower, Steel Fabrication and Gulvanising Service

• 3. Power

Transmission and Distribution Turnkey Projects

• 4. Renewable Power

Plant

• 1. Switch Board,

Cable Tray and Supporting Systems

1.1 Electrical Switch Board

• Manufacture, design and install electrical switch board, main distribution

board (MDB), control panel and related equipment with IEC standard.

Products and Services

2.2 Telecommunication Tower

• Manufacture steel towers for installing

devices used in telecommunication systems including mobile phone networks and radio or television broadcasting systems.

11

• 2. Transmission &

Telecom Tower, Steel Fabrication and Gulvanising Service

• 3. Power

Transmission and Distribution Turnkey Projects

• 4. Renewable Power

Plant

• 1. Switch Board,

Cable Tray and Supporting Systems

2.1 power Transmission Line Tower

• Manufacture and distribute transmission line towers used for transmitting

electricity from power plant to substation

• Varieties of voltage of transmission line towers can be produced including 69

kV, 115 kV, 230 kV and 500 kV. The tower height ranges from 30m up to 100m

Products and Services

2.3 Steel Substation and Galvanized Steel Fabrication

• Take Off Structure - small lattice tower which support high voltage

transmission line from transmission line tower to electricity substation

• Equipment Support – fabricated steel structure for supporting equipment in

power substation

• Produce galvanized steel fabrication and other related products such as

fabricated support structure for solar panel, railways steel bridge and steel railroad sleeper 2.4 Gulvanizing Service

• Provide the galvanizing service to both internal and external parties (for

internal: approx. 80%)

12

• 2. Transmission &

Telecom Tower, Steel Fabrication and Gulvanising Service

• 3. Power

Transmission and Distribution Turnkey Projects

• 4. Renewable Power

Plant

• 1. Switch Board,

Cable Tray and Supporting Systems

Products and Services

• 3. Power Transmission and distribution turnkey project
• Provide EPC (Engineering, Procurement and Construction) turn-key project
• f high voltage transmission line and power distribution system in overseas:

– High voltage transmission line system – Substation – Power distribution system and maintenance

13

• 2. Transmission &

Telecom Tower, Steel Fabrication and Gulvanising Service

• 3. Power

Transmission and Distribution Turnkey Projects

• 4. Renewable Power

Plant

• 1. Switch Board,

Cable Tray and Supporting Systems

Products and Services

• 4. Renewable power Plant - Hydroelectric
• Tadsalen Power Company invested in Tadsalen hydroelectric power plant

(capacity 3.2 MW) located at Xepone, Savanakhet in Lao PDR.

• Officially distributed power to EDL in 2013 with 30 year concession period

(2013 – 2042).

14

• 2. Transmission &

Telecom Tower, Steel Fabrication and Gulvanising Service

• 3. Power

Transmission and Distribution Turnkey Projects

• 4. Renewable Power

Plant

• 1. Switch Board,

Cable Tray and Supporting Systems

Current Project: PDSR-1

15

Power Distribution System Rehabilitation Project: PDSR

• State-owned electricity authority in Laos (EDL)

targeted to improve efficiency of low and medium voltage distribution systems in 4 major cities including Vientiane, Thakhek, Savannakhet and Pakse.

• SCI were awarded as a turn-key contractor.
• Total project value = 94 MUSD
• Contract period = 36 months
• Currently 99.5% completed and expected to be

100% complete within 4Q2015

Vientiane Thakhek Savannakhet Pakse

Customers

• Switch Board
• Cable Tray
• Supporting Systems
• Contractors
• Project Owners
• Traders
• Private sector (eg. Energy,

Petrochemical, Transportation)

• Industrial sector
• Government sector
• High-rise building
• Transmission Tower, Telecom

Tower

• Steel Fabrication Structure
• Gulvanizing Service
• Contractors
• Project Owners
• Private sector (eg. Energy, Electrical,

telecommunication)

• Industrial sector
• Government and stated-own

government sectors such as EGAT, PEA, MEA

• High Voltage Transmission

Line And Power Distribution System Installation

• EDL
• Electricity consumers in Laos PDR
• Hydro Power Plant
• EDL
• Electricity consumers in Laos PDR

Products & Services Customers End User

16

SCI Competitive Advantages

17

• SCI have varieties of business both domestic and

international, which support and facilitate each other. Also, SCI have many on-going opportunities for project development in the future;

• SCI Management team have extensive experiences of more

than 20 years, leading to high creditability and credentials. Our important end users included EGAT, EDL, mobile network

• perators, contractors of large infrastructure projects;
• SCI business operate in high growth potential sector, for

example, an expansion of electric power industry and telecom industry, both in domestic and international markets;

• SCI have strong technological supports from an alliance,

therefore, SCI products and services are accepted at an international level standard;

• SCI products are certified by both local and international

standards and “SCI” brand is widely known in electrical system design and engineering field; and

• SCI can provide full scale services of design, manufacturing

and galvanizing of products.

