OPPORTUNITY DAY Q2/2014

The Stock Exchange of Thailand
OPPORTUNITY DAY Q2/2014
AAPICO HITECH PLC [AH]
Financial Performance for the 2nd quarter of 2014
Ms. Yeap Xin Rhu
August 28th, 2014
Agenda
1.
Company Profile
2.
Industry Overview
3.
Financial Performance
4.
Strategy and Direction
3
Company Profile [AH]
AAPICO HITECH PUBLIC COMPANY LIMITED
• Established in 1996 and listed on SET in 2002.
Industry/Sector
: Auto
Average price
: Baht 16.70*
52 weeks range
: Baht 12.80 – 17.80
Market Cap
: Baht 5,387 million
P/E (YTD)
: 13.52x*
P/BV
: 0.99x
Dividend yield
: 2.93%
* Data as of August 15th, 2014
• 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.
4
Shareholding Structure
Yeap
Family
39.8%
Sojitz
Corp.
15.8%
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.
Freefloat
44.5%
Thai
86.7%
* Data as of March 28th, 2014
Thai
institutions
9.9%
Foreign
institutions
Foreign 3.2%
0.1%
5
Company Milestones
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
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
2009
Established AAPICO Structural
Products.
2010
AAPICO 25th Anniversary and
established JV with Thai Takagi
Seiko.
2011
Completed Honda 3S showroom
in Malaysia.
Listed on SET.
Acquired KPN and renamed
AAPICO Forging.
2012
2003
2008
2013
Purchased AAPICO Amata from
Dana Corp., USA.
Established JV with Minth Corp.,
China.
6
Kunshan new factory in operation.
Establish 4 JVs with Lemtech,
Edscha, Sumino and Sodecia.
AAPICO’s Vision
Where do we want to go?
How do we want people to remember us?
MANUFACTURING
RESEARCH & DEVELOPMENT
CAR RETAILING
Happy Customers
S – Safety
Q – Quality
C – Cost
D – Delivery
E – Engineering
M - Management
LEAN, GREEN AND HAPPY
WORLD-CLASS CORPORATION
Happy Employees
Happy Shareholders
Profitability
Reasonable Dividend
Teamwork
Mutual Respect
Loyalty and Honesty
Look at problems
as opportunities
Love Family, Company
and Country
7
Happy Public
Corporate Social
Responsibility
Business Segment
1
2
Sales and Service Income
Manufacturing of
Automobile Parts
6M14
39%
Car Dealership
6M13
26% 6M12
21%
6M12
79% 6M13
3
74%
6M14
61%
Car Navigation
Auto Parts
8
Car Dealers
Navigation
Business Segment
1
Manufacturing of
Automobile Parts
2
Car Dealership
OEM Automobile Parts
Assembly Jigs and Stamping Dies
(Project base)
3
Car Navigation
9
Business Segment
1
Manufacturing of
Automobile Parts
2
Car Dealership
3
Car Navigation
Ford dealers
Thailand
Mitsubishi
dealers
Thailand
Honda
dealers
Malaysia
10
Business Segment
1
Manufacturing of
Automobile Parts
2
Car Dealership
3
Car Navigation
11
Global Operations
CHINA
Sales & Service Income
Production: 2 factories
Process: Forged & Machined parts
Products: Connecting rods
5%
6M13 5%
6M14 15%
9%6%
26%
Malaysia
6M12,85%
6M13, 80%
TH
MY
CN
6M14, 69%
Productions: 5 companies
Process: Car dealership & Navigation
Products: Honda, POWERMAP
12
Locations in Thailand
Production : 5 factories
Products : Stamping Dies,
Jigs, and Stamping parts, and
Car navigation
Production : 3 factories
Products : Chassis Frames,
Forged and machined parts.
