Investor Presentation
Q2’2019
Osotspa Public Company Limited (OSP)
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Statements included or incorporated in these materials that use the word “believes”, “anticipate”, “estimate”, “target”, or “hope”, or that otherwise relate to the objectives, strategies, plans, intentions, beliefs orexpectations or that have been constructed as statements as to future performance or events, are “forward-looking statements” within the meaning that are not guarantees of future performance and involve risksand uncertainties that could cause actual results to differ materially from historical results or those anticipated at the time the forward-looking statements are made. Osotspa Public Company Limited (“OSP” or the“Company”) undertakes no obligation to publicly update or revise any forward-looking statement, whether as result of new information, future events or otherwise. OSP makes no representation and assume noliabilities against whatsoever about the opinion or statements of any analyst or other third party. OSP does not monitor or control the content to third party opinions or statements and does not endorse or acceptany responsibility for the content or the use of any such opinion or statement.
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Financial Performance
Core Strategy Updates
Key Activity Highlights
Agenda
Financial Performance
Business UpdateNew Business Segment Grouping and Additional Provisions
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Segment Regrouping
Provision for Retirement Benefits
When: Q1’19Impact to account treatment:Re-group segment report for all periods in 2018 and 2019 into 3 main segments- Beverage : All beverages including C-Vitt and Calpis- Personal Care : Babi Mild, Twelve Plus, Exit- Others : OEM, Healthcare, Confectionary, OtherImpact to Financial Statement: - No impact
When: Q2’19 (May 2019)Impact to account treatment: Set up additional provision for retirement benefitsImpact to Financial Statement: Recognize expenses approximately 96.8 million baht (before tax) in the consolidated financial statements
Q2’19 Financial Highlights – by Segment
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• Chalarm +33.9%
Continued strong growth
momentum from Chalarm
Black Galingale
• Som In Sum + 25.1%
Almost tripled in sales after
repositioning in Q3’17
• Peptein + 70.8%
Launched Peptein Plus in
Q1’19
• Shark + 34.5%
New NPD (Natural Caffeine)
• Babi Mild + 24.3%
Mainly driven by NPD
Sweet Almond launched in
May’19
• Twelve Plus +22.7%
Continued momentum of
Cool Powder and Perfume
Mist launched last year
• OEM - 17.9%
Lower sales on OEM-
personal care
• Confectionery + 15.4%
Driven by growth from
Botan
▪ CLMV +4.5%
Mainly driven from Myanmar
and Laos (+9.4% at constant
FX), offsetting with decline in
Cambodia
• Others +29.8%
Driven by Middle East and
Indonesia
▪ Net profit* +7.5% YoY
▪ Net profit margin** at
11.3% vs. 11.1% in Q2’18
(12.5% if excluding additional
provision for retirement
benefits 96.8 MB)
▪ Outstanding GM at 35.3%
improved by 400 bps YoY
from “Fit Fast Firm” project
driving overall costs down
driven by all major categories of Beverage and Personal Care
Remark : * Net Profit attributable to owners of the parent ** Net Profit attributable to owners of the parent to Total Revenue from Sales
Net Profit*
THB 710M
11.3%
Net Profit Margin**
4
1H’19 Financial Highlights – by Segment
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• C-Vitt + 62.6%Maintained no. 1 in
Functional drinks for 4
consecutive quarters
• Chalarm +29.7%Continued strong growth
momentum from Chalarm
Black Galingale
• Som In Sum + 23.4%Doubled in sales after
repositioning in 2H’17
• Peptein + 22.1%With Peptein Plus in Feb’19
• Babi Mild + 7.6%
Mainly driven by NPD
Sweet Almond launched in
May’19
• Twelve Plus +22.4%
Continued momentum of
Cool Powder and Perfume
Mist launched last year
• OEM - 2.6%
Growth in OEM-Glass
offsetting with lower sales
on OEM-personal care
• Confectionary + 15.5%
Driven by growth from
both Botan and NPDs i.e.
