caraboa

Strictly Private & Confidential
Carabao Group PCL
Q1’15 Presentation
Strictly Private & Confidential
Section 1
Overview
Carabao Group structure
Carabao
Tawandang
Co., Ltd.
100% owned
Tawandang
DCM Co., Ltd.
100% owned
Asia Pacific
Glass Co., Ltd.
100% owned
 Manufactures, markets and sells the Group’s Carabao Dang
energy drink and Start Plus electrolyte sports drink
 Manages the distribution of the Group’s products throughout
Thailand
 Manufactures and supplies glass bottles required to manufacture
Carabao Dang
 Supplies glass bottles required to manufacture Start Plus
 Construction of a 650 million p.a. capacity glass bottle factory recently
completed with commercial operations beginning in August of 2014
 Additional glass bottle requirement is procured from third parties
2
Our product range
Non-carbonated
Non-carbonated
Carbonated
250mL glass bottle
150mL glass bottle
250mL can
325mL Sleek Can
General retail price of
THB10
Sold internationally
only
Currently sold in
Cambodia only
General retail price of
THB10
Commenced in May
2015
Mainly sold in Thailand
Targets the working population
in the low-to-moderate income
segment
Target consumers differ per
export country
Teenagers to middle-aged
consumers
Sold in Thailand only
Commenced in May
2014
Teenagers to middle-aged
consumers looking to recharge
from work/ activities
Source: Company filings
3
Key success factor
1
Strong brand recognition that associated with Thailand’s
legendary for life music band
2
Vertically integrated business model to maximise control over
supply, inputs costs, quality, and distribution
Production
Manufacturing
Distribution
Marketing
Products are available in over 20 countries with the focus on
3 tapping CLMV opportunities
4 Strong leadership and highly experienced management team
instrumental in building the business
4
1
Strong brand recognition that associated with
Thailand’s legendary for life music band
Thailand’s legendary for life music band “Carabao”
One of Thailand’s most recognized energy drink “Carabao Dang”
A brand synonymous with the way of life of its target consumers
5
1
Strong brand recognition with a market leading
position in the energy drinks market in Thailand
The Searcher Thai energy drink market brand equity index1
May 2015
47.43
41.56
27.81
20.54
M150
Carabao Dang
Redbull
Lipo
Source: The Searcher Brand Study
BRAND EQUITY INDEX (BEI) = Brand Awareness 25% + Brand Perception 25% + Brand Loyalty 50%
6
2
Vertically integrated business model - maximizes
control over supply, inputs costs and quality
Raw materials and
supplies
Own glass bottle
manufacturing*
 Other raw materials and
supplies sourced
externally
Yearly contracts for main
raw materials from
multiple sources
Manufacturing
Mixing
9 production lines
bottling Carabao Dang
3 production lines
canning Carabao Dang
2 production lines
bottling Start Plus
Capping/seaming
Quality control testing
*Guarantees supply
and limits exposure to
price volatility
Maximizes control
over quality
Distribution
Marketing
A vast network of agents
for domestic distribution
Believed to be the largest
in-house sales &
marketing team for
energy drinks in Thailand
Own "cash vans" to
ensure product
availability
 Third party logistics
International trading
partners in each export
market
Intimate relationships
with agents to
optimize countrywide
market penetration
Direct consumer
penetration nationwide
Ability to gather direct
consumer feedback
Ensures consistent
marketing message
whilst having a
regionalized in-country
approach
7
2.1
Own manufacturing facility – Maximize control over quality
CBD Manufacturing Facility
Commenced production in 2002
Bottle CBD – 9 production lines – max. prod. cap. of 1,080 million bottles p.a.
Can CBD – 3 production lines – max. prod. cap.of 350 million cans p.a.
Start+ – 2 production lines - max. prod. cap. of 120 million bottles p.a.
2015 PLAN
APR
Convert 1 canning line to produce carbonated Energy drink – max.
prod. Cap. of 90 million cans p.a
Q4
Install a new canning Carabao Dang line – max prod. Cao. of
350 million cans p.a
Total can production capacity: 700 million cans p.a
APG Glass Bottle Manufacturing Facility
Commenced production in 2014
Maximum molten glass production of 310 tonnes per day
Capable of producing approximately 650 million bottles p.a.