Ayutthaya
Bangkok
Chonburi
Samutprakan
Rayong
Mitsubishi Dealers:
Ramindra
Navanakorn
Ford Dealers:
Ladprao
Samutprakarn
Production :1 factory
Products : Plastic parts
13
Production : 2 factories
Products : Stamping parts
and Plastic parts
Our Partners
Strategic
Shareholder
Joint Ventures
14
Technical
Partners
Our OEM Customers
Top Customer Profile
OTHERS PARTS
TOYOTA
SGMW2
Jan-Jun
201 4
ISUZU
NISSAN
AAT1
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.
15
Agenda
1.
Company Profile
2.
Industry Overview
3.
Financial Performance
4.
Strategy and Direction
16
Thailand Automotive Production
Unit: Million
Forecast
3.0
Others
Passenger Car
1 -Ton Pick-up/PPV
2.5
Global
Financial
Crisis
2.0
1.5
1.0
0.5
0.0
0.28
0.1 6
0.29
0.1 7
0.38
0.25
0.47
0.30
0.32
0.55
0.40
0.60
0.87
0.95
0.97
0.67
1 .07
0.96
1 .07
2.2
0.54
0.31
0.30
0.82
Flood
-29.0%
0.59
1 .45
0.37
1 .33
0.90
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F
0.72
0.57
6M13 6M14
 Thailand vehicle production volume for the first half of 2014 was 952,685 units, compared
to 1,340,930 units produced in 1H 2013. The year-on-year production decline was in both
1-Ton pick-up/PPV (-20.6%) and passenger car (-37.1%).
Source: The Federation of Thai Industry (Automotive Industry Club)
17
Thailand Automotive Production
Unit: Million
Others
0.8
Passenger Car
1 -Ton Pick up / PPV
-29.7%
0.7
0.6
0.28
0.5
0.4
0.3
0.11
0.13
0.15
0.16
0.18
0.18
0.12
0.2
0.1
0.0
0.26
0.25
0.28
0.28
0.28
0.21
0.29
0.14
0.32
0.33
0.27
0.22
0.26
0.22
0.21
0.17
Flood
2011
0.06
0.35
0.33
0.37
0.40
0.38
0.34
0.32
0.30
0.31
0.26
0.11
Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
 In Q2 2014, total vehicle production volume was 435,193 units, a 29.7% drop compared to
619,423 units produced in Q2 2013. The production of 1-Ton pick-up/PPV and passenger
car declined compared to Q2 2013 by 21.6% and 37.2% respectively.
Source: The Federation of Thai Industry (Automotive Industry Club)
18
Thailand Domestic Car Sales
Unit: Million
Forecast
1.6
Others
Passenger Car
1 -Ton Pick up/PPV
1.4
1.2
0.8
0.6
0.4
0.2
0.0
Flood
Global
Financial
Crisis
1.0
0.1 0
0.1 7
0.1 3
0.24
0.1 8
0.31
0.21
0.37
0.1 9
0.47
0.1 9
0.45
0.1 7
0.41
0.35
0.23
0.28
0.63
1.0
0.35
0.67
0.39
-40.5%
0.36
0.23
0.33
0.67
0.59
0.37
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F
0.1 8
0.33
0.21
6M13 6M14
 For the first half of 2014, Thailand Domestic car sales were 440,911 units, a 40.5% decline
compared to 740,795 units sold in 1H 2013. The Jan-Jun sales of 1-Ton pick-up/PPV and
passenger cars were lower than 1H 2013 by 35.0% and 47.8% respectively.
Source: The Federation of Thai Industry (Automotive Industry Club)
19
Thailand Domestic Car Sales
Unit: Million
Others
0.5
Passenger Car
1 -Ton Pick up/PPV
0.5
0.4
-33.8%
0.4
0.3
0.19
0.3
0.10
0.2
0.2
0.1
0.1
0.0
0.11
0.07
0.09
0.09
0.09
0.09
0.09
0.12
0.11
0.11
0.09
0.09
0.22
0.20
0.16
0.15
0.11
0.11
0.06
0.16
0.15
0.05
0.18
0.19
0.18
0.15
0.15
0.12
0.13
0.14
0.09
0.09
0.11
0.10
Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14
 Domestic car sales in Q2 2014 were 216,740 units, which was 34% below the sales volume
of 327,539 units in Q2 2013. Both sales of 1-Ton pick-up/PPV and passenger cars were
lower than Q2 2013 by 32.5% and 37.7% respectively.
