Hoang Anh Gia Lai Joint Stock Company · HOSE:HAG
Hoang Anh Gia Lai Joint Stock — SSI Gateway (2018)
26 slides from Hoang Anh Gia Lai Joint Stock's conference presentation, 2018
Slide 1: HAG – A New Cycle of Growth
HAG – A NEW CYCLE OF GROWTH 1
Slide 2: Business Operation
BUSINESS OPERATION Business Segmentation Industrial Fruits Cow Property Crops Passion Rubber Myanmar Fruits Banana Palm Oil Vietnam Dragon Fruits Mango In harvest Chili Will harvest before 6 months Others: 12 other tropical fruits Will harvest after 6 months 2
Slide 3: Past – Lessons Learnt
PAST – LESSON LEARNS MAC = 14% DEBT UP- CASH DOWN TO DO: 48,000 HA RUBBER 30,000 HA PALM OIL 30,000 Bil VND WHICH DOES NOT CREATE CASH FLOW UNTIL 2017-18 27.300 25,000 Debt Cash 20,000 15,000 10,000 5.800 5,000 3.588 791 0 2010 2016 • Mistake in taking extensive debt to build up long term assets • R
Slide 4: However Our Execution Ability Is Proven
HOWEVER OUR EXECUTION ABILITY IS PROVEN MAC = 14% • We made mistakes, but no one can doubt our execution ability • Execution ability is important for the transformation we are telling you later. • We were in liquidity problem but our asset value is way over our liability EXECUTION ABILITY: 2010-17 L
Slide 5: Legacy: Rubber
LEGACY: RUBBER MAC = 14% PLANTATION AND EXPLOITED AREAS (HA) RUBBER: REVENUE AND GROSS PROFIT 50,000 3,000,000 VND bn Accummulative Plantation (ha) 45,000 Total Revenue (Mil. VND) Exploited Area (ha) 40,000 2,500,000 Profit before interests (Mil. VND) 35,000 30,000 2,000,000 25,000 1,500,000 20,000
Slide 6: Legacy: Palm Oil
LEGACY: PALM OIL MAC = 14% PLANTATION AND EXPLOITED AREAS (HA) RUBBER: REVENUE AND GROSS PROFIT 30,000 Accummulative Plantation (ha) Exploited Area (ha) 2,500,000 VND bn Total Revenue (Mil. VND) 25,000 Profit before interests (Mil. VND) 2,000,000 20,000 1,500,000 15,000 1,000,000 10,000 500,000 5,00
Slide 7: Legacy: Cow
LEGACY: COW MAC = 14% COW: IMPORTED AND SOLD REVENUE AND PROFIT BEFORE INTEREST 140,000 4,000,000VND bn Total Revenue (Mil. VND) 120,000 3,500,000 Profit before interests (Mil. VND) 100,000 3,000,000 80,000 2,500,000 60,000 2,000,000 40,000 1,500,000 20,000 1,000,000 - 2015 2016 2017 2018 2019 2020
Slide 8: Myanmar Project: The Gem of Yangon
MYANMAR PROJECT: THE GEM OF YANGON MAC = 14% PHASE 1: 2013-15 PHASE 2: 2017-19 RETAIL: 38,300 m2 RETAIL: 29,300 m2 Rent: 100% OFFICE: 80,000 m2 OFFICE: 64,500 m2 Rent: 52% HOTEL: 430 Rooms HOTEL: NO Occupancy: 40% APARTMENT: 0 APARTMENT/ Sold: O SERVICED APT: 1034 8
Slide 9: Myanmar: Value at $500-600M
MYANMAR: VALUE AT $500-600M UNDER NEGOTIATION FOR EXIT PHASE 2: APARTMENT / SERVICED APARTMENT WILL INCREASE PROFIT SIGNIFICANTLY 90 Total Revenue (USD) Millions 84 EBITDA (USD) PHASE 2 80 Profit before tax (USD) 70 65 63 60 51 49 50 42 40 33 30 18 20 12 10 0 2017 2018 2019 • The best retail mall in
Slide 10: Transformation: Focus on Consumer Demand
TRANSFORMATION: FOCUS ON CONSUMER DEMAND MAC = 14% FOCUS: BECOMING ONE OF THE LARGEST TROPICAL FRUITS PRODUCERS GLOBALLY WHAT WE GOT WHAT WE’VE ACHIEVED UNTIL 3Q2017 • Change Our Way Of Doing Business: • 18,000ha plantation • We grow what markets needs. • 19 types of fruits & spices • We plant what
Slide 11: HAGL Fruit - The Big Picture
HAGL FRUIT - THE BIG PICTURE Addressable Market • 3bn population (CN, ID, JP, KO, ASEAN) MARKET AND COMPETITOR Growing Market • Booming Middle Income, Modern Trade Weak Competitor • 95% farmers with smaller than 5ha Ready Infrastructure • 100,000ha, cheap labor, and close to markets ADVANTAGES HAG H
Slide 12: Support by Huge Increasing Middle Income
SUPPORT BY HUGE INCREASING MIDDLE INCOME CHINA IS A ON SPOTLIGHT • China middle class will be added by more than 300mil people (100 mil households) • 400 mil ton of fresh fruits consumed globally, China accounts for 40%. • Rising middle class, and urbanization will push development of modern supply
Slide 13: Vietnam Fresh Fruit Export: Booming
VIETNAM FRESH FRUIT EXPORT: BOOMING MAC = 14% BUT NUMBERS LIKELY UNDERSTATED AS EXPORT FRUITS & VEGETABLES: BOOMING DRAGON FRUITS ACCOUNTS FOR 61% • Vietnam Fruits export grow 7 folds in 7 years, hitting $3.5bnVietnam’s vegetable and fruits growth 7 folds in 7 years, reaching 7 bil. USD in 2017 (fru