8
2.2
Own distribution network – Full coverage of product
distribution Active countrywide distribution management network in Thailand
The Group’s vast network of agents
 Sale and distribution management
 Three tiered agent distribution network targeted
at traditional trade nationwide
Manufacturing
 The Group’s regional and branch managers
responsible for agent selection and to maintain
close relationships at various levels
CBG has an established three tiered distribution
network comprising Tier 1 agents (one in each province),
Tier 2 agents (district level coverage) and Tier 3 agents
(selected target area and retail outlet coverage at
the sub-district level)
This multi-tiered approach enables the
Company to achieve maximum penetration
in each of its target areas
CBG’s
regional and
branch
manager
support as
well as SBD
Team
marketing
support
Tier 1 Agents:
 > 50 agents
 Focus on province-level coverage
Tier 2 Agents:
 > 1,200 tier 2 agents
 Focus on district-level coverage
Tier 3 Agents:
 Focus on sub-district-level coverage and direct relationship with retail outlets
3rd party logistics
Distribution network management, >160 staff
Raw material supply
End Consumers
Traditional retail
outlets
Tier 1
…
Tier 2
…
Tier 2
…
Tier 3
Tier 3
Tier 3
Marketing support
Constant engagement and cooperation between
CBG and agents across all levels
9
2.3
Differentiated Product Positioning – Vitamin B12
Brand performances based on selected criteria
5.00
4.50
4.00
3.50
3.00
Is a popular brand Frequently seen Highly accessible
advertisement
Get rid of
sleepiness
Carabao Dang
Refreshing
Alert and
energetic
M150
Redbull
Long acting
Contain brainnourishing
substances
Good taste
Extremely good
taste
Lipo
[ N= 1,000 each]
Source: The Searcher Brand Study May 2015
10
2.3
Marketing and promotion activities supporting brand
awareness and gain in market share
Dedicated in-house marketing team has established close relationships with multiple
media channel, enabling us to react to market trend, minimize lead time and costs
Flexible uses of multimedia channels to reach target consumers: media advertising,
on-the-ground marketing team, brand ambassador and event sponsorships
Media advertising
Brand Ambassador and events
sponsorships
Television
commercials for
wider reach
spread
Celebrity spokesperson
promoting our brand,
product as well as
enhancing corporate image
Printed
advertising in
magazine,
newspaper, and
posters
Unaware
(15.6%)
Contributed significantly in
establishing our brand
Regularly sponsor events
which appeal to target
consumers
On-the-ground marketing
More than 70 Sao Baodang
teams, consisting of over 500
members
Nationwide below-the-line
marketing and promotion
coverage
Aware / Have seen / Have heard about
“Bao Dang Girls”
(84.4%, n=844)
Promote social activities
Bao Dang Girls Team visibility amongst consumers2
Source: The Searcher Brand Study
11
2.3
Marketing and promotion activities supporting brand
awareness and gain in market share
12
3
Products are available in over 20 countries with the
focus on tapping CLMV opportunities
Myanmar
GDP CAGR ‘14
to ’18
GDP per capita
CAGR ‘14 to ‘18
9.6%
7.5%
Population
(As of May 2015
in millions)
Myanmar
Laos
"Strategically located
to serve high growth
markets"
14%
54.7
Vietnam
Thailand
7.3%
Vietnam
6.2%
4%
92.0
Cambodia
9.3%
Cambodia
8.2%
Brunei
62%
15.7
Malaysia
Singapore
Netherlands
USA
Afghanistan
Azerbaijan
Pakistan
Yemen
China
Bangladesh
Kenya
Australia
