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Daibochi Plastic & Packaging Industry Berhad Corporate Presentation – AGM 2017 24 May 2017 IR Adviser AQUILAS
Daibochi Plastic & Packaging
Industry Berhad
Corporate Presentation – AGM 2017
24 May 2017
IR Adviser
AQUILAS
FY2016 Financial Performance
Delivering healthy returns…
Operations Highlights Financial Review Investment Merits Corporate Profile
3
Export sales the key revenue driver in 2016… Daibochi inexpansion mode in 2016 to catalyse future growth
INCOME STATEMENT & BALANCE SHEET
Balance Sheet Highlights As at 31.12.16 As at 31.12.15
Net gearing 0.20x 0.14x
Return on Average Shareholders Equity 13.2% 15.3%
Return on Average Total Assets 8.1% 9.1%
Operations Highlights Financial Review Investment Merits Corporate Profile
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Consistent dividends and payout ratio…
DIVIDEND HISTORY
9.4 10.1 15.2 17.1 14.8 16.0 14.8
51.6% 50.3%61.5% 61.3% 62.2% 60.0% 60.2%
0.0 %
25. 0%
50. 0%
75. 0%
100 .0%
0.0 00
6.0 00
12. 000
18. 000
2010 2011 2012 2013 2014 2015 2016
Dividend Payout
Dividend Payout (RM 'mil) Payout Ratio
3.4 3.7 5.5 6.2 5.4 5.9 5.4
2010 2011 2012 2013 2014 2015 2016
Net Dividend Per Share (sen)*
• Dividends in respect of FY2016• Paid four interim dividends amounting to 5.42 sen per
share or RM14.76 million in total payouts
• Daibochi has a dividend policy to distribute
60% of net profits to shareholders
*Adjusted for 1-for-2 bonus issue, effective 10 Sep 2012; and
1-to-2 share split and 1-for-5 bonus issue, effective 22 Feb 2016
Stock charts (5-Year & 1-Year)
5YR outperformance: 240.5%
1YR outperformance:
22.2%
19 May ‘16 KLCI: 1633.76 DPP:MK: 2.10*
19 May ’17 KLCI: 1768.28 DPP:MK: 2.74
18 May ’12 KLCI: 1532.46 DPP:MK: 0.77*
19 May ’17 KLCI: 1768.28 DPP:MK: 2.74
Operations Highlights Financial Review Investment Merits Corporate Profile
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Bonus and 5-year free warrants issue to broaden shareholder base and raise up to RM68.3 million for working capital…
CORPORATE EXERCISE
• Proposed 2-for-10 bonus issue of up to54.6 million new ordinary shares
» Enhance trading liquidity of Daibochi sharesand potential to broaden shareholder base
» Enlarged share capital through capitalizationof retained earnings
• Proposed 1-for-10 free warrants issue of upto 27.3 million new 5-year warrants
» Indicative exercise price of RM2.50 to raiseRM68.3 million for working capital
- To finance, amongst others, salaries,repayment to trade creditors as well asgeneral expenses
» Low cost entry for shareholders to increaseequity participation in the Group
• Obtained approval from Bursa Malaysia inApril 2017; exercise expected to complete in2Q17
As at LPD of 29
March 2017
After bonus
issue of shares
After issue of
warrants
Assuming full
exercise of
warrants
Share capital 136,819 164,144 164,144 232,455
Share premium 2,950 - - -
Translation reserve 595 595 595 595
Treasury shares - - - -
Retained earnings 47,753 23,378 23,168 23,168
Warrants reserve - - 2,732 -
Discount on shares - - (2,732) -
Shareholders' equity 188,177 188,177 187,907 256,218
No. of ordinary shares excl.
