Slide 1: K LASER (2461)
K LASER (2461) November 2016 1
Slide 2: Disclaimer
Disclaimer • The information contained in this confidential document ("Presentation") has been prepared by K LASER (the "Company"). It has not been fully verified and is subject to material updating, revision and further amendment. • While the information contained herein has been prepared in good f
Slide 3: About K Laser
ABOUT K LASER 3
Slide 4: Executive Summary
Executive Summary ► We are the largest fully integrated holographic material supplier in the world, ranking No. 1 in Consumer Packaging and top 3 in Tobacco Security in China. The global market we target is over US$ 3 bn. ► With in-house design and origination capabilities, we are a total solution p
Slide 5: Company Background
COMPANY BACKGROUND = K LASER
Slide 6: K Laser at a glance
K Laser at a glance Product sales mix ► Ticker: 2461 TT Hologram 69% ► Founded in 1988 Optical Film 31% ► 2015 Revenue: NT$4.1 bn (US$125 m) Hologram sales mix Holographic Market cap*: NT$2.3 bn (US$73 m) 31% ► paper ► Employee number **: 800+ Holographic film 19% Hot stamping ► 8 manufacturing site
Slide 7: Corporate Structure
Corporate Structure K Laser (2461 TT) Hologram 47%** Optical Optivision* K Laser(TW)* R&D center (US) (3666 TT) China International Ningbo* US Wuxi* Thailand* Dong Guan* Japan* Changsha* Dubai Hong Kong India* Korea* * With manufacturing facilities ** K Laser holds 47% of Optivision as of end of 2Q1
Slide 8: Milestones
Milestones 2014 Optivision listed on OTC 2005 Introduced 1 m wide 2016 2003 rainbow pattern Consolidated He Rai Entered Tobacco Security 2013 Laser as a subsidiary market and Consumer Introduced Truly Seamless market in China Products 2004 Subsidiary – Optivision 1999 Established Listed on OTC 2001
Slide 9: Industry Leader
Industry Leader Products K Laser The largest fully integrated holographic Hologram material supplier in the world is the sole supplier No. 1 in Consumer Packaging Market Our and top 3 in Tobacco Security Market Consumer focus Security in China & Tobacco labels, industry packaging & Capturing a US$3b
Slide 10: Total solution provider
Total solution provider Dedicated R&D team In-house design and Total solution provider origination capabilities One-stop shopping Printing End 25+ years experience K Laser companies Customers Comprehensive product offerings Co-design capabilities Global presence Close to customers Solid relationship
Slide 11: Dedicated management team
Dedicated management team Alex Kuo, Ph.D. Chairman Ph.D in Electrical Engineering, SUNY 28 yrs+ of experience Wai-Hon Lee, Ph.D. Teresa Huang CTO CFO Ph.D. in Electrical Engineering, MIT MS in Accountancy, Bentley University Xerox, Harris Corporation, 45 yrs+ of experience Delta Electronics, 22 yrs+
Slide 12: Strategy Focus
STRATEGY FOCUS 2 K LASER
Slide 13: 3-year strategy plan
3-year strategy plan Maximize ► Increase ROE shareholder value ► Maintain revenue CAGR above the Pursue growth & industry average efficiency in core ► Expand gross margin business ► Lower opex ratio in core business* ► Gain shares Strategy focus ► Resource optimization * Core business indicates K La
Slide 14: Strategy Focus
Strategy Focus Resource Gain Shares Optimization Truly Seamless Streamline operations products (TSL) Grow non-tobacco Rationalize global exposure operations 14
Slide 15: Strategy Focus
Strategy Focus Resource Gain Shares Optimization Truly Seamless Streamline operations products (TSL) Grow non-tobacco Rationalize global exposure operations 15
Slide 16: TSL – What is it?