represents the % sales contribution of Myanmar, Vietnam and Cambodia to CBG’s international sales in FY2013
13
4
Strong leadership and highly experienced
management team instrumental in building the
business
Mr. Sathien Setthasit
Chief Executive Officer
• Co-Founder of the Group in 2001
Ms. Nutchamai Thanombooncharoen
Managing Director
• Co-Founder of the Group in 2001
Mr. Yuenyong Opakul
(Aed)
Senior Deputy Managing
Director
• Co-Founder of the Group
in 2001
• Lead of Carabao Band
• Brand Ambassador of the
Carabao Group Pcl
Mrs. Wongdao
Thanombooncharoen
Senior Deputy Managing
Director
– Marketing Operations /
Production
• Been with the Group
since 2008
Mr. Kamoldist
Smuthkochorn
Deputy Managing Director
– Marketing
• Been with the Group
since 2002
Mr. Paiboon
Kujareevanich
Deputy Managing Director
– CFO
• Been with the Group
since 2013
Mr. Surasak Prokati
Deputy Managing Director
– Production
• Been with the Group
since 2014
14
Market Share
Leverage strong Carabao brand recognition
Differentiated product positioning
47.7% 46.9% 46.8% 46.3%
21.7%
Market Share
Effective and extensive countrywide marketing
activities
Active distribution management
21.1% 21.5% 21.7%
17.5%
11.8% 11.2% 11.8% 12.1%
M150
2012
2013 2014
Carabao Dang
MAT
TY
2012
2013 2014
8.30% 7.90% 7.90% 7.80%
Redbull
MAT
TY
2012
2013 2014
Lipo
MAT
TY
2012
2013 2014
MAT
TY
Source: Nielsen energy drink market report, March 2015 ("Nielsen Report") | Note: (1) Estimated market share of Thai energy drink market only
15
Strictly Private & Confidential
Section 2
Financials
Sales Revenue
FY14
1Q15
28.1%
OVERSEAS SALES
71.9%
30.4%
69.6%
DOMESTIC SALES
TRADITIONAL
TRADE
MODERN
TRADE
71% 29%
1Q15 VS 1Q14
TOTAL SALES
REVENUE
(Baht mil)
FY14 VS FY13
+0.2% YoY
2,000
+8.5% YoY
1,721
1,717
8,000
1,500
6,000
1,000
4,000
500
2,000
0
7,448
6,863
2014
2013
0
2015
2014
17
Sales Revenue
1Q15 VS 1Q14
TOTAL DOMESTIC
SALES REVENUE
(Baht mil)
FY14 VS FY13
-2.4% YoY
1,500
1,226
1,197
+0.9% YoY
6,000
1,000
4,000
500
2,000
0
5,358
5,331
2014
2013
0
2015
2014
1Q15
1Q14
% Y-o-Y
FY14
FY13
% Y-o-Y
Carabao Bottle
1,185
1,226
-3.4%
5,276
5,311
-0.7%
Start Plus Bottle
12
-
100%
82
-
100%
1,197
1,226
-2.4%
5,358
5,311
0.9%
Total Sales
1Q15 VS 1Q14
TOTAL OVERSEAS
SALES REVENUE
+6.6% YoY
(Baht mil)
400
600
FY14 VS FY13
+34.7% YoY
523
2,500
491
2,091
2,000
1,552
1,500
1,000
200
500
0
0
2015
2014
2014
2013
1Q15
1Q14
% Y-o-Y
FY14
FY13
% Y-o-Y
Carabao Can
503
474
6.0%
2,001
1,479
35.3%
Carabao Bottle
20
17
24.6%
90
73
23.7%
Total Sales
523
491
6.6%
2,091
1,552
34.7%
18
Overseas Sales Analysis by Country
1Q15
1Q14
%Y-o-Y
FY14
FY13
%Y-o-Y
Cambodia
325
214
51.9%
1,006
591
70.3%
Afghanistan
40
201
-80.1%
531
492
8.0%
Myanmar
73
45
64.6%
243
126
92.6%
Yemen
37
0
100.0%
169
244
-30.6%
Vietnam
22
7
212.8%
66
44
51.1%
Others
26
24
11.0%
76
57
34.7%
Total
523
491
6.6%
2,091
1,552
34.7%
OVERSEAS SALES BREAKDOWN (As of 1Q15)
5%
VIETNAM
FOCUS COUNTRIES GROWTH TARGET (2015 VS 2014)
OTHERS
CAMBODIA
MYANMAR
VIETNAM
4%
YEMEN
7%
AFGHANISTAN
8%
MYANMAR
14%
CAMBODIA
62%
MORE THAN 50% GROWTH
19
Average Selling Price
DOMESTIC AVERAGE SELLING PRICE
OVERSEAS AVERAGE SELLING PRICE
1Q15
1Q14
%Y-o-Y
FY14
FY13
%Y-o-Y
Quantity
(Mil Bot)
161
167
-4.1%
717
742
-3.3%
Avg.
Selling
Price
7.38
7.32
0.8%
7.36
7.16
2.8%
Quantity
(Mil Bot)
2
-
100.0%
12
-
100.0%
Avg.
Selling
Price
7.18
-
100.0%
6.59
-
100.0%
1Q15
1Q14
%Y-o-Y
FY14
FY13
%Y-o-Y
Quantity
(Mil Can)
65
57
13.8%
248
182
36.2%
Avg.
Selling
Price
7.72
8.29
-6.9%
8.05
8.11
-0.7%
Quantity
(Mil Bot)
4
3
32.1%
16
13
26.1%
Avg.