treasury shares 273,246 327,895 327,895 355,220
Proforma Effects
Operational Highlights
Enlarging regional footprint…
Operations Highlights Financial Review Investment Merits Corporate Profile
Achieved Higher Exports
• FY2016 exports increased 12.6% year on year to RM204.0 million(FY2015: RM181.2 million) on greater sales to SEA and ANZ
• Export contribution rose to 55% of total group revenue (FY2015: 53%)
Completed Facilities Expansion
• Increased built-up area of DPP Plant 2 to 140,000 sq ft (from 80,000sq ft) for additional warehousing and production floor space
• Increased in-house blown film-making capacity to 5,000 metric ton (MT)per annum (from 1,800 MT)
Driven by higher exports and new product innovations…
OPERATIONAL AND CORPORATE HIGHLIGHTS 7
55%
45%
FY16 Revenue: RM371.2 mil
Domestic
Exports
Operations Highlights Financial Review Investment Merits Corporate Profile
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Maintaining excellence in corporate governance…
OPERATIONAL AND CORPORATE HIGHLIGHTS (cont)
• Secured for the third consecutive year the Minority ShareholderWatchdog Group’s (MSWG) Excellence Award for Top CorporateGovernance And Performance in 2016 for companies with marketcapitalisation of between RM300 million to RM1 billion
• Ranked among the Top 100 Companies in the Malaysian Chapter ofthe MWSG-ASEAN Corporate Governance Transparency Index 2016
Received Awards & Recognition
Operations Highlights Financial Review Investment Merits Corporate Profile
• Daibochi and Myanmar Smart Pack Industrial Company Limited (MSP) incorporated Daibochi Packaging (Myanmar) Co. Ltd. (DPM) in Myanmar
• Daibochi to invest USD6.8 mil for 60% stake in DPM,and MSP would transfer its entire existing business,production assets, as well as workforce into DPM tohold the balance 40% stake in the JV
• DPM to invest USD5.5 mil over three years via internalfunds to enhance production capacity, quality, andefficiency
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Investment in Myanmar to tap into low-cost manufacturing base…
OPERATIONAL AND CORPORATE HIGHLIGHTS (cont)
Invested in Myanmar subsidiary
Myanmar Smart Pack Industrial
Company Limited
• One of the leading flexible consumer
packaging manufacturers in Myanmar
focusing on Home Personal Care products
• Strategically located in industrial estate
30 minutes from Yangon
• Future potential to expand factory size by 3x
Operations Highlights Financial Review Investment Merits Corporate Profile
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Flexible packaging expected to see double-digit growth, driven by foreign investment and industry modernisation…
OPERATIONAL AND CORPORATE HIGHLIGHTS (cont)
• QUICK FACTS ON MYANMAR:
» Population (1) : More than 50 million
» Flexible packaging USD40 million (2014), growing at 6% p.a.,
market size (2) : estimated to grow 22% for next 5 years
» Flexible packaging <USD1 per pax
consumption per capita (2) : (Regional counterparts: Indonesia USD13,
Vietnam USD9, India <USD5)
» Myanmar is gradually liberalising its political and economic landscapes,
adopting pro-business policies and encouraging foreign investment
• Sources:
(1) 56.9 million according to CIA World Factbook
(2) PCI Wood Mackenzie, 2015
Operations Highlights Financial Review Investment Merits Corporate Profile
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Leveraging strengths & synergies to accelerate expansion in high-growth markets…aiming to be supplier of choice to MNCs
WIDER PRODUCT RANGE
• DPM to benefit from technology transfer from Daibochi Malaysia (CPP & metalliser)
• Daibochi Malaysia to fulfil product line gap in the interim
• Expand F&B packaging line leveraging on Daibochi Malaysia’s strengths and long-term relationships with MNCs
SIGNIFICANT LOW-COST ADVANTAGE
• Capitalise on low manufacturing cost advantage to export to cost-sensitive customers in SEA
• Benefit from bulk purchases of raw materials (e.g. resin)
• Enjoy cost savings from production of in-house film
HUMAN CAPITAL DEVELOPMENT
• Access to ample workforce pool; opportunities for skillset upgrading and optimisation
• To tap into Daibochi’sR&D and specialty films, develop sales team, & enhance production efficiency
• To attain international certifications in food safety, quality & environment management
STRONG CASHFLOW & DIVIDENDS
• Able to fund future growth, without requiring additional capital injection from shareholders
• Targeting dividend payment from Year 3 onwards
• Aiming to secure 3- or 5-year tax exempt status
OPERATIONAL AND CORPORATE HIGHLIGHTS (cont)
OPERATIONAL SYNERGIES FINANCIAL BENEFITS
Growth Strategies
Boosting clientele while improving efficiency…
Operations Highlights Financial Review Investment Merits Corporate Profile
Capacity expansion and efficiency improvement positionsGroup to target new growth opportunities…
GROWTH STRATEGIES
Securing New Customers
• Commenced supply of flexible packaging a major regional food and beverage player withrenowned home-grown brands in Indonesia in 1Q17
• Conducting trial production run for new MNC customer for fast moving consumer goodsproduct line in Indonesia; targeting supply commencement in 2H17
• Undergoing qualification process with MNC customer for the Indonesia market; targetingqualification in FY2017
Improving Operating Efficiency
• Received approval from local authorities to hire 150 foreign workers to alleviate labourshortage issues.
• Engaged 46 foreign workers in 1Q17; with the remaining expected in subsequentmonths.
• Lowering costs by improving wastage control through employee education
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Operations Highlights Financial Review Investment Merits Corporate Profile
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Myanmar operations set to kick off in mid-2017… already making good headstart with uptrending sales prospects
GROWTH STRATEGIES (cont)
• Secured regulatory approval from the Myanmar InvestmentCommission (MIC) for investment in Myanmar
• DPM to begin supplying packaging to MSP’s existing businessin Myanmar
» Also on track to supply label packaging for a majorbeverage brand in Myanmar in 4Q17
» DPM set to start exporting to SEA in 3Q17 tocomplement Malaysian plant in covering wider base
• DPM to be training ground for Group’s workforce
» Higher skilled DPM workers may be sent to Malaysianoperations
• DPM is set to contribute significantly to the Group’s financialperformance effective from 3Q17
Setting Up Production Overseas
Daibochi Managing Director Lim Soo Koon exchanging
documents with MSP Executive Director Kyaw Win Tun
during the signing ceremony, witnessed by
Daibochi Chairman P. James Edwin (centre),
Executive Director Low Jin Wei (far left) and MSP Business Development Manager Ye Wint Oo (far right)
THANK YOU
Bursa: DAIBOCI/8125 Bloomberg: DPP:MK Reuters: DPPM.KL