Olé Boost and Olé Mini
Sugar Free
▪ Net profit* +10.7% YoY
▪ Net profit margin at 12.6%
vs. 12.0% in 1H’19 (13.2% if
excluding additional
provision for retirement
benefits 96.8 MB)
▪ Outstanding GM at 35.0%
improved by 330 bps YoY
from “Fit Fast Firm” project
driving overall costs down
▪ CLMV +8.0%
Growth mainly driven from
Myanmar and Laos (+9.9% at
constant FX), offsetting with
decline in Cambodia
• Others +12.3%
Driven by Middle East and
Indonesia
Remark : * Net Profit attributable to owners of the parent ** Net Profit attributable to owners of the parent to Total Revenue from Sales
driven by all major categories of Beverage and Personal Care
Net Profit*
THB 1,599M
12.6%
Net Profit Margin**
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31.3%35.3%
31.7%35.0%
Q2'18 Q2'19 1H'18 1H'19
12,389 12,906
1H'18 1H'19
14.2% 15.7% 14.7% 14.8%
5.8%7.5%
5.6% 7.2%
Q2'18 Q2'19 1H'18 1H'19
661 710
1,444 1,599
11.1% 11.3%12.0% 12.6%
3.0%4.0%5.0%6.0%7.0%8.0%9.0%10.0%11.0%12.0%13.0%
0
500
1,000
1,500
2,000
2,500
Q2'18 Q2'19 1H'18 1H'19
To the owner of the parents
Revenues Gross Margin
SG&A Net Profit
Q2’19 and 1H’19 Financial Highlights
Admin Exp
Selling Exp
⚫ Net Profit Margin
6,049 6,394
Q2'18 Q2'19⚫ Other Income
(20.0%)(23.2%)
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(20.3%)(22.0%)
Net Sales Analysis: Thai Beverages
+25.1%SALES GROWTH YOY
Chalarm Black Galingale Turnaround Chalarm brandContinued Success of Campaign
“Aroi Jing Mai Manoh” through Activation and promotion campaign nationwide,
starting from North – Central - Northeast Reaching 9 million bottles/month
+70.8%SALES GROWTH YOY +33.9%
SALES GROWTH YOY
Focus on below-the-line activities
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Launch new formula Peptein Plus in Mar’19 with Impressive performance in 7-11
New packaging (Aug’19)
Net Sales Analysis: Thai Beverages
38.5%MARKET SHARE
New LINE Official Account for M-Point collection campaign 2019Communication campaign “Poo
Klar LIPO” with local activations (emphasize of Japan heritage)
8.9%MARKET SHARE
Strengthen communication campaign and below-the-line activities
22.5%MARKET SHARE
8
Continued reinforcing brand awareness and ensure adequate supply
+22.7%SALES GROWTH YOY
Net Sales Analysis: Thai Personal Care
Continued Momentum from Cooling Powder and Perfume Mist
+24.3%SALES GROWTH YOY
The Launch of EXIT x BNK48 Special Collaboration with
Collectable Premium
+20.8%SALES GROWTH YOY
9
Babi Mild Sweet Almond Launch
in May’19
Organik by Babi Mild Launch
Net Sales Analysis: International Sales
SALES GROWTH +8.7% YOY (at constant FX)
10
▪ Launched TVC with refreshing look using Khar Ra, a Burmese actor, model and singer, emphasizing as a drink for all occasions #SHARKforalloccasions
▪ Activate Instant Win Campaign in May 2019
Balance Sheet (as of 30 Jun 2019)
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Key Changes in Balance Sheet Items
• Total assets: Decrease by THB 717mn from: THB 1,825mn decrease in cash and cash equivalents: THB 200mn decrease in current investments, which shift to long term investments: THB 217mn decrease in inventories: THB 1,329mn increase in PPE
• Total liabilities: Decrease by 222mn from lower trade and other payables
• Shareholders’ equity: Decreased by THB 495mn, where profit for the period was offset by to dividend payment of THB 2,072mn for 2018 performance
Cash Flows and Key Ratios
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Cash Flow (as at 30 Jun 2019) Key Financial Ratios
Notes: ROE and ROA are annualized
Units: THB mnQ2'19 Q2'18 1H'19 1H'18
Liquidity Ratios
Current ratio (times) 2.1 0.6 2.1 0.6
Number of days of inventory 30 40 32 39
Collection period (days) 43 43 43 43
Accounts payable (days) 42 45 42 43
Profitability Ratios
Gross profit margin (%) 35.3 31.3 35.0 31.7
EBITDA margin (%) 17.8 18.1 19.4 19.2
Net profit margin for the period (%) 11.4 11.3 12.8 12.2
Net profit margin attributable to owners of the parent (%)
11.3 11.1 12.6 12.0
Return on equity (%) - trailing 28.9 58.1 28.9 58.1
Return on assets (%) - trailing 16.9 17.4 16.9 17.4
Other Ratios
Total debt to equity (times) 0.3 2.5 0.3 2.5
Cash Flow Movement
• Operating CF: THB 1,923mn cash inflow from
1) THB 1,618mn Net profit
2) THB 862mn Non-cash transactions (depreciation and provision)
3) THB -50mn change in working capital
4) THB -507mn tax paid
Investing CF: THB 1,655mn cash outflow from
1) THB 1,660mn PPE acquisition
Financing CF: THB 2,093mn cash outflow from
1) THB 2,072mn Total dividend payment
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Dividend Payment and Policy
Dividend Paid (after IPO)
• Interim Dividend 0.35 Baht paid on 13 September 2019 (Approx. 66% payout)
(XD-date on 27 August 2019 and record date on 28 August 2019)
Dividend policy
• At least 60% of consolidated net profit after deducting the legal reserve specified by law or Articles of Association of the CompanyNonetheless, the consideration of a dividend payout shall depend on the Company’s performance, financial position, cash flow, contractual obligations (i.e. loan payments), working capital, investment plans, general economic situation, and related factors as deemed appropriate by the Board of Directors and when in compliance with the laws & regulations.
