Pt Pan Brothers Tbk · IDX:PBRX
Pt Pan Brothers Tbk — Investor Presentation (March 2014)
43 slides from Pt Pan Brothers Tbk's investor presentation, March 2014
Slide 1: PT Pan Brothers Tbk Investor Presentation
PT Pan Brothers Tbk Investor Presentation March 2014
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by PT Pan Brothers Tbk. (the "Company") solely for your information and may not be copied, published, distributed, reproduced or transmitted in any manner, directly or indirectly. By accessing this presentation, you are agreeing to be bound by the follo
Slide 3: Agenda
Agenda Presenters Group Overview Key Investment Highlights Focused Business Strategies Financial Overview Appendix 3
Slide 4: Presenters
Presenters Anne Patricia Sutanto Fitri Ratnasari Hartono Vice President Director Director • Vice President Director of the Group since 2010 • Appointed as a Director of the Group in 2007 • Joined the Group in 1997 as a Director, promoted as the President • More than 8 years of experience in textile
Slide 5: Group Overview
Group Overview
Slide 6: Group Overview
Group Overview 1 Indonesia’s largest listed garment manufacturer 2 Well-established business founded in 1980 and listed on the Indonesia Stock Exchange since 1990 3 Strong export focus – markets include US, Europe, Asia, Canada, Japan and Australia 4 Long-standing relationships with many leading glo
Slide 7: Group Structure
Group Structure PT Trisetijo Manunggal PT Ganda Sawit Utama Others Utama 26.33% 19.86% 53.81% 99.91% 51.04% 51.00% 51.00% 99.00% 85.00% PT Eco Smart PT Pancaprima PT Hollit PT Ocean Asia Continent 8 PT Apparelindo Garment Ekabrothers International Industry Pte Ltd Prima Sentosa Indonesia 7
Slide 8: Segment Overview
Segment Overview Business Garment manufacturing Product development and buying agent Fabric supply Retail PT Eco Smart Group Garment Companies PT Pan Brothers Tbk PT Pancaprima Indonesia PT Hollit Continent 8 Pte PT Ocean Asia PT Apparelindo Ekabrothers International Ltd Industry Prima Sentosa “PBT”
Slide 9: Our Journey – Growth and Diversification
Our Journey – Growth and Diversification Indonesia’s largest listed garment manufacturer Set up OAI (Apparel material manufacturer) a) Expansion of PBT at Boyolali (Cut & Sewn Knit Factory) b) Expansion of PPEB at Boyolali (Woven Factory) 2013 a) Expansion of PPEB at Boyolali (Woven Factory) b) Expa
Slide 10: Sales Split by Product and Geography
Sales Split by Product and Geography Sales split by Product Type Sales split by Geography 2010 2013 2010 2013 Sales: US$158m Sales: US$340m Sales: US$158m Sales: US$340m 7% 3% 1% 8% 37% 30% 42% 39% 58% 42% 47% 56% 30% Light & Heavy Cut & Sewn Knitted Fabric US Europe Asia Others Woven Jackets + Wove
Slide 11: Human Resources
Human Resources Evolution of Workforce Employee Benefits Initiatives • Position allowance and incentives; • Healthcare allowance; and 17,523 • Training program and employee development. 16,612 13,604 The company maintains cooperative relationship with all workers and the union Has only one union and
Slide 12: Key Investment Highlights
Key Investment Highlights
Slide 13: Key Investment Highlights
Key Investment Highlights 1 Indonesia well poised for becoming a key player in the global OEM manufacturing market 2 Largest listed garment manufacturer / exporter in Indonesia 3 Partner of choice for leading global brands – across key factors like ethical practices, quality, timing, price and diver
Slide 14: Attractive Industry Fundamentals
1A Attractive Industry Fundamentals Major garment exporting countries – 2012 Recent trend on garment industry % of world exports • Buyers diversifying from China due to the increasing sourcing cost and lack of 37.8% labour supply 4.7% • Key challenges to buyers is to secure suppliers who possess bel
Slide 15: Attractive Industry Fundamentals
1B Attractive Industry Fundamentals Strong outlook despite global uncertainties Conducive economic environment and government support Textile & garment exports from Indonesia Priority • Second largest source of foreign earnings representing Sector c.10.7% of the country’s non-oil and non-gas exports
Slide 16: Largest Listed Garment Manufacturer & Exporter in Indonesia