Source: The Federation of Thai Industry (Automotive Industry Club)
20
Thailand Export Car Sales
Unit: Million
1.4
1.2
Global
Financial
Crisis
1.0
0.8
0.6
0.69
0.54
0.4
0.44
1.13
1.2
1.03
0.90
+3.6%
0.74
0.54
0.54
0.56
0.33
0.2
0.0
0.78
Flood
0.18
0.18
0.24
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F
6M13 6M14
 Export car volume during Jan-Jun 2014 increased 3.6% to 560,047 units, compared to
540,604 units in Jan-Jun 2013.
Source: The Federation of Thai Industry (Automotive Industry Club)
21
Agenda
1.
Company Profile
2.
Industry Overview
3.
Financial Performance
4.
Strategy and Direction
22
Financial Highlights
Jan-Jun
2012
Jan-Jun
2013
Jan-Jun
2014
Revenues
7,223
8,732
7,561
Growth%
+28%
+21%
-13%
478
670
329
GM%
6.9%
7.9%
4.6%
SG&A
395
438
389
Associate
170
135
85
Int. & Tax
162
182
117
Net Profit
376
473
261
5.2%
5.4%
3.5%
ROE (%)
-3.5%
19.1%
7.5%
ROA (%)
-1.1%
7.4%
3.3%
1.19
0.97
0.77
In Million
Baht
GM
NP%
D/E (x)
Jan-Jun 2014 Highlights
• Revenues fell 13.0% y-o-y, lower than
industry decline of 29%, thanks to
strong growth in dealership in Malaysia.
• Gross margin (GM) % declined y-o-y,
attributable to lower sales, high fixed
costs and increases in car dealership
sales which has low margins.
• SG&A decreased y-o-y, in line with
lower sales.
• Interest and tax expenses declined, due
to lower debt and lower taxable income.
• Net profit margin declined from 5.4% in
Jan-Jun’13 to 3.5% in Jan-Jun’14.
23
Revenues & Net Profit Overview
Unit: Million Baht
Total Revenues
Net Profit
22,000
Global
Financial
Crisis
1 7,000
1 2,000
Flood
11,758
16,998
16,811
10,786
9,513
8,732
7,366
7,561
7,000
2,000
(116)
(3,000)
927
394
230
634
473
261
(392)
2008
2009
201 0
201 1
201 2
201 3
6M1 3
Net Profit %
2.4%
-1.6%
3.4%
-3.6%
5.5%
3.7%
5.4%
3.5%
Sales Growth%
-2%
-23%
+60%
-8%
+56%
+1%
+21%
-13%
6M1 4
Note: 2013 results included Bt.903 m. insurance income and Bt.852 m. impairment loss; 2012 results included Bt.145 m. insurance income.
24
Total Revenues : AAPICO Group
Unit: Million Baht
Auto Parts
Dealers
Other income
Insurance
10,000
Dealers
8,732
9,000
7,561
8,000
7,000
6,000
5,000
4,000
Auto Parts
4,049
3,173
4,561
5,028
4,685
6M14, 6M13,
39% 26% 6M12,
4,047 3,927
4,338
21%
3,692 3,869
6M14,
6M12, 6M13,
61%
79% 74%
3,000
2,000
1,000
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
6M13 6M14
 For the first half of 2014, total revenues were
13% lower than Jan-Jun 2013, compared to the
industry decline of 29%, as strong growth of car
dealership in Malaysia helped compensate the
decline of auto parts sales in Thailand and China.
 Q2 Revenues declined by 4% compared to Q2’13,
despite the 29.7% decline of industry. The auto
parts sales decline was largely offset by growth in
dealership Malaysia and Thailand.
 Compared to Q1’14, sales grew 5% driven by
continued growth in car dealership.