Core Strategy Updates
Production Efficiency – New facilities
• New glass factory (SGA2)
• New factory in Myanmar
• New cullet treatment lines
• Total Productive Maintenance (Increase capacity without major investment in new production line)
Business Update: Core Strategies Progress Update
15
Strengthen domestic presence in broader non-alc. beverages and expand PC
Leverage market-leading position in Thailand to sustain and expand to overseas markets
Focus on cost-efficiency and margin enhancement through NRM principle
Maintain Energy Drink Market Share (Value) : 1H’19
53.8%
Grow Functional Drink Market Share 1H’18 → 1H’19
28.4%→33.6%
Personal care sales growth in 1H’19 :
+13.4%Total international sales growth for 1H’19 (at constant FX):
+8.7%
International PC sales growth For 1H’19:
+15.2%OEM Bottle sales – Improve margin overall beverage by sharing fixed costs
1H'18 2H'18 1H'19
Fit Fast Firm
1H’19 GM
= 35.0%+330bps YoY
+19.8%YoY
Continued impact in 1H’19:
Bev international sales growth for 1H’19 (at constant FX):
+8.3%
2019 “Fit Fast Firm” Project►Reap benefits from projects implemented in 2018► Increase efficiency through new cullet treatment lines ►New lighter weight bottles ►OEM-PC initiatives
Key Activity Highlights
• Invest in Channel – Vending Machine Business TH • Increase R&D Capabilities - Osotspa Innovation Center (OIC)•Complete new Glass Factory under BOI – SGA2 (Aug19)•Complete new Talcum Plant (4Q19)•Complete Myanmar New Plant, RTM, Portfolio strategy (4Q19)•New Countries / Businesses (4Q19)•Progress cost saving program for margin expansion and cost efficiencies through “Fit Fast Firm”•Technology: Robotics for accounting process •Distribution and Warehouse (4Q19)•Next step Net Revenue Management (4Q19)
• Extend portfolio – Babi Mild Sweet Almond• Revitalize using idol marketing – Twelve Plus• Capture Premium Segment – Organik by Babi Mild• Enter Facial and Skincare Category - Plantstory• Adopt New Distribution Channel – E-commerce• Embrace New trend and New packaging – Olé Boost
and Olé Mini Sugar Free
• Grow Herbal Variant – Chalarm Black Galingale• Extend Segmentation – Som In-Sum• Strengthen Consumer Base - M-Point Loyalty Program• Target New Trend – Shark Natural Caffeine / No Sugar• Start New Channel – Osotspa Delivery
• Continue Growth – C-Vitt Capacity Expansion• Expand Distribution Channel – C-Vitt Tetra Pack• Add New Variant – Peptein Plus• Respond New Healthy Trend – Vplus
• New Benefits (4Q19)
2019 Highlights
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Energy Drinks Functional Drinks
Strategic MovesPersonal Care and Others
Beverage
M-150
Line Official Account
2.3 Millionusers
LIPO
Shark C-Vitt
Calpis Peptein
SAMURAI18
Consumers become more HEALTH-CONSCIOUS, They eat right and exercise often.
V PLUS targets to URBANIST age range 18-35 years old who have ACTIVE LIFSTYLE & EXCERCISE at least once a week.
Fitness Sport venue Park
Uplift Personal Care Portfolio to Drive Growth
Secure leadership of Babi Mild with
strengthened core + innovationDrive Twelve Plus to be famous for
fragrance
Enter growth Face Care category
with active natural brand
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24ROJANA INDUSTRIAL PARK, AYUTTHAYA
SGA2 HEAT UP CEREMONYFOR THE CONSTRUCT ION OF NEW GLASS PLANT
Osotspa Innovation Centre
Technical Expertise Capabilities & Structure
Innovation & Category Strategy
To develop high quality infrastructure as a center of expertise and ensure cross-functional efficient structure with technical expertise to support innovation capabilities and build innovation pipeline align with strategy roadmapBackground
Locations
• Huamark - R&D Lab • Innovation Center at Thailand Science Park (Rangsit) – Pilot Plant• Ladkrabang – Personal Care Lab and Pilot Plant
ExpertiseProduct, Process and Packaging Design and Regulatory Compliance with highly competent staff
• Beverage• Confectionery
• Powder, Gel, Emulsion• Packaging Material
• Herbal
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Vending Machine
26
Rationale
Investment
To capture the growth opportunities in one of the fastest growing retail channel
“Vending Machine … Convenient, Intelligent, Efficient and Innovative”
Company Background
▪ To acquire 51% shares of Asia Vending Machine Operation Company Limited (AOC), a subsidiary of Fuji Electric at 25.5 mBaht
▪ Started business in Thailand in 2016▪ Expert in vending machine technology, operation and management▪ Market share : #3 in terms of total vending machines
(approximately 2,000 machines)▪ Product : beverage, food and snack products▪ Location : factories, office buildings, universities, residentials
Partnership
Thai Market Leader in Energy Drinkand Functional Drink
Strong Marketing and Sales
World Leading Vending Machine Manufacturer and Operator
R&D, Technical and Operating Expertise
+
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