3Q2019/ YTD3Q2019 RESULTS PRESENTATION · 8 Your Integral Component to Success 8 CONSUMER PRODUCTS...

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3Q2019/ YTD3Q2019

RESULTS PRESENTATIONTuesday, 5 November 2019

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AGENDA

By moving forward and thinking

forward,

Serial System helps its partners to be

more competitive in the marketplace,

today and in the future

CORPORATE OVERVIEW

FINANCIAL RESULTS

OUTLOOK & STRATEGIES

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3Your Integral Component to Success

CORPORATE OVERVIEW

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One of Asia Pacific’s

largest electronic distribution

networks

Wide product range and diversified customer portfolio

One of the largest electronic

components distributor

listed on SGX

Total Shares: 896 million

Free Float: 40%Market Capitalisation: S$71M

(As at 5 Nov 2019)

Dividend yield: 2-22% p.a. over 10 years

(YTD3Q2019: 2.8%)P/B: 0.36 PE: 5.26

SERIAL SYSTEM AT A GLANCE

YTD3Q2019 FY2018

Hong Kong 49% 61%

China 12% 11%

South Asia 27% 17%

South Korea 4% 5%

Taiwan 8% 6%

100% 100%

YTD3Q2019 FY2018South Asia 100% 100%

SERIAL

SYSTEM

listed in

Singapore

in 1997

Consumer Products (4%)*

Electronic Components (95%)*

* Group Revenue

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Supporting a network of global brands, Serial System is a leading distributor of electronic components in Asia and a dealer

for a variety of consumer products. It is also a strategic investor in businesses in healthcare and managed print services.

EXTENSIVE NETWORK & DIVERSIFIED BUSINESS

Electronic ComponentsDistribution

Consumer ProductsDistribution

Managed PrintServices

Hospitality and Healthcare Solutions

Medical DevicesAssemblyand Distribution

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… more than 90 Franchised Product Lines in Serial Group

PARTNERING LEADING SUPPLIERSElectronic Components Distribution

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PARTNERING LEADING SUPPLIERSConsumer Products Distribution

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CONSUMER PRODUCTS DISTRIBUTION

• The Group’s 100%-owned subsidiary: Achieva Technology Sdn. Bhd.

• Major suppliers include AMD and Intel.

• Achieva Technology works closely with partner brands to both fulfil their distribution needs and to create a one-stop solution for their customer needs in both end-user and enterprise markets.

• In the modern e-commerce market, Achieva Technology already maintains key channels on online platforms such as Qoo10 and Lazada.

Achieva Technology Pte Ltd

• The Group’s 100%-owned subsidiary: Swift-Value Business Pte. Ltd.

• Major suppliers include Hewlett-Packard (HP), Epson and Canon. Also the authorized reseller of products from major brands such as Fuji Xerox, Samsung, Oki and Panasonic.

• Swift-Value is the largest HP printer supplies distributor, having captured over 45% of the Singapore market. They keep their top spot by maintaining close relationships with hundreds of customers, ranging from heartland operators to large retail superstores s uch as Popular.

• Providing fast and value-added service and having the ability to retain customer loyalties help Swift-Value offers an extensive and consistent network for their suppliers and partner brands.

Swift-Value Business Pte. Ltd.

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• Started in 2014, Singapore-based Print-IQ is 70%-owned by Serial System since May 2017

• Provides managed print services and maintains and distributes copiers and printers

• Premier partner for HP copiers

CONSUMER PRODUCTS DISTRIBUTIONManaged Print Services

Under the managed print services business model, companies outsource their printing, scanning and copying functions, as well as the management of the equipment, to external service providers like Print-IQ and PT SMI. This reduces their operating costs and wastage.

• Set up in 2008, PT SMI is 20% owned by Serial System since November 2018

• Listed on Development Board of Indonesia Stock Exchange

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10Your Integral Component to Success 10

OTHER BUSINESSESPart of Group’s diversification into investment holding of high-margin companies

• Core businesses: Hospitality and Healthcare solutions

• Hospitality solutions: Build based on a core venue management application suite known asVenue360.

• Leading edge modules within Venue360: Electronic meal ordering system (eMOS), IntelligenceRoom Infotainment Solution, Digital Media Content Management System, and IncidentTracking and Reporting System.

• Clients: Khoo Teck Puat Hospital, Ng Teng Fong General Hospital, Jurong Community Hospital,Changi General Hospital, Institute of Mental Health, St Andrew’s Hospital, Gleneagles Hospital,Mount Elizabeth Orchard, Parkway East Hospital, Parkway Mount Elizabeth Novena, YishunCommunity Hospital, Sengkang Hospital, Sengkang Community Hospital and Alexandra

Integrated Health.

Serial MultiVision Pte. Ltd. (100%-stake)

• Assembly and distribution of medical devices

• Offers full range of standard and customised perfusion tubing

packs marketed over the Asia-Pacific region: • Customized Heart Lung Pack• Blood Cardioplegia Set• Angio Pack• Sterile Procedural Pack

• SurgiAid ® Collagen Wound Dressing

• Company is ISO 13485-certified and its perfusion products bear the coveted CE certification mark.

