Songwon Industrial Co., Ltd. · KRX:004430
Songwon Industrial — Investor Presentation (February 2013)
38 slides from Songwon Industrial's investor presentation, Feb 11, 2013
Slide 1: Salient in Additives
Salient in Additives A Prominent Global Supplier of Chemical Additives
Slide 2: Disclaimer / forward-looking statements
2 Disclaimer / forward-looking statements This presentation contains forward-looking statements about circumstances and events that have not yet taken place. Accordingly, there can be no assurance that projected financial results, future plans or strategies will be attained. In particular, no repres
Slide 3: Investment highlights
3 Investment highlights • Strengthen position as 2nd largest polymer stabilizers producer worldwide Strategy • Optimize business portfolio • Expansion into Middle East, India, China, Brazil • Gross margin in excess of 22%* by 2015 Financial • EBITDA of 12% by 2015 targets • Total CAPEX of KRW 100bn
Slide 4: Agenda
4 Agenda 1. Company profile 2. Market environment 3. Financial highlights 4. Business strategy & future plan
Slide 5: Agenda – Company profile
Agenda – Company profile 5 1. Company profile 1.1. Overview 1.2. Vision and mission 1.2. Products 1.3. Revenue and capacity 1.4. Global footprint 2. Market environment 3. Financial highlights 4. Business strategy & future plan
Slide 6: Company profile – Overview
Company profile – Overview 6 Founded: 1965 Headquarters: Ulsan, Korea CEO: JH Park Employees: 576 (2012) Global presence: 17 entities in 9 countries Logistics hubs: More than 30 logistics hubs globally Revenue: KRW 680bn* Public listing: Korea stock exchange Market capitalization: KRW 285,600m (USD
Slide 7: Company profile – Vision & Mission
Company profile – Vision & Mission 7 Achieve sustainable and profitable growth by Our vision understanding, anticipating and satisfying the Our Vision needs and desires of all our customers Our mission People Partners Products Productivity Performance Strong commitment to all stakeholders
Slide 8: Company profile – Product portfolio
Company profile – Product portfolio 8 Products PU & Super Alkylphenols Polymer PVC Tin Plasticizers polyesters Absorbent Flocculants Biphenol Alkylcresols Stabilizers Stabilizers Intermediates diols Polymer Product applications PLASTICS
Slide 9: Company profile – Major products
Company profile – Major products 9 Plasticizers Tin intermediates PVC Stabilizers Super Absorbent Polymer Polymer Polyesterdiols Stabilizers Alkylphenol & Polyurethanes Intermediates Flocculants Driving growth by focusing on polymer stabilizers
Slide 10: But, what are polymer stabilizers?
10 But, what are polymer stabilizers?
Slide 11: Company profile – Polymer stabilizers
Company profile – Polymer stabilizers 11 Unstabilized Stabilized Polymer stabilizers make plastics usable
Slide 12: Company profile – Polymer stabilizers
Company profile – Polymer stabilizers 12 Stabilized Unstabilized (different exposure times)
Slide 13: Company profile – Polymer stabilizers
Company profile – Polymer stabilizers 13 SONGNOX® SONGNOX® OPS Basic, Specialty Antioxidants and Blends One Pack systems SABOSTAB® and SONGLIGHT® SONGSORB® Hindered Amine Light Stabilizers UV light absorbers Powder Free flow Pastilles One Packs Liquid A complete range of products in various physical
Slide 14: Company profile – One Pack Systems
Company profile – One Pack Systems 14 • One Pack Systems (OPS) to provide value-added solutions by • Reducing storage space and investments • Improving dosing accuracy (minimizing overdosing and off-specs) • Increasing safety standards (minimizing risks of powder explosions) • Creating a healthier w
Slide 15: Company profile – Revenue snapshot
Company profile – Revenue snapshot 15 … to a key global specialty chemical player 680 629 Revenue in KRWbn 557 From a vision of success to a major 428 regional polymer additives supplier … 268 214 96 64 16 32 - 5 1965 1975 1980 1985 1990 1995 2000 2005 2008 2010 2011 2012E Consolidated K-IFRS revenu
Slide 16: Company profile – Capacity
Company profile – Capacity 16 200,000 180,000 160,000 Total capacity in tons per year 140,000 OPS 120,000 Polymer Stab. 100,000 PVC Stab Tin Int 80,000 PU 60,000 Others 40,000 20,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 Note: Capacity relates to final products Sufficient plant capacity to
Slide 17: Company profile – Revenue snapshot
Company profile – Revenue snapshot 17 … with solid growth! >900 …to a key global 840 specialty chemical player… 755 680 629 Revenue in KRWbn 557 428 From a vision of success to a major regional polymer additives supplier… 268 214 96 64 16 32 - 5 1965 1975 1980 1985 1990 1995 2000 2005 2008 2010 2011
Slide 18: Company profile – Established markets
Company profile – Established markets 18 Established markets Warehouse hubs Germany Japan Toller: no 3rd party sales Sales (KRWbn): 94.3 Employees: 37 Employees: 8 Main markets: EMEA Main market: Japan Main products: OPS Main products: AOX, UV, tin inter. NAFTA Switzerland Korea Sales (KRWbn): 124.3
Slide 19: Company profile – Future growth markets
Company profile – Future growth markets 19 Future growth markets China Sales (KRWbn): 24.6 Main market: China Main products: AOX, UV South America Sales (KRWbn): 32.7 Main markets: Brazil, Argentina, Chile Main products: AOX, UV, OPS Middle East India Sales (KRWbn): 47.5 Sales (KRWbn): 5.0 Main mark
Slide 20: Agenda – Market environment
Agenda – Market environment 20 1. Company profile 2. Market environment 2.1. Additives market 2.2. Competitors 2.3. Mapping 2.4. Competitive strengths 2.5. Customers 3. Financial highlights 4. Business strategy & future plan