2A Largest Listed Garment Manufacturer & Exporter in Indonesia 2012 Garment Sales (US$m)1 Key competitive strengths Pan Bros 287 Can satisfy global brands’ demand for large quantity yet high quality orders Peer 1 73 c. 4x the nearest Strong capabilities for manufacturing complex garment competitor i
Slide 17: Integrated Business Model
2B Integrated Business Model Raw Material Textile Apparel Branded Apparel Retailers Production Manufacturing Manufacturing Players Spinning, Fabric Designing, cutting, Marketing and Fibre Production weaving, knitting, sewing, Retail Outlets distribution finishing buttonholing, ironing Upstream expan
Slide 18: Supplier to Global Marquee Brands
3A Supplier to Global Marquee Brands Footwear / Sportswear / Sports Equipment brands Apparel / Lifestyle / Fashion brands Department Stores and Others MITSUBISHI A partner of choice for leading global brands across apparel, lifestyle, sports/performance wear sector 18
Slide 19: Testimony from Buyers
3B Testimony from Buyers UNIQLO ADIDAS “Pancaprima has been a reliable business partner since 1995. Our “A trusting relationship is essential for us business has been steady over the to grow together...We work with partners years, and we are expecting to grow to create better working environments, t
Slide 20: Long History of Co-operation with Key Apparel Players
3C Long History of Co-operation with Key Apparel Players Top 5 customers by sales Long-standing relationships Sales contribution % Customer Customers with a business relationship for more than 5 years 2013 MITSUBISHI 22% 15% 10% Amer Group 6% 3% The Company has a diversified customer base - only 3 b
Slide 21: Strong Partnerships with Some Key Clients
3D Strong Partnerships with Some Key Clients Association with Mitsubishi Association with Amer Group PT Pan Brothers Tbk MITSUBISHI Nature of 85% 15% Key Brands JV Supplied New Joint Venture #1 supplier in Amer Group’s portfolio in terms of both value and volume Business To strengthen partnership wi
Slide 22: Strong Financial Track Record
4 Strong Financial Track Record Sales (US$m) Stable record of growth and profitability, driven by 339.7 strong fundamentals 286.6 249.0 Expansion of capacity 158.1 Capture new customers 2010 2011 2012 2013 Increasing high value added products EBITDA (US$m) / Margin % Downstream expansion and special
Slide 23: Specialised Product Development Capability
5 Specialised Product Development Capability Design, develop and source for high value added items • Specialises in Product Design and Development Jackets, Denim, Pants, Acquired • Pan Brothers benefits Shirts / Blouses, in 2011 from enhanced design Swimwear capabilities • Specialises in Sourcing •
Slide 24: Strong Production Capability
6A Strong Production Capability Production and distribution spread across key Asian markets Key production facilities Tangerang Boyolali Sukabumi Sragen Taiwan Hong Kong Singapore Buying agents Indonesia Rep offices Indonesia Plants Manufacturing Capabilities Manufacturing Capacity State of the art
Slide 25: Improving Productivity & Efficiency
6B Improving Productivity & Efficiency Efficiency metrics Rejection rates Productivity metrics Time required for machinery adjustment on product change 7.3% 97.3% 7 hrs 6 hrs 4 hrs 95.2% 90.1% 95.9% 92.4% 86.1% 3.9% 2.1% 2011 2012 2013 2011 2012 2013 2011 2012 2013 Delivery on Time Rate Employee Pro
Slide 26: Quality Control Certifications and Accreditations
6C Quality Control Certifications and Accreditations Quality control strategy Accreditations ISO 9001:2008 SA 8000 ISO 14001:2004 ISO 9001:2008 Quality Assurance Department: Quality control checks at ISO 14001 each step of production to ensure stringent quality WRAP GSV SA 8000 Buyers’ Audit: Qualit
Slide 27: Experienced and Committed Management Team
7 Experienced and Committed Management Team Ludijanto Setijo, CEO & President Director Michael Hwang, Director • President Director of the Group since 2010 • Appointed as the Director of the Group in 2013 • Joined the Group in 1997 as a Director, promoted as the VP Director in 2002 • More than 11 ye
Slide 28: Focused Business Strategies
Focused Business Strategies
Slide 29: Our Vision and Growth Strategies
Our Vision and Growth Strategies 1 Expand production capacity 2 Increase penetrating of existing customers and capture new customers VISION: To be an 3 Strengthen design and integrated and processing capability to focus on higher margin global apparel products supplier 4 Vertical integration to incr