25
Sales & Profit : Automobile Parts
Unit: Million Baht
Sales
8,000
EBIT
6,214
6,000
4,000
2,469
3,032
2,943
3,559
4,422
3,295
2,919
2,708
2,139
2,336
2,000
2,086
479
230
1Q12
2Q12
CN
8%
TH
92%
Jan-Jun 201 4
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
6M13 6M14
 During Jan-Jun’14, sales of auto parts declined by 28.8% compared to
Jan-Jun’13. Sales in Thailand dropped 29.6%, in line with the industry
decline of vehicle production volume.
 EBIT for the first 6 months decreased Baht 249 million compared to
the same period last year, largely due to lower sales. As percentage of
sales, EBIT margin declined from 7.7% in 1H’13 to 5.2% in 1H’14.
26
Sales & Profit : Car Dealership
Unit: Million Baht
Sales
EBIT
4,000
2,786
3,000
2,231
2,000
1,000
1,361
902
534
1,320
1,248
1,104
983
1,231
1,238
1,548
1Q12
2Q12
TH
33%
MY
67%
Jan-Jun 201 4
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
41
63
6M13
6M14
 Car dealership sales during Jan-Jun 2014 grew 24.9% compared to the
same period last year, driven by good growth in Malaysia (+50.9%).
Sales of dealers in Thailand were 7.4% below last year as 1H’13 had
positive impact from the 1st car buyer scheme carried over from 2012.
 EBIT for the first 6 months increased Baht 22 million, driven by higher
sales. EBIT margin improved from 1.8% in 1H’13 to 2.3% in 1H’14.
27
EBITDA
Unit: Million Baht or as % of revenues
EBIT
1,200
Insurance/Impairment
Depreciation
1,000
892
800
600
400
436
478
538
470
646
422
334
243
341
305
1Q14
2Q14
274
200
-
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
EBIT%
4Q13
6M13
6M14
EBITDA%
16.0%
10.8%
12.0%
8.0%
10.7%
7.7%
4.5%
4.0%
10.5%
5.4%
5.8%
10.0%
6.2%
10.4%
9.2%
8.5%
6.3%
5.0%
4.4%
3.7%
2.1%
10.2%
7.9%
5.6%
3.3%
8.5%
3.9%
1.1%
0.0%
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
28
4Q13
1Q14
2Q14
6M13
6M14
Net Profit
Unit: Million Baht or as % of revenues
Net Profit (Core)
800
Associate Income
Insurance/Impairment
600
200
377
276
400
473
284
174
100
261
189
154
150
11
107
1Q12
2Q12
3Q12
4Q12
1Q13
Net Profit%
2Q13
3Q13
4Q13
1Q14
2Q14
6M13
6M14
Net Profit% (excl. insurance/impairment)
12.0%
9.0%
6.0%
7.5%
6.8%
6.1%
4.7%
3.8%
3.2%
3.8%
3.0%
5.4%
4.2%
3.5%
2.8%
0.3%
0.0%
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
29
4Q13
1Q14
2Q14
6M13
6M14
Return on Equity
ROE (In the Quarter)
ROE (Seasonally adjusted)
60%
40%
20%
9.0%
7.1 %
1 8.7% 21 .4% 1 9.1 % 1 8.5%
8.0%
0%
-9.5%
-9.1 %
4Q11
1Q12
-3.5%
-2.7%
2Q12
3Q12
1 1 .6%
9.0%
7.5%
4Q13
1Q14
2Q14
-20%
-40%
-60%
-80%
1Q11
2Q11
3Q11
4Q12
1Q13
2Q13
3Q13
 Return on Equity (ROE) decreased from 9.0% in Q1’14 to 7.5% in Q2’14, which was
about the same level as in Q2’11 before flood at 7.1%. The ratio decline compared to
Q2’13 was due to lower profit, following the slowdown of automotive industry.
30
Return on Assets
ROA (In the Quarter)
ROA (Seasonally adjusted)
30%
20%
10%
3.6%
2.8%
3.0%
0%
-3.4%
-2.9%
-1 .1 %
4Q11
1Q12
2Q12
-0.9%
3Q12
6.7%
8.0%
7.4%
7.6%
4Q12
1Q13
2Q13
3Q13
5.0%
4.0%
3.3%
4Q13
1Q14
2Q14
-10%
-20%
-30%
1Q11
2Q11
3Q11
 Return on Asset (ROA) as of Q2’14 was 3.3%, compared to 4.0% as of Q1’14 and 7.4%
as of Q2’13. Lower profit was the main reason of the ratio decline.