Switch Board Steel Tower Power Plant Turnkey Project

Lifetime Responsibility

18

For further information, please contact investor relations unit (ir@sci-groups.com) or visit our website at www.sci-mfgr.com

Industry Outlook

Construction and Real Estate Industries

• The number of industrial factories permitted to operate rises in the first 6 month of 2015 compared to

20141.

• In 2015, Thai government has been preparing for ASEAN economy by investing in more

infrastructures and transportation. Hence, government spending in construction sector is expected to grow 7% – 10% or THB 464 – 477 billion from 20142

• Private sector benefits from government’s transportation network expansion project leading to growth

in construction sector and real estate sector

Electrical Switch Board and Cable Tray Industry

1 Source : Department of Industrial Works 2 Source : Kasikorn Research

6M2014 6M2015 Growth (%) The number of plants (Plant) 2,000 2,043 2.15% (%) Investment (MB) 171,126 171,233 0.06%

19

Telecommunication Tower Industry

• The National Broadcasting and Telecommunications Commission (NBTC) expects that the number of

mobile subscriptions and percentage of mobile subscription per population will continuously increase.

• The Auction of 4G spectrum in Thailand has prompted three leading mobile network operators as well

as the new joiner to earmark massive capital expenditure to expand their network capabilities to support growing users and rapidly changing technologies.

Telecommunication Tower Industry

20

108.43 116.03 123.63 131.26 161.3% 172.0% 182.8% 193.5%

140% 150% 160% 170% 180% 190% 200% 20 40 60 80 100 120 140 2015F 2016F 2017F 2018F Mobile Subscriptions (million) % Mobile Subscriptopns per 100 ppl

Domestic Power Industry

• Peak demand and electricity consumption continued rising over years
• Length of transmission system and number of high voltage substation continued to increase to

support higher electricity demand and consumption.

• PDP2015 targets the electricity production in 2015 – 2036 to be 57,467 MW or increase 153% from

2014 production

Transmission Tower Industry

21

Thailand peak demand for electricity and consumption EGAT’s transmission line length and substation numbers

• Electricity demand in Laos is taking off.
• EDL plans to expand high voltage transmission line for 4,405 Km within the next 5 years.

Offshore Power Industry

Power industry in Lao PDR

22

500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2555 2556 2557 2558 2559 2560 2561 2562 2563 2564 2565 2566 2567 2568

MW

ครัวเรือน อุตสาหกรรม รวม

Steel and Zinc Price

• In 2015, steel price is expected to be sluggish

due to low oil price and also an oversupply of steel in China.

• China Iron and Steel Association saw the
• versupply of steel in China will continue and

therefore less likely chance for the steel price to rise significantly in the near term.

Source: World Bank Commodities Price Forecast (4 Nov 2015)

• World Bank forecasted Zinc price will continue

to increase up to 2025

• Also, International Zinc Association forecasts

that the world zinc demand would likely to increase at least 5% each year until2018, therefore; effecting the zinc price on an uptrend.

23

500 1000 1500 2000 2500 2013 2016 2019 2022 2025

World Bank Zinc Price Forecast ($/mt) Iron Ore Price ($/mt)

Source: World Bank (Last observation Sep 2015)

24

For further information, please contact investor relations unit (ir@sci-groups.com) or visit our website at www.sci-mfgr.com

