Vedan International (holdings) Ltd. · HKEX:2317
Vedan International (holdings) — H1 2005 Earnings Presentation
26 slides from Vedan International (holdings)'s earnings presentation, Aug 30, 2005
Slide 1: 2005 Interim Results
2005 Interim Results 30 August 2005 1- 1 -
Slide 2: Highlights
Highlights 40% Wh’ RN ° A ver” FED’ EA’ EDAM PCDAN * ow VEDAN ° a | AN VEDA" N VEDAN VEDAN VEI*”" DAN VERMA tr”
Slide 3: Summary of Interim Results
Summary of Interim Results Six months ended 30 June, USD million 2004 2005 Change Turnover 109.4 117.4 +7.2% Gross Profit 37.4 23.4 -37.5% Net Profit 15.7 5.7 -63.8% Basic EPS per share 1.04 0.37* -64.4% (US cents) Dividend per share, interim 0.506 0.201 -60.3% (US cents) Gross profit margin 34.2% 1
Slide 4: What Went Wrong – 1H 2005 Vs 1H 2004
What Went Wrong – 1H 2005 Vs 1H 2004 z Lysine prices declined dramatically (average 36%) - Over-supply in the PRC - Outbreak of bird flu in Asia and pig-borne Streptococcus suis bacteria ( ) in the PRC - Weak demand for soybean and corn z Lysine production cost increased by around 24% z MSG prices w
Slide 5: Pressure on Lysine Price
Pressure on Lysine Price 2H 2003 1H 2004 2H 2004 1H 2005 Average 76 100 73 64 Sale Price Average 104 100 112 124 Sale Cost Gross Profit Margin 69 100 52 20 140 120 100 80 A v e r a g e S a le s P r ic e A v e r a g e S a le C o s t 60 G r o s s P r o f it M a r g in 40 20 0 2H 2003 1H 2004 2H 2004 1
Slide 6: Pressure on Production Costs
Pressure on Production Costs The Prices of Molasses and Cassava increased since 2H 2004 250 200 150 M o la s s e s C assava 100 50 0 2H 2003 1H 2004 2H 2004 1H 2005 Note: Take the price of 1H 2004 as the base to calculate the change from 2H2003-1H 2005 6- 6 -
Slide 7: Pressure on Production Costs
Pressure on Production Costs z Prices of raw materials standing high pushed up by persistently hefty oil prices Molasses: – Due to high oil prices, molasses to alcohol production scheme becomes economically viable thus pushing molasses price to a historical high – Price of molasses nearly doubled wh
Slide 8: Sales Performance
Sales Performance Sales revenue keeps growing US million 2H 2003 1H 2004 2H 2004 1H 2005 Sales 109.0 109.4 115.5 117.4 120 117.4 115.5 115 109 109.4 110 105 100 2H 2003 1H 2004 2H 2004 1H 2005 8- 8 -
Slide 9: Key Financial Figures
Key Financial Figures 30 Jun 2004 30 Jun 2005 Cash (USD million) 39.6 20.4 Current Ratio (Times) 1.61 1.65 Net Gearing Ratio* (%) 14.36% 25.4% ROE Ratio (%) 6.7% 2.4% Six months * Net debt / equity 9- 9 -
Slide 10: Business Review
Business Review — PCDAN * oe VEDAN * Deen V KUAN VEDA” N VEDAN VEDAN VEI**" DAN VEIAa! 8° VEDAN 10
Slide 11: Market Analysis
Market Analysis Revenue by Markets Others (4.4%) 5.2M ASEAN (5.2%) 6.2M Vietnam (54.5%) 63.9M 117.4M The PRC (14.5%) 17.0M Japan (21.4%) 25.1M 1H 2005 11 - 11 -
Slide 12: Major Market Analysis
Major Market Analysis Vietnam 4.5% to US$63.9 million z Growth in sales volume and turnover; driven by higher MSG, modified starch and caustic soda sales z The weak lysine price dragged down profit Japan 3.7% to US$25.1 million z MSG growth rate 37.3% to 15M, modified starch growth rate 125% to 3.6M
Slide 13: Major Market Analysis
Major Market Analysis The PRC 45.6% to US$17.0 million z Contribution from Shanghai Vedan; MSG sales grows 58% compare with 1H 2004. z Sales of modified starch enjoyed significant growth z Overall prospects remain promising 13 - 13 -
Slide 14: Product Analysis
Product Analysis Turnover by Products Modified Starch (6.0%) 7.0M Specialty Chemicals (4.6%) 5.5M Native Starch (0.1%) 0.1M 117.4M Others (3.2%) 3.7M Lysine (8.9%) 10.5M MSG (71.8%) GA (5.4%) 84.2M 6.4M 1H 2005 14 - 14 -
Slide 15: Major Products Analysis
Major Products Analysis MSG 16.2% to US$84.2 million z Increasing contribution from Shanghai Vedan z In PRC, continuing consolidate the distribution network and expand sales coverage z Sales from ASEAN countries and Japan increased z Surge of molasses costs affected profit margins z Stable growth in
Slide 16: Major Products Analysis
Major Products Analysis Modified Starch 78.3% to US$7.0 million z Strategically increased production of modified starch for better profit margins Native Starch 97.0% to US$0.14 million z Strategically reduced sales of native starch to focus on the modified starch market that enjoys a higher margin z
Slide 17: Business Strategies
Business Strategies _ re’ FOS’ EDAM, PCOAN * we VEDAN * a AN VEDA N VEDAN VEDAN VEI*?" DAN VEIAa! 8° VEDAN 17
Slide 18: Major Strategies
Major Strategies z Continue to execute the price increase policy systematically to mitigate pressure on material costs z Diversify raw material sources and expand sources of procurement z Strengthen production efficiency of China operations z Speeding up new product development, plant construction a
Slide 19: Expand Raw Material Sources
Expand Raw Material Sources Molasses: z Source from different countries such as Pakistan and Eastern Europe in addition to the existing major source in neighbouring countries such as Thailand z Import raw sugar to replace molasses New Source of Carbohydrates z Currently working with Syngenta in Swit
Slide 20: New Product Launch
New Product Launch Enhance sales and profitability by launching new high value products: • The r-PGA factory in Vietnam is expected to be completed at the end of 2005 or the 1Q of 2006 r-PGA • In Vietnam, the construction of the new factory for producing high value-added seasonings has been High Val
Slide 21: Acquisitions and Strategic Alliance
Acquisitions and Strategic Alliance Acquisitions during the review period: z Completion of acquisition of Shanghai Vedan Food, which has already brought in significant contribution z Acquired Ve-Thai Tapioca-Starch Co., Ltd. in Gia-Lai Province to expand material sources and facilitate the prosperin
Slide 22: Capacity Expansion
Capacity Expansion Ve–Thai Tapioca Starch factory from z Expand capacity of 60MT/day to 100MT/day z Construction of a modified starch production facility in the Shanghai factory; capable of producing 10,000 tons of modified starch per year; initially construction is expected to be completed in Q3 20
Slide 23: Research and Development
Research and Development z Currently assessing the feasibility of using rice as raw material to produce high value added rice protein and starch syrup; related technique has been developed, large scale trial production will commence in due course z Continue to develop modified starch products, espec
Slide 24: Prospects
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Slide 25: Business Outlook
Business Outlook z Lysine prices appeared to have stabilized z Raw material prices reached a plateau z Our sales keep growing z New product launch z Expanded capacity and enhanced production and operational efficiency ⇒ Margin and profitability will gradually pick up 25 - 25 -
Slide 26: 2005 Interim Results
2005 Interim Results 30 August 2005 26 - 26 -
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