Slide 30: Expand Production Capacity
1 Expand Production Capacity Organic capacity expansion plan through ESGI JV with Mitsubishi Potential overseas expansion of manufacturing facilities # Factories Est. Capex: US$60m Increase • Create new cost advantage 10 14 16 17 by establishing new plants capacity (mn pieces p.a.) 72 in Vietnam, Ca
Slide 31: Increase Penetrating of Existing Customers and Capture New Customers
2 Increase Penetrating of Existing Customers and Capture New Customers Successful co-operation with existing customers for repeated collaboration on new styles and high-end products Basic Medium High-end Capture new customers with our proven track record and superior OEM/ODM capability 2011 2012 201
Slide 32: Strengthen design and processing capability to focus on higher margin products
3 Strengthen design and processing capability to focus on higher margin products Examples of higher margin products • Expand R&D team for research of new technologies and enhancing design capability to increase the added value to garments and Enhance develop diversified range of products product des
Slide 33: Vertical Integration to Increase Competitiveness
4 Vertical Integration to Increase Competitiveness Upstream expansion into textiles segment Downstream expansion into retail segment • Opened 6 shop-in-shop in several department stores • Zoe is positioned as a mid-end life style brand • Currently importing 70% of high-performance targeted at office
Slide 34: Continue to Optimise Operational Efficiency and Productivity
5 Continue to Optimise Operational Efficiency and Productivity Modernisation and optimisation of machinery A B Optimisation of plants and equipment • Introduction of automation equipment such as • Organic expansion of production facilities into lower labour automatic spreading machine and automatic
Slide 35: Financial Overview
Financial Overview
Slide 36: Strong Financial Track Record
Strong Financial Track Record Sales (US$m) Gross Profit (US$m) / Margin % Margin 11.2% 11.1% 11.1% 12.3% (%) 339.7 41.8 286.6 249.0 31.7 27.7 158.1 17.6 2010 2011 2012 2013 2010 2011 2012 2013 EBITDA (US$m) / Margin % Net Income (US$m) / Margin % Margin Margin 6.7% 6.9% 7.0% 7.7% 2.5% 3.0% 2.4% 3.1%
Slide 37: Cost Structure and Returns Evolution
Cost Structure and Returns Evolution Cost Structure 2010 2013 4.2% 5.2% 2.8% 1.6% 24.0% 31.1% 57.8% 63.7% Material Cost Making Cost Selling cost G&A cost Material Cost Making Cost Selling cost G&A cost Total operating cost: US$151.5m Total operating cost: US$320.9m Return on Assets Evolution Return
Slide 38: Robust Capital Structure
Robust Capital Structure Total debt and cash (US$m) Debt / equity (x) 121.9(a) 2.3x 78.7 70.0 54.2 57.1 38.4 0.7x 0.8x 0.8x 19.7 17.7 3.0 2010 2011 2012 2013 2010 2011 2012 2013 Debt Cash (a) Pro-forma adjustment to include rights proceeds of IDR1.02tn (US$83.5m), USD/IDR: exch. rate of 12,193 Debt
Slide 39: Key Investment Highlights
Key Investment Highlights 1 Indonesia well poised for becoming a key player in the global OEM manufacturing market 2 Largest listed garment manufacturers / exporters in Indonesia 3 Partner of choice for leading global brands – across key factors like ethical practices, quality, timing, price and div
Slide 40: Appendix
Appendix
Slide 41: Summary Income Statement
Summary Income Statement (US$m) 2010 2011 2012 2013 Net sales 158.1 249.0 286.6 339.7 % growth - 57.5% 15.1% 18.5% COGS (140.5) (221.3) (254.9) (297.9) % of sales 88.8% 88.9% 88.9% 87.7% Gross profit 17.6 27.7 31.7 41.8 % margin 11.2% 11.1% 11.1% 12.3% Selling expenses (4.5) (4.3) (4.0) (5.5) % of s
Slide 42: Summary Balance Sheet
Summary Balance Sheet (US$m) 2010 2011 2012 2013 Cash and bank balances 3.0 19.7 17.7 38.4 Trade receivables 16.9 35.7 52.7 45.3 Inventories 42.4 48.0 54.1 55.6 Other current assets 12.4 18.8 23.1 30.4 Total current assets 74.7 122.3 147.6 169.7 Tangible assets 27.0 43.9 53.0 56.8 Goodwill 0.6 3.4 3
Slide 43: Garment Manufacturing Process
Garment Manufacturing Process Woven Process: Warehouse Fabric Inspection Lab Test Cutting Sewing Inspection Needle Detection Embroidery/Print Cut & Sewn Knit Process: Warehouse Fabric Inspection Cutting Sewing 1st Inspection 2nd Inspection Needle Detection Source: Company data 43