Engtex Group Bhd. · MYX:ENGTEX
Engtex Group Bhd — Q2 2014 Earnings Presentation
36 slides from Engtex Group Bhd's earnings presentation, August 2014
Slide 1: Engtex Group Berhad 2Q14 Results & Corporate Update
Gravy in the pipeline… ENGTEX GROUP BERHAD 2Q14 Results & Corporate Update Presented by : Dato’ Ng Hook, Group Managing Director 1 Mr. Khoo Chong Keong, Chief Financial Officer Mr. Chong Thian Fook, PA to Group Managing Director Operations Review Financial Review Prospects Investment Merits Appendix
Slide 2: Agenda
Gravy in the pipeline… 2Q14 Operations Review 2Q14 Financial Review Prospects Investment Merits Appendix Corporate profile 2 AGENDA Operations Review Financial Review Prospects Investment Merits Appendix Corporate Profile
Slide 3: Operations Review
Gravy in the pipeline… OPERATIONS REVIEW 3 Operations Review Financial Review Prospects Investment Merits Appendix Corporate Profile
Slide 4: Operations Review: Manufacturing Division
Manufacturing segment impacted by lower sales of MS pipes…however mitigated by uptrend in wire mesh sales and utilisation of capacity Gravy in the pipeline… DI Pipes Others Manufacturing sales dropped 1% yoy Revenue: +4.0% Revenue: -17.1% yoy (2Q14: RM270.3 mil vs 2Q13: RM273.6 Sales Tonnage: +0.3%
Slide 5: Operations Review: Manufacturing Division (con't)
Expanding footprint nationwide by ramping up capacities of wire mesh facilities and increasing diameter size of MS pipe…to Gravy in the pipeline… become one of the leading player in Malaysia New wire mesh facility to cater for East Malaysian market; on track for completion in H2-2014 • Investing R
Slide 6: Operations Review: Wholesale & Distribution Division
Wholesale & Distribution division continues to be a leading player in Gravy in the pipeline… Malaysia… Commendable growth of 17% in 2Q14, as compared to 2Q13 • Group’s trading products continued to be fuelled by ongoing and new public infrastructure projects in the infrastructure, utilities, constru
Slide 7: Operations Review: Property Development
Slow down in Group’s property segment…balance Bumi units of Gravy in the pipeline… completed project still pending release Project Name Type Land GDV No. of Take- Unbilled Sales Unsold stock Project (Ongoing) Area (RM’mil) Units up Rate (RM’mil) (RM’mil) Duration (acres) (%) (As at 30 June (As at 30
Slide 8: Financial Highlights
Gravy in the pipeline… FINANCIAL HIGHLIGHTS 8 Operations Review Financial Review Prospects Investment Merits Appendix Corporate Profile
Slide 9: 2Q14 Income Statement
2Q14 performance rebounded on the back of contribution from Gravy in the pipeline… distribution, manufacturing and property development… Qtrly Revenue (RM'mil) Comments 2Q14 2Q13 Change RM'000 FY13 331.3 2Q14 topline improved from 591.6 548.7 7.8% Revenue 1,090.4 279.3 278.2 269.4 350 263.5 260.3 24
Slide 10: Revenue Segmentation
2Q14 performance impacted by both manufacturing division… Gravy in the pipeline… FY13 Revenue: RM1,090.4 mil (+18.5% yoy) 2Q14 Revenue: RM591.6 mil (+7.8% yoy) 6.6% yoy Revenue (RM’mil) Manufacturing -1.2% yoy 431 295 362 433 486 518 47.5% 45.7% 2008 2009 2010 2011 2012 2013 47.1% 34.6% 5.4% 49.1% y
Slide 11: Revenue Segmentation (Manufacturing Division)
MS Pipes sales in 2Q14 not matching to strong performance in Gravy in the pipeline… 2Q13…wire mesh continued to perform in 2Q14 2Q14 Manufacturing Revenue: FY13 Manufacturing Revenue: RM518.1 mil (+6.6% yoy) RM270.3 mil (-1.2% yoy) Revenue (RM'mil) Revenue (RM'mil) Others Wire Mesh 17.5% yoy 8.6% yo
Slide 12: EBITDA Segmentation
Lower EBITDA in 2014 as a result of lower capacity utilization from manufacturing and higher OPEX from property division… Gravy in the pipeline… FY13 EBITDA: RM103.3 mil* (+47.8% yoy) 2Q14 EBITDA: RM51.8 mil (-5.1% yoy) EBITDA (RM'mil) EBITDA (RM'mil) Wholesale & Distribution Manufacturing 45 74.2%
Slide 13: Balance Sheet
Gearing sustained at less than 1x… Gravy in the pipeline… (RM’000) As at As at Comments 30 June 2014 31 Dec 2013 (Audited) Non-Current Assets 258,172 236,589 Mainly due to RM23.0m CAPEX for acquisition of industrial land and building ($11.4m), machineries ($8.8m), and hotel building ($2.8m) Current
Slide 14: Key Financial Ratios
Fundamentals set to improve… Gravy in the pipeline… FY2009 FY2010 FY2011 FY2012 FY2013 1Q14 2Q14 Current Ratio 1.6 1.6 1.5 1.5 1.5 1.5 1.5 Collection Period (Days) 94.6 93.6 98.2 96.3 92.9 109.2 92.2 Payment Period (Days) 28.3 27.7 33.9 40.6 36.9 39.6 35.1 Inventory Processing Period (Days) 96.6 82.