Slide 21: Market environment – Additives market
Market environment – Additives market 21 Estimated total plastic additives market size: USD 30 bn (in 2011) • Songwon is focused on AOX and UVS USD 1.0 bn (AOX) • Total market size: USD 2.5 bn (in 2011) USD 1.5 bn (UVS) • Expected average growth rate of 5% pa Antioxidants (AOX) UV stabilizers (UVS)
Slide 22: Market environment – Competitors
Market environment – Competitors 22 • Strong competition in the specialty chemicals industry; BUT NOT in the polymer stabilizers segment • High barriers of entry due to substantial initial investments • No new market entrants for the past 15 years in the polymer stabilizers segment Only a limited nu
Slide 23: Market environment – Mapping
Market environment – Mapping 23 Product portfolio Logistics Global competitors Installed capacity Innovation Customer service Leading Average Below average Innovation and on-time delivery paired with first-class customer service
Slide 24: Market environment – Competitive strengths
Market environment – Competitive strengths 24 Competitive cost structure • Excellent cost position through backward integration • Attractive margins through economies of scale Proximity to end markets • Providing local technical support for optimal client satisfaction • On-time delivery through stra
Slide 25: Market environment – Customers
Market environment – Customers 25 Serving the key players in the chemical industry; Top 20 customers account for > 50% of global sales
Slide 26: Agenda – Financial highlights
Agenda – Financial highlights 26 1. Company profile 2. Market environment 3. Financial highlights 3.1. Listing at KRX 3.2. Trade multiples 3.3. Sales 3.4. Performance 3.5. Capital structure 4. Business strategy & future plan
Slide 27: Financials – Listing at KRX
Financials – Listing at KRX 27 Stock ticker: KOSE:A004430 Share price (28.12.2012): 11,900 Listed since: 1977 52-week high: 12,900 Stock exchange: Korea Stock Exchange 52-week low: 7,410 Market cap (KRWm): 285,600 Dividend per share (2012): 60.00* Shares outstanding: 24 million Free float: 64.5% * D
Slide 28: Financials – Sales
Financials – Sales 28 Sales history Sales by areas (2012) 800 100% = 680 KRWbn 700 4% Korea 600 19% Sales in KRWbn 32% Rest of Asia 500 400 Europe 300 North and South 200 21% America Middle East and 100 Africa - 23% 2008 2009 2010 2011 2012E Source: 2008: Revenue for Songwon Industrial Co., Ltd. Sou
Slide 29: Financials – Performance
Financials – Performance 29 Profitability (2012) (KRWbn and % of revenue) Profitability (2013) (KRWbn and % of revenue) Revenue: 680 100.0% Revenue: 755 100.0% Gross profit*: 132 19.4% Gross profit*: 146 19.3% EBITDA: 67 9.9% EBITDA: 86 11.4% EBIT: 37 5.5% EBIT: 55 7.2% Net income: 20 3.0% Net incom
Slide 30: Financials – Capital structure
Financials – Capital structure 30 • Successful debt re-financing through a syndicated loan in the amount of KRW220bn • Arranged by Korea Exchange Bank (KEB) and Woori Bank Tranche A Tranche B Type Term loan Type Revolving credit facility Amount KRW 170 bn Amount KRW 50 bn Term 3 years Term 1 year re
Slide 31: Agenda – Business strategy & future plan
Agenda – Business strategy & future plan 31 1. Company profile 2. Market environment 3. Financial highlights 4. Business strategy & future plan 4.1. Product portfolio management 4.2. Geographical expansion 4.3. Financial targets - Growth and profitability 4.4. Financial targets - Revenue growth
Slide 32: Strategic objectives
32 Strategic objectives Geographical expansion • Grow OPS business in Middle East and Americas • Capitalize on growth in emerging markets Product portfolio management Financial targets • Establish a balanced portfolio of profitable businesses • Continued focus on polymer stabilizer segment •Revenue
Slide 33: Product portfolio management – Product key initiatives
33 Product portfolio management Geographical expansion Product key initiatives Polymer stabilizers Non-polymer stabilizers •Continue to invest in •All non-polymer additional capacity to stabilizers business units meet future demand under systematic strategic evaluation •Broaden and strengthen produc
Slide 34: Geographical expansion
34 Geographical expansion USA India Geographical expansion Houston, USA: Mumbai, India: • New OPS plant to be established • Plan to establish an AOX JV with a by the end of Q1 2013 local manufacturer Houston Shanghai Abu Dhabi Hong Kong Mumbai China Middle East China: • Plan to establish a local man
Slide 35: Financial targets – Growth and profitability
Financial targets – Growth and profitability 35 Geographical expansion Sustainable growth projections through focused expansion… • Annual growth rate > 10% until 2015 • Gross margin* > 22% by 2015 • EBITDA margin > 12% by 2015 … and a solid capital structure • Solid balance sheet • Deleverage the ca
Slide 36: Financial targets – Revenue growth
Financial targets – Revenue growth 36 Geographical expansion + New products + AOX/Other + UVS > 900 Consolidated revenue in KRWbn + OPS 680 684 2012E 2015F Double-digit growth through innovation and investments
Slide 37: Investment highlights
37 Investment highlights • Strengthen position as 2nd largest polymer stabilizers producer worldwide Strategy • Optimize business portfolio • Expansion into Middle East, India, China, Brazil • Gross margin in excess of 22%* by 2015 Financial • EBITDA of 12% by 2015 targets • Total CAPEX of KRW 100bn
Slide 38: Thank you for your attention!
감사합니다 38 Thank you for your attention! For more information please visit: www.songwon.com
Songwon Industrial — Investor Presentation (February 2013) on 6ix