Contract Sterilization Services Pte Ltd (100%-stake)

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FINANCIAL RESULTS

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US$’000 3Q2019 3Q2018 Change (%) YTD3Q2019 YTD3Q2018 Change (%)

Sales 184,612 385,567 (52) 615,864 1,199,490 (49)

Gross Profit 11,706 30,221 (61) 41,792 95,222 (56)

Gross Profit Margin (%) 6.3 7.8 (1.5 pt) 6.8 7.9 (1.1 pt)

Net Profit After Tax(Attributable to equity holders of the Company)

2,000 10,267 (81) 7,429 17,499 (58)

EPS - fully diluted (US cents)(1) 0.22 1.14 (81) 0.83 1.95 (57)

NAV per share (US cents)(2) 30/09/2019: 15.54 31/12/2018: 15.26

(1) Earnings per ordinary share on a fully diluted basis are computed by dividing net profit attributable to equity holders of the Company by the weighted average number of shares in

issue during the period of 895,841,914 (3Q2018/ Year-To-Date 30/09/2018: 895,841,914) after adjusting assumed conversion of all potential dilutive ordinary shares.

(2) Net asset value per ordinary share as at 30 September 2019 and 31 December 2018 is calculated based on the net assets value attributable to the equity holders of the Company

as at the end of the respective period and the respective aggregate number of ordinary shares of 895,841,914.

SNAPSHOT OF 3Q2019 & YTD3Q2019 PERFORMANCE

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• Revenue of US$184.6M in 3Q2019, a decrease of 52% from US$385.6M in 3Q2018

• Mainly due to the termination of the electronic components distribution business with Texas Instruments (“TI”)

• Excluding the impact of decline in turnover due to TI termination, turnover for the electronic components distribution business would have

increased by 21%, despite the ongoing and broadening trade tensions between China and United States. The increase was attributable to

increased sales for certain existing product lines and contribution from new product lines as the Group realigned its resources to grow these

product lines following TI termination

• Consumer products distribution sales also declined due to weak demand in the markets (Singapore and Malaysia) in which the Group operates,

and the Group’s continued rationalisation and exit of non-profitable products

• Gross profit margin decreased to 6.3% in 3Q2019 from 7.8% in 3Q2018

• Lower margins achieved by the electronic components distribution business as a result of keen market competition in a challenging environment

• NPAT decreased by 81% to US$2.0M in 3Q2019 from US$10.3M in 3Q2018

3Q2019 HIGHLIGHTS

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• Revenue of US$615.9M in YTD3Q2019, a decrease of 49% from US$1.2B in YTD3Q2018

• Mainly due to the termination of the electronic components distribution business with Texas Instruments (“TI”) which has impacted sales in all

markets in Asia

• Taking out the impact of decline in turnover due to TI termination and discontinuation of a product line in March 2018, turnover for the

electronic components distribution business would have increased by 13%. This was attributable to the Group’s conscientious efforts to grow its

existing product lines and contribution from new product lines which the Group secured post-TI termination, despite the continuous trade

tensions between China and United States which have dampened market sentiment

• Consumer products distribution sales also declined due to weak demand and keen competition in the markets (Singapore and Malaysia) in which

the Group operates, and the Group’s continued rationalisation and exit of non-profitable products

• Gross profit margin declined to 6.8% in YTD3Q2019 from 7.9% in YTD3Q2018

• Lower margins achieved by the electronic components distribution and consumer products distribution businesses resulting from keen market

competition in a challenging environment

• NPAT decreased by 58% to US$7.4M in YTD3Q2019 from US$17.5M in YTD3Q2018

YTD3Q2019 HIGHLIGHTS

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-

200

400

600

800

1,000

1,200

1,400

1,600

44 92

186 184 183 228

315 354

382

545

616 658

817

1,036

1,222

1,403

1,492 1,527

405.2 408.7 385.6 327.6

229.9 201.4 184.6

Revenue (US$' million)

2%

REVENUE GROWTH TRENDSERIAL SYSTEM GROUP

6%

15%

18%

27%

24%

7%

13%

43%

8% -52%

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-

200

400

600

800

1,000

1,200

1,400

1,600

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

545 616

658

817

1,036

1,222

1,403

1,492 1,527

-

50

100

150

200

250

300

350

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

205 207 205 209

229 232 241

285

323

-0.9%

Asia Pacific (including Japan)Semiconductor Revenue (US$' billion)

Source : World Semiconductor Trade Statistics/

Semiconductor Industry Association

1.0%

2%

Serial System Revenue (US$' million)