31
Interest Coverage Ratio
Interest Coverage Ratio (In the Quarter)
Interest Coverage Ratio (Seasonally adjusted)
10.0
5.0
3.80
3.1 6
3.30
(0.25) (0.26)
0.0
0.61
0.70
2Q12
3Q12
4.34
5.00
4Q12
1Q13
4.77
4.69
2Q13
3Q13
3.59
3.1 7
2.94
4Q13
1Q14
2Q14
-5.0
-10.0
1Q11
2Q11
3Q11
4Q11
1Q12
 Interest Coverage Ratio decreased from 4.77x as of Q2’13 and 3.17x as of Q1’14 to
2.94x as of Q2’14. The main reason for the ratio decline was the decrease of profit,
which was more than the lower financing costs.
32
Capital Structure
Unit: Million Baht
Net interest-bearing debt to equity ratio as end of Jun’14
continued to decline to 0.77x compared to 0.97x in Q2’13
and 0.85x in Q4’13. This was in line with the plan to reduce
loan outstanding with banks.
Interest-bearing Debt
Longterm
43%
Short
-term
27%
CPLTD
37%
Total bank debt decreased
Baht 17 million during Q2
to Baht 4,336 million at
end of Jun’14, which was
Baht 893 million lower
than Q2’13.
Cash & Current Inv.
Debt
Equity
D/E
(L-C)/E
6,000
2.5
5,000
2.06
2,000
1.36
1.20
2.0
2.00
1.74
1.72
4,000
3,000
1.99
1.25
0.93
1.19
1.24
1.07
1.64
1.00
1.52
0.97
1.41
0.91
1.5
1.25
0.85
1.23
0.78
1.18
1.0
0.77
0.5
1,000
-
2010
2011
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
33
Capital expenditures
Capex
Forecast
1,800
1,600
1,400
Capital expenditures for the first 6 months
of 2014 were Baht 230 million, which was
Baht 117 million lower than capex in JanJun ’13 at Baht 347 million.
1,649
1,200
1,000
1,145
1,237
800
600
734
400
200
347
230
2010
2011
2012
2013 2014F
230
6M13 6M14
Capex
300
Capex in Q2’14 were Baht 34 million
compared to Baht 197 million in Q1’14 and
Baht 181 million in Q2’13.
250
243
200
150
167
197
181
143
100
34
50
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
34
Agenda
1.
Company Profile
2.
Industry Overview
3.
Financial Performance
4.
Strategy and Direction
35
Business Strategy
THAILAND
MALAYSIA
INDONESIA
PHILLIPPINES
CHINA
To be a leading
automobile parts
manufacturer in
Asia, a Thailand
footprint for
world-class global
manufacturer.
JAPAN
AMERICA
ASIA
INDIA
EUROPE
36
Finance Strategy
Shareholder portfolio
and generate return
to shareholders
Equity
Profitability
Improve profitability
through margin
management
Maximize
shareholder
value
Portfolio
diversification
Liquidity
37
Cash flow
management
Thailand Automotive Outlook
Production
Forecast
Domestic
Export
3.5
3.0
3.0
2.5
2.5
2.0
Global
Financial
Crisis
1.5
1.0
0.5
0.0
0.5
0.6
0.8
0.9
1.1
1.2
1.3
1.4
1.0
Flood
1.6
2.6
2.5
1.2
2.4
1.5
1.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
 Forecasted vehicle production volume for 2014 remains at about 2.2 million units,
with estimated full year domestic car sales at around 950,000-1,000,000 units and
export car sales at around 1,200,000 units.
Source: The Federation of Thai Industry (Automotive Industry Club)
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Disclaimer
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
[email protected]
Tel: 66 (0) 2613-1504
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