Slide 15: Prospects
Gravy in the pipeline… PROSPECTS 15 Operations Review Financial Review Prospects Investment Merits Appendix Corporate Profile
Slide 16: Group's outlook still positive on robust public and private activities
Group’s outlook still positive on the back of robust activities in both Gravy in the pipeline… public and private sectors in Malaysia… To benefit from numerous upcoming projects from both private and public sectors nationwide • Major new pipe laying projects – PAAB projects in 6 states (Perlis, Pera
Slide 17: Outlook: non-revenue water and pipe leakages
Group’s outlook still intact on the back of robust activities in both Gravy in the pipeline… public and private sectors in Malaysia… In 2013, NRW stood at 36.6% (2012: 36.4%) of all water pumped out from treatment plants or abt 5.69 bil litre a day, and >75% of NRW due to pipe leakages of AC pipes a
Slide 18: Growth Strategies
Growth strategies in place to broaden revenue base… Gravy in the pipeline… Uncharterd Waters High Flyers 1. Building future MS Industry Growth Potential recurring income from hospitality business 1. Investing in more DI 2. Earnings from capacity to tap property dev to construction demand mitigate cy
Slide 19: Investment Merits
Gravy in the pipeline… INVESTMENT MERITS Valuation, room to grow… 19 Operations Review Financial Review Prospects Investment Merits Appendix Corporate Profile
Slide 20: Valuation
One of the best proxies to the water sector growth story…single digit Gravy in the pipeline… earnings multiple an affordable entry Share Price (16 Aug 2014) RM1.86 Market Cap (16 Aug 2014) ('mil) RM364.1 Trailing PE Ratio (x) 7.42 Trailing EV/EBITDA (x) 7.58 Price to Book Ratio (x)1 0.91 Net Dividen
Slide 21: Dividend History
Consistently paying dividends since listing… Gravy in the pipeline… Dividend Payout Adjusted Net Dividend Per Share RM’ mil Sen 3.5 22% 25% 2 20% 3.0 17% 20% 2.5 14% 2.0 15% 10% 1 1.5 8% 10% 6% 6% 6% 6% 1.0 4% 5% 0.5 3.0 3.0 1.2 1.2 1.1 1.1 1.5 2.1 2.8 2.8 3.3 1.7 1.8 1.7 1.2 0.6 0.6 0.6 0.6 0.8 1.1
Slide 22: Thank You
Gravy in the pipeline… Bloomberg: ENGT MK | Reuters: ETEX.KL THANK YOU IR Contacts: Mr. Khoo Chong Keong +603-6140 1111 ckkhoo@engtex.com.my 22 Mr. Chong Thian Fook +603-6140 1111 tfchong@engtex.com.my Operations Review Financial Review Prospects Investment Merits Appendix Corporate Profile
Slide 23: Corporate Profile
Gravy in the pipeline… CORPORATE PROFILE Leading one-stop pipeline systems provider in Malaysia… 23 Operations Review Financial Review Prospects Investment Merits Appendix Corporate Profile
Slide 24: Executive Summary
Strong growth catalyst from long-overdue pipeline replacement Gravy in the pipeline… project…Engtex set to be key beneficiary • Founded in 1983, Engtex Group Berhad (Engtex) is a leading one-stop pipeline system provider in Malaysia Well-established backbone of manufacturing and distribution arms
Slide 25: Executive Summary (cont)
Total market capitalisation of more than RM400 million… Gravy in the pipeline… Engtex Group Berhad Stock Exchange Main Market, Bursa Malaysia - since 30 July 2002 - IPO price: RM0.817 (Adjusted for 1-for-4 Bonus Issue, 1-to-2 share split and 1-for-5 Rights Issue) Sector Trading / Services Codes Burs
Slide 26: Corporate Credo: Vision, Mission, Values
Committed to superior quality for customers towards achieving Gravy in the pipeline… sustainable returns for stakeholders… To be a leading integrated manufacturer and one-stop distribution center for pipes, valves, fittings, plumbing and Vision steel products that provides total supply chain solutio