TSL – What is it? Truly Seamless (TSL) Traditional TSL can solve the issues - end products with seams or inconsistent patterns 16
Slide 17: TSL – Benefits
TSL – Benefits Minimized disturbance Less limitations on to production specification Traditional Truly Seamless (TSL) Customers K Laser • Production speed/capacity improves significantly • Higher yield rate • Higher yield rate • Higher production rate • Cost-saving for Holographic Film by • Lower in
Slide 18: TSL - Strategy
TSL - Strategy Increase product offerings TSL as % of Revenues • Offer more patterns TSL as % of core Revenues* Gross Margin of core business* 29.7% 29.6% Target markets 26.8% • Continue to focus on China market • Penetrate US and Europe 24.7% 24.9% >14% 10% >10% >6% New opportunities <3% • Develop
Slide 19: Strategy Focus
Strategy Focus Resource Gain Shares Optimization Truly Seamless Streamline operations products (TSL) Grow non-tobacco Rationalize global exposure operations 19
Slide 20: Grow non-tobacco exposure
Grow non-tobacco exposure Focus on non-tobacco market Hologram sales mix by customer industry • Holograms are more affordable for Consumer Other Consumer Tobacco & Alcohol customers with truly seamless 15% 16% 21% 20% 26% 22% products (TSL) • Leverage successful 34% 34% 36% experience in Tobacco mar
Slide 21: Strategy Focus
Strategy Focus Resource Gain Shares Optimization Truly Seamless Streamline operations products (TSL) Grow non-tobacco Rationalize global exposure operations 21
Slide 22: Streamline operations
Streamline operations Reduce impact from non-core holdings ► Lessen financial impact from non- Refocus on core business core subsidiaries ► Indirectly increased our holdings of ► Target Optivision as He Rui Laser to 74% from 49% in unconsolidated subsidiary Jan 2016 ► Better transparency for each ►
Slide 23: Strategy Focus
Strategy Focus Resource Gain Shares Optimization Truly Seamless Streamline operations products (TSL) Grow non-tobacco Rationalize global exposure operations 23
Slide 24: Rationalize global operations
Rationalize global operations Closed down inefficient operations • Closed Mexico office in 4Q14 • Liquidating K Laser Jiangyin Integrate resources to sell globally • New initiatives since early 2015 Target to improve capital efficiency and expense control 24
Slide 25: Our Goals
OUR GOALS 2 K LASER
Slide 26: Our Goals
Our Goals We strive to enhance our No. 1 position in the world Increase ROE Improve efficiency & Expand gross expand margin in core operating Core revenue business margin in core CAGR superior business to the industry average 26
Slide 27: K LASER
fi 27 K LASER
Slide 28: Financial Performance
FINANCIAL PERFORMANCE = K LASER
Slide 29: Sales mix by geographic
Sales mix by geographic Consolidated Consolidated excl. Optivision IMEA IMEA 5% 6% Europe America Europe 1% 1% 10% America 14% Other Asia 13% China Taiwan Other 58% 2% Asia 18% China 69% Taiwan 3% Note: Based on 1H16 revenue 29
Slide 30: Gross Margin
Gross Margin Consolidated Consolidated excl. Optivision 26.6% 26.7% 26.8% 27.4% 24.9% 25.0% 24.8% 24.7% 24.9% 23.6% 22.4% 22.4% 4,079 4,216 4,057 3,845 3,234 3,234 3,246 3,085 3,167 2,985 2,158 1,633 2011 2012 2013 2014 2015 1H16 2011 2012 2013 2014 2015 1H16 Revenue NT$ million Revenue NT$ million
Slide 31: Operating Margin
Operating Margin Consolidated Consolidated excl. Optivision 8.4% 7.8% 7.1% 6.1% 6.5% 6.7% 5.3% 4.8% 2.9% 2.9% 3.3% 3.1% 290 272 249 246 204 180 156 110 93 93 156 95 2011 2012 2013 2014 2015 1H16 2011 2012 2013 2014 2015 1H16 Operating Profit NT$ million Operating Profit NT$ million 31
Slide 32: Dividend
Dividend 2013 2014 2015 Net Income (NT$ mn) 228 91 164 Cash Dividend (NT$ mn) 105 55 66 Dividend per Share (NT$) 0.65 0.42 0.50 Payout Ratio (%) 46% 61% 40% Cash Yield (%)* 3.8% 2.9% 3.6% * Cash yield is based on K Laser’s closing share price on the day before ex-dividend day (August 6, 2014 for 201
Slide 33: 2Q16 Income Statement (consolidated)
2Q16 Income Statement (consolidated) NT$ Million 2Q16 2Q15 YoY (%) 1H16 1H15 YoY (%) Sales Revenue 1,000 952 5.0 2,158 1,895 13.9 Gross Profit 274 237 15.9 576 462 24.9 Operating Profit 80 57 39.3 180 108 66.4 Income before Tax 57 52 11.3 120 78 52.7 Net Income to Parent 28 40 (30.8) 59 66 (10.6) EP
Slide 34: 5-year Income Statement (consolidated)
5-year Income Statement (consolidated) YoY (%) NT$ Million 2011 2012 2013 2014 2015 1H16 2012 2013 2014 2015 1H16 Sales Revenue 3,234 3,845 4,079 4,216 4,057 2,158 18.9 6.1 3.4 (3.8) 13.9 Gross Profit 725 908 1,017 1,122 1,013 576 25.4 12.0 10.3 (9.7) 24.9 Operating Profit 93 204 249 272 290 180 120
Slide 35: 5-year Balance Sheet (consolidated)
5-year Balance Sheet (consolidated) YoY (%) NT$ Million 2011 2012 2013 2014 2015 1H16 2012 2013 2014 2015 1H16 TOTAL ASSETS 5,114 5,464 5,624 6,175 5,996 6,398 6.8 2.9 9.8 (2.9) 6.6 Cash 1,134 923 992 1,106 1,242 1,328 (18.6) 7.4 11.5 12.3 17.3 NR & AR 1,152 1,542 1,504 1,696 1,548 1,528 33.8 (2.5)