Slide 14: Supply Chain: Small Players in Trouble
SUPPLY CHAIN: SMALL PLAYERS IN TROUBLE 95% FARMERS A FEW COMPANIES & WITH LESS THAN 5HA LAND COLLECTIVES Collectors NO … Collector Big Collector IN VIETNAM MUCH OR AT HIGHER BORDER MARGIN Wholesalers NO (packing & Wholesalers grading) Local Large Distributors Distributors IN IMPORT COUNTRIES Traditi
Slide 15: HAG's Positioning
HAG’S POSITIONING MAC = 14% 60 Value added Organic PAN 40 Global GAP HAGL Hoang Hau Dragon fruit NAFood Fohla Viet VietGap GAP 20 Mass 95% of all farmers in Vietnam Product 0 0 5000 5 ha 10000 10015000 ha 20000 25000 3000020,000 ha 35000 Area 15
Slide 16: Area of Plantation
AREA OF PLANTATION MAC = 14% EXPLOITED PLANTATION AREAS AND PRODUCTION – 2018 VS. 2017: TURNING POINT IN 2018 ha tons 2017 2018 2017 2018 200,000 2500 186,834 2,137 1,962 2,000 160,000 2000 1,805 1,635 120,000 1500 1,159 971 80,000 1000 57,224 713 773 47,337 42,134 40,734 40,000 27,000 500 291 148 1
Slide 17: Case Studies: Passion Fruits
CASE STUDIES: PASSION FRUITS MAC = 14% Market Characteristics HAGL Achievements • Market size is small: China import 100.000ton in 2016, • 1.600ha planted and applying Global GAP, 1.000 ha mostly from Vietnam. harvested, export 30.000 ton, Revenue VND 700bil, EBITDA VND 328bil in 9mth 2017. • But gr
Slide 18: Case Studies: Passion Fruits
CASE STUDIES: PASSION FRUITS MAC = 14% PRODUCTION WILL JUMP 35% BUT WITH MUCH EXPLAIN WHY REVENUE JUMPS 45% TO $63M HIGHER EXPORT QUALITY WITH ESTIMATED EBITDA OF $27M ASSUMTIONS • Productivity: 35 ton/ ha vs. average 40 ton /ha by farmers • Price: VND 24,000/kg similar to average 2017 expected pric
Slide 19: Case Studies: Banana
CASE STUDIES: BANANA MAC = 14% Market Characteristics HAGL Achievements • Market size is huge: 15mil ton trade globally, China • 2500ha planted and applying Global GAP, 400ha consume 14mil ton/year. harvested, export 15.000 ton, Revenue VND 230bil, EBITDA VND 90bil in 9mth 2017. • Well establish ind
Slide 20: Case Studies: Banana
CASE STUDIES: BANANA MAC = 14% PRODUCTION JUMPS 4 TIMES REVENUE WILL TRAIL THE PRODUCTION MUCH HIGHER EXPLOITED AREA EBITDA IS EXPECTED TO REACH $57M ASSUMTIONS • Productivity: 40 ton/ ha vs. average 40 ton /ha by farmers • Price: VND 15,000/kg, 10% discount to average 2017 expected price • Harvest
Slide 21: Case Studies: Dragon Fruit
CASE STUDIES: DRAGON FRUIT China import value of dragon fruit(‘000 USD) MAC = 14% China import volume of dragon fruit(‘000 tons) Market Characteristics HAGL Achievements • 1.5bil USD market and growing quickly with Vietnam • 2500ha red & purple meat planted and applying Global domination. GAP, 700ha
Slide 22: Case Studies: Dragon Fruits
CASE STUDIES: DRAGON FRUITS MAC = 14% FULL YEAR PRODUCTION AND LARGER HARVEST DON’T SURPRISE: HUGE PROFIT MARGIN AREA PUSHES PRODUCTION UP 4.5 TIMES EXPECTED TO REACH $45M EBITDA ASSUMTIONS • Productivity: 20 ton/ ha vs. average 30 ton /ha by farmers • Price: VND 39,000/kg, 10% discount to average 2
Slide 23: Fruits Business Has Risks
FRUITS BUSSINESS HAS RISKS MAC = 14% Risks and Obstacles HAGL Solutions Market risks: - Trade war Multi origination: Vietnam, Laos, Cambodia Export through big and official channels - Technical barriers Global GAP, post-harvest technologies, internal QC - Demand changes Constant feedbacks fr
Slide 24: Planning 2017-18: Fruits
PLANNING 2017-18: FRUITS MAC = 14% Big contribution of fruits business will be in 2018: • Over 300.000 tons products • Over VND 7000bil Revenue and VND 4000bil EBITDA 24
Slide 25: Plan of Debt Repayment
PLAN OF DEBT REPAYMENT MAC = 14% 30,000 8,000 7,413 Thousands Bil. VND Thousands Bil. VND 27,337 7,000 25,000 22,337 6,000 5,000 19,837 20,000 5,000 4,043 4,000 15,837 4,000 15,000 3,000 3,000 2,500 2,000 1,500 10,000 1,074 1,000 5,000 - 2017 2018 2019 - 2016 2017 2018 2019 Cash from Core Operation
Slide 26: Conclusion
CONCLUSION MAC = 14% A FEW KEY POINTS - Complete financial restructuring in 2017 - Turning point for fruits business in 2018 - Continue to divest from non-core assets: HAGL Myanmar. - Focus on building sustainable agricultural ecosystem: - Maintain cows, harvest rubber and palm. - Further investment
Hoang Anh Gia Lai Joint Stock Company — SSI Gateway (2018) on 6ix