Slide 27: Corporate Milestones
30 years of business expansion… Gravy in the pipeline… 1983 Formed Engtex Sdn Bhd as a hardware retail shop, involved in wholesale and distribution of PVF, plumbing materials and general hardware products 1995 • Ventured into manufacturing of steel pipes, fittings and other metal-related products. C
Slide 28: Principal Activities
Primarily involved in manufacturing and distribution of water- and Gravy in the pipeline… steel-related products… Ductile iron (“DI”) pipes Mild steel (“MS”) pipes and fittings Wire mesh, hard drawn wire and Manufacturing steel service center 47% of FY12 revenue Valves, hydrants, fittings an
Slide 29: Manufacturing Facilities & Distribution Network
Manufacturing facilities complemented by wide and established Gravy in the pipeline… distribution channel… Manufactured Product Location(s) Contribution to FY13 revenue DI Pipes Gebeng (Kuantan) 5.5% MS Pipes Serendah (Selangor) 8.8% Wire Mesh Ijok (Kuala Selangor), Gebeng (Kuantan), Seberang Perai
Slide 30: Manufacturing: Ductile Pipe
DI pipe business profitable even at 30% utilisation… operating Gravy in the pipeline… leverage to manifest when pipe replacements take off • Ventured into DI pipe manufacturing in 2002 The larger of 2 DI pipe manufacturers in Malaysia; able to produce DI pipes of up to 800mm diameter Mainly cate
Slide 31: Manufacturing: Ductile Pipe vs PVCO
DI pipe vs PVCO (molecularly oriented polyvinyl chloride) pipe Gravy in the pipeline… • DI has >10 times the tensile strength of PVCO (73,947psi vs 6,729psi). Therefore less susceptible to fatigue failures. • Thermal coefficient of PVCO is approx. 5 times that of DI pipe- therefore variation in oper
Slide 32: Manufacturing: Mild Steel Pipes
MS pipe segment complementary to DI for comprehensive product Gravy in the pipeline… range… • One of the largest MS pipe manufacturers in Malaysia Able to produce MS pipes up to 2600mm diameter Mainly catering for the water & sewerage sectors Hot rolled coil / Steel plates (main raw mat) sourc
Slide 33: Manufacturing: Wire Mesh
Wire mesh segment aiming to be the largest player in Malaysia… Gravy in the pipeline… • One of top 3 wire mesh manufacturers in Malaysia Mainly catering for construction and infrastructure sectors • Strategically-located manufacturing plants catering to specific regions Location Production Product
Slide 34: Distribution: Valves & Fittings
Undisputed cost leader in PVF distribution… Gravy in the pipeline… The top PVF distributor in Malaysia Large revenue base and wide distribution channels allow for cost leadership Diverse product range of 150 product categories with >5K SKUs • In-house brands make up about 40% of product range
Slide 35: Key Management
Key management possess many years’ experience… Gravy in the pipeline… Dato’ Ng Hook • Group founder with 40 years’ hands-on experience in the hardware and PVF industry Group Managing Director • Provides the Group’s strategic direction Ng Chooi Guan • 30 years’ experience in hardware industry • Instr
Slide 36: Revenue & Profit Trend
Profitable since incorporation… Gravy in the pipeline… Group Revenue (RM'mil) 1,500 14.9% 14.4% 14.6% 15.1% 14.9% 14.4% 14.5% 16.0% 13.0% 13.4% 14.0% 14.3% 13.1% 14.0% 11.4% 12.5% 12.6% 12.0% 13.8% 1,000 10.0% 8.0% 6.0% 500 1,090.4 4.0% 146.7 296.0 352.3 355.3 452.2 566.4 751.8 599.8 680.1 793.6 920