Financial Highlights

Revenues

25

267 267M Baht

Switch Board

746 746M Baht

Steel Tower & Gulvanising

564 564M Baht

Projects Management

14 14M Baht

Hydro Power Plant

1,590M Baht

Revenues from sales and services

328 478 327 225 267

2012 2013 2014 9M14 9M15

+18.26%

1,025 546 1,106 714 746

2012 2013 2014 9M14 9M15

+4.54%

91 1,123 1,346 1,031 564 2012 2013 2014 9M14 9M15

• 45.27%

29 30 23 14 2012 2013 2014 9M14 9M15

• 41.72%

1,444 2,176 2,809 1,992 1,590 2012 2013 2014 9M14 9M15

• 20.18%
• Revenue from EPC project

decreased since the PDSR (phase 1) is near completion The phase 2 project is to be expected in 4Q2015

• Revenue from the power plant

decreased due to lower rainfall (delayed rainfall period compared with 2014)

9M2015

17.2% 40.8% 39.0% 0.9% 2.1%

Income Structure

26

Income Structure 2012-2014 Income Structure 9M20150

*Other incomes includes interest income, gains from property sales, bad debt recoveries, FX gain 16.7% 46.7% 35.3% 0.9% 0.5%

Switch Board Steel Tower & Gulvanising Project Management Renewable Power Plant Others*

220 326 578 370 324 15.23% 14.99% 20.57% 18.55% 20.35% 0% 5% 10% 15% 20% 25% 100 200 300 400 500 600 700 2012 2013 2014 9M14 9M15

Profits & Margins

27

(million Baht)

Gross Profit and Gross Profit Margin Net Profit and Net Profit Margin

65 171 327 206 190 4.28% 7.72% 11.56% 10.34% 11.93% 0% 2% 4% 6% 8% 10% 12% 14% 50 100 150 200 250 300 350 400 2012 2013 2014 9M14 9M15 (million Baht)

Gross Profit Margin by Products (9M2015)

• For 9M2015 Period, gross margin and profit

margin decreased due to decreased revenues.

• However, gross profit margin and net profit

margin increased by 9.70% and 15.34%

• respectively. The increase was primarily due to

better cost management

• 5.41%

25.27% 14.42% 27.86% Hydro Power Plant Project Management Steel Tower & Gulvanizing Switch Board

+9.70% +15.34%

Returns

28

Earning Per Share (x) Return on Equity (%) Return on Asset (%)

37.0% 9M2015

79.4% 88.9% 70.3% 37.0% 2012 2013 2014 9M15 5.4% 10.9% 16.9% 13.6% 2012 2013 2014 9M15

0.47 9M2015

0.85 1.04 1.98 0.47 2012 2013 2014 9M15 *Annualized **No. of shares vary each year

ROE (%) EPS

13.6% 9M2015

ROA (%)

• EPS changed mainly from an

increase in share amount, however; net profit for 9M2015 period did not have significant changes from the same period last year (<10%)

• ROE decreased due to an

increase in shareholder’s equity (retained earnings continuously increased)

• ROA decreased due to a

decrease in net profits

*Annualized *Annualized

Capital Structure

29

13.82 5.39 2.08 1.31 2012 2013 2014 9M15

Interest Bearing Debt-to-Equity Ratio Total Assets (million Baht)

3.53 1.06 0.69 0.36 2012 2013 2014 9M15

Debt-to-Equity Ratio (D/E)

• For 9M2015 period total asset decreased due to the

short-term loan repayment from financial institution.

• D/E ratio continuously decreased due to an increase in

retain earnings.

• Liabilities are mainly account payables.

1,219.26 1,936.36 1,927.09 1,845.80 2012 2013 2014 9M15

Interest Bearing Debt Non-interest Bearing Debt Total Equity Total Assets

30

For further information, please contact investor relations unit (ir@sci-groups.com) or visit our website at www.sci-mfgr.com

Future Projects/Investments

Future Projects/ Investments

Projects Project Value (approx.) Period (Months) Tentative Starting Period Expected Revenue Recognition Period 1 Power Distribution System Rehabilitation (PDSR) Project Phase 2 67 MUSD 28 4Q2015 Starting 1Q2016 2 Building Power Transmission Line Tower and Telecom Tower Plant in Myanmar

– SCI plans to invest at least 40% with other alliances

26 MUSD 18 1Q2016 2018-2019 3 Wind Power Plant

– SCI plan to invest approximately 30% with the another alliance

3.5 - 3.7k MB ≤ 24 1Q2016 2H2017 4 Power Transmission Line and Substation in Lao PDR 700-800 MUSD 48 Feasibility study

31

32

For further information, please contact investor relations unit (ir@sci-groups.com) or visit our website at www.sci-mfgr.com

THANK YOU