24%

27%

18%

9%

1%

7%

13%

4%

15%19%

6%

OUTPERFORMING THE INDUSTRY

13%

2%

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PROFITABILITY

33.4

50.7

57.5 62.6

73.5

90.4 91.5

97.4

105.1

118.6

31.4 33.6 30.2 23.4

16.7 13.4 11.7

8.7%

9.3%9.3% 9.5%

9.0% 8.7%

7.5% 6.9%7.0%

7.8%

7.7%8.2%

7.8%

7.1%7.3%

6.7%

6.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19

Gross Profit & Gross Profit Margin(US$' million)

GP GP%

23%

6%

8%

1%

17%

13%

9%

13%

52%

-61%

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PROFITABILITY

5.1

12.0

10.1

7.9

11.2

16.1

11.0

4.6

9.6

17.7

5.2

2.0

10.3

0.2

3.2 2.3 2.0

1.3%

2.2%

1.6%

1.2%1.4%

1.6%

0.9%

0.3%

0.6%

1.2%1.3%

0.5%

2.7%

0.05%

1.4%

1.1% 1.1%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0


Net Profit & Net Profit Margin(US$' million)

Net Profit Net Profit Margin (%)

-21%

133%

-16%

41%

44%

-31%

-59%

110%

85%

-81%

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PROFITABILITY

8.8

20.2 19.9 18.9

22.0

30.8

26.0

23.5

26.1

43.2

11.1

8.1

20.3

3.7

6.5 5.5 4.8

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0


EBITDA (US$' million)

-5%

130%

-2%

17%

40%

-16%

-9%

11%

65%

-76%

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173.8

218.3 211.5

277.0

347.8

382.6

430.6

468.6 458.5

309.0

120.7

147.5 147.0

218.7

295.6

324.1

372.0

397.5 371.5

211.9

1.4 1.5

1.4

1.3

1.2

1.2

1.2 1.2

1.2

1.5

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

-

100.0

200.0

300.0

400.0

500.0

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 YTDSep19

Maintaining Healthy Current Ratio

Current Assets Current liabilities Current Ratio

FINANCIAL POSITION

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FINANCIAL POSITION

86.5

98.7

104.5 110.0

122.2 119.4 124.8

145.0 144.5 145.9

37.6

71.2

56.3

97.9

120.2

138.0 139.3

166.5

155.9

75.6

43%

72%

54%

89%

98%

116%112%

115%

108%

52%

0%

20%

40%

60%

80%

100%

120%

140%

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0


Net Gearing Ratio

Shareholders' Equity Net Borrowings Net Gearing Ratio

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FINANCIAL POSITION

38

55 61

62

67

53 49 51

54

84

31 36

33

32 33

33 33 35

29 36

44 51 41

30 32

38 40 42 41

59 51

70 69

60

66 58

56 58

66

107

25

35

45

55

65

75

85

95

105

115


Cash Conversion Cycle (days)

Trade Receivable Turnover (days) Trade Payable Turnover (days) Inventory Turnover (days) Cash Conversion Cycle (days)

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- 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

1H19

0.33

0.13

0.28

0.30

0.22

0.24

0.30

0.35

0.18

0.29

0.40

0.22

0.16

0.25

1.00

0.25

0.38

0.67

0.33

0.30

0.30

0.75

0.50

0.17

0.46

0.46

Interim Special Final

Total Dividend Payout

(In Cent (SGD))

(Interim & Final) each year

DIVIDEND YIELD

21.9%

4.6%

2.4%

6.3%

8.0%

Singapore

Cents

6.3%

5.0%

7.9%

6.1%

8.5%

8.9%

2.8%

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OUTLOOK & STRATEGIES

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Uncertainties

? Greater uncertainty in the global market due to continuing US-China trade tensions, as well as Japan and South Korea

? Global economic slowdown and keen market competition

? Slowdown in semiconductor industry

Bright spots

New applications in IoT, AI, mobility services and autonomous vehicles

China creates semiconductor supply chain fund worth US$28.9 billion

INDUSTRY OUTLOOK

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• Exploring opportunities for potential partnerships and revenue streams

• Reviewing its operations and reallocating resources and personnel to boost efficiency and

reduce costs

• Barring unforeseen circumstances, the Group expects to remain profitable for the financial

year ending 31 December 2019

GROUP OUTLOOK

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The presentation herein may contain forward-looking statements by the management of Serial System Ltd (“Serial System”) that pertain to expectations for financial performance of future periods versus past periods.

Forward–looking statements involve certain risks and uncertainties because they relate to future events. Actual results may vary materially from those targeted, expected or projected due to several factors. Such factors are, among others, general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures as well as changes in tax regimes and regulatory developments. Such statements are not and should not be construed as management’s representation on the future performance of Serial System. Therefore, the actual performance of Serial System may differ significantly from expressions provided herein.

This presentation does not constitute an invitation or an offer to sell, or solicitation of an offer to buy any securities in connection with, any contract or commitment whatsoever.

This presentation has been prepared exclusively for the parties presently being invited for the purposes of discussion. Information contained in this presentation does not constitute a prospectus or offering circular in whole or in part.

Thank You

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