Selling
Price
5.33
5.65
-5.6%
5.61
5.72
-1.9%
Gross Margin
(% to sales)
1Q15
1Q14
%Y-o-Y
FY14
FY13
%Y-o-Y
DOMESTIC
38.8%
32.2%
6.6%
33.3%
28.8%
4.5%
OVERSEAS
31.6%
36.5%
-4.9%
34.6%
34.8%
-0.2%
TOTAL
36.6%
33.4%
3.2%
33.7%
30.2%
3.5%
20
P&L
1Q15
1Q14
FY14
FY13
Baht Mil % to Rev. Baht Mil % to Rev. %Y-o-Y Baht Mil % to Rev. Baht Mil % to Rev. %Y-o-Y
Sales revenue
1,721
100.0%
1,717
100.0%
0.2%
7,448
100.0%
6,863
100.0%
8.5%
Other revenue
41
2.3%
41
2.3%
-0.1%
126
1.7%
66
1.0%
89.9%
1,761
102.3%
1,758
102.3%
0.2%
7,575
101.7%
6,929
101.0%
9.3%
Cost of good sold
(1,090)
-63.4%
(1,143)
-66.6%
-4.6%
(4,939)
-66.3%
(4,793)
-69.8%
3.0%
Selling expenses
(218)
-12.7%
(218)
-12.7%
0.1%
(973)
-13.1%
(956)
-13.9%
1.8%
Admin expenses
(84)
-4.9%
(67)
-3.9%
26.8%
(302)
-4.1%
(226)
-3.3%
33.5%
Other expenses
0
0.0%
0
0.0%
0.0%
0
0.0%
(33)
-0.5%
-100%
(1,393)
-81.0%
(1,427)
-83.1%
-2.4%
(6,213)
-83.4%
(6,007)
-87.5%
3.4%
EBIT
Financial
expenses
Profit before tax
368
21.4%
330
19.2%
11.6%
1,361
18.3%
922
13.4%
47.7%
(0)
0.0%
(30)
-1.8%
-99.3%
(112)
-1.5%
(136)
-2.0%
-18.2%
368
21.4%
300
17.5%
22.7%
1,250
16.8%
786
11.4%
59.1%
Taxation
(56)
-3.2%
(60)
-3.5%
-7.3%
(238)
-3.2%
(159)
-2.3%
49.7%
Profit after tax
313
18.2%
240
14.0%
30.2%
1,012
13.6%
626
9.1%
61.5%
Total revenue
Total expenses
21
Strictly Private & Confidential
Section 3
Business Update
New Product
Carbonated Energy Drink
325mL Sleek Can
Production Capacity: 90 million cans p.a
First Target Country: Cambodia
Retail Price: 20% Premium
Commenced in May 2015
Source: Nielsen energy drink market report, July 2014 ("Nielsen Report") | Note: (1) Estimated market share of Thai energy drink market only
23
Cash Van Team
2015 Plan
Cash Van Team Objective
Improve Distribution Coverage
Increase Sales Opportunity
Strengthen Brand Awareness
Increase Market Share
FOCUSED IN NORTHEASTERN AREA
9 Distribution Centers / 105 Vans
Currently Operated
1. Khon Kaen DC (March 2015 )
2. Udorn Thani DC (May 2015 )
2 years target: Improve distribution coverage from 85% to 95%
Source: Nielsen energy drink market report, July 2014 ("Nielsen Report") | Note: (1) Estimated market share of Thai energy drink market only
24
Promotion
DRAW DATE
First Round
10 January 2015
Second Round
10 May 2015
Third Round
10 September 2015
PRIZE
1st Prize
1,000,000 THB
1
2nd Prize
100,000 THB
20
3rd Prize
10,000 THB
200
TOTAL: 663 PRIZE WORTH 15 MILLION THB
TOTAL BUDGET: 35 MILLION THB
25
Marketing Activities
Annual marketing activities for Taxi drivers who have
registered as our Taxi Bao Dang membership,
organized 3 times a year
Total members: 60,005 members
About 2,500 members attend the event each year
MAJOR PRIZE is Bao Dang Taxi
worth more than 800,000 THB
TOTAL BUDGET: 5 MILLION THB / YEAR
There have already been 16 lucky taxi drivers who won
our Bao Dang Taxi in the past
THIS YEAR EVENT DATE
17th Taxi
26 July 2015
18th Taxi
29 November 2015
26
Marketing Activities
In Greater Bangkok and rural areas, we will have
district marketing events to create a sense of
belonging in the communities and brand awareness
In the event, there will be special lucky draw prize
which is Bao Dang Motorbike
55 Bao Dang Motorbike
Have been given away
TOTAL BUDGET: 15 MILLION THB / YEAR
27
CSR Activities
RESULT OF BAO YOUNG BLOOD
Final Round 26 April 2015
Average Program Rating: 0.54
Average Impression: 355,000 people
Total Facebook Fanpage No: 1,363,047
(An increase of 217,052)
Youtube view: 300,000
28
Q&A
29