Pt Sri Rejeki Isman Tbk · IDX:SRIL
Pt Sri Rejeki Isman Tbk — Non-Deal Roadshow (June 2017)
31 slides from Pt Sri Rejeki Isman Tbk's roadshow presentation, June 2017
Slide 1: Management Presentation June 2017
Management Presentation June 2017 STRICTLY CONFIDENTIAL
Slide 2: Disclaimer
THIS PRESENTATION IS BEING PRESENTED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED, REDISTRIBUTED OR PASSED ON, DIRECTLY OR INDIRECTLY, TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, FOR ANY PURPOSE. This presentation has been prepared by PT Sri Rejeki Isman Tbk (the “Company”
Slide 3: Presenters
Presenters Iwan Setiawan Allan M. Severino Welly Salam President Director Finance Director Corporate Secretary ~19 years of experience ~36 years of experience ~24 years of experience • Served as President Director of • Served as Director of Sritex • Joined Sritex in 2012 Sritex since 2006 since 2006
Slide 4: Company overview / Key investment highlights
1 Company overview 4 2 Key investment highlights 12 4
Slide 5: Sritex – a leader in Southeast Asia's textile industry
Sritex – a leader in Southeast Asia’s textile industry PT Sri Rejeki Isman Tbk (“Sritex“) is the largest vertically integrated textile companies in SE Asia, with operations across Spinning, Weaving, Finishing and Garment Manufacturing, for prime clients across its range of products A diversified bas
Slide 6: Key milestones – a long history of growth and successes
Key milestones – a long history of growth and successes Revenue 2014 (USDmn) 12-16 CAGR: Continued innovation – 8.5% launch of its SRX brand 680 800 (special military products) 700 589 631 547 1992 600 490 Inaugural international 500 Achieved vertical bond (US$270 million) 400 integration with 2006
Slide 7: The largest vertically integrated textile manufacturers in SEA – Main competitors
The largest vertically integrated textile manufacturers in SEA – Main competitors Textile Value Chain Down- Upstream Midstream stream Fibre (Cotton, Spinning Weaving Finishing Garment Retail Rayon, (Yarn) (Greige) (Fabric) Polyester) Spinning Weaving Finishing Garment #1 #1 #1 #2 Capacity Capacity C
Slide 8: The largest vertically integrated textile manufacturers in SEA – Business model
The largest vertically integrated textile manufacturers in SEA (Cont’d) - Business model Sritex is a fully integrated Midstream textile producer Upstream Midstream Downstream Raw Material Yarn Greige Dyed Fabric Apparel Retail 60% Rayon Spinning Weaving Finishing Garment 20% Cotton Worldwide 20% Pol
Slide 9: Sritex' competitive advantage
The largest vertically integrated textile manufacturers in SEA (Cont’d) - Sritex’ competitive advantage Sritex’s vertical integration provides significant competitive advantage over non-vertically integrated competitors Better quality products High and consistent quality through overseeing of the
Slide 10: A successful growth into higher margin segment
A successful growth into higher margin segment 2012-16 GPM by segment Sales CAGR Total gross sales contribution by segment and EBITDA margin (2016) 900 30.0% (USDmn) 800 20.0% Garment 18.3% 18.7% 20.0% Garment 14.8% 680 +25.1% 700 13.5% 32% 631 600 589 10.0% 547 26% Finishing 22% Finishing 18% 500 4
Slide 11: Significantly invested over the past years – now ready to harvest
Significantly invested over the past years – now ready to harvest To meet the demand of domestic and international customers, Sritex has significantly increased its production capacity. USD 511mn have been invested for the past 5 years Spinning Weaving : Utilisation rate Bales Yarn (thousands) Capac
Slide 12: Company overview / Key investment highlights
1 Company overview 4 2 Key investment highlights 12 12
Slide 13: Key investment highlights
Key investment highlights 1 A strategic positioning within Indonesia 2 Distinctive focus on efficiency and high quality production Experience working with prime clients key for next phase of 3 growth Expertise in developing new products, new designs and new 4 fabrics to continue expansion in higher
Slide 14: A strategic positioning within Indonesia – textile industry continued growth
1 A strategic positioning within Indonesia - Sritex to benefit from textile industry continued growth Sritex’ facilities are located in some of the region’s Key growth driver for Indonesian textile industry cheapest production areas • Indonesia still represents a small proportion of the global texti
Slide 15: A key player in Indonesia's textile landscape
1 A strategic positioning within Indonesia (cont’d) - A key player in Indonesia’s textile landscape Sritex likely to benefit from Indonesia’s textile market fragmentation Sritex, a strategic asset for Indonesia • 2,930 textile companies in Indonesia competing for products varying • Sritex is a symbo
Slide 16: Strategically located with superior infrastructure and logistics
1 A strategic positioning within Indonesia (cont’d) - Strategically located with superior infrastructure and logistics Tanjung Emas International Port, Semarang SPD Facilities Area: ~18ha Semarang Sukoharjo Central Java, Indonesia Distance Between Facilities & Ports Sritex to Tanjung Emas Internatio
Slide 17: Superior quality due to cutting edge equipment and control process
2 Distinctive focus on efficiency and high quality production - Superior quality due to cutting edge equipment and control process Highest operating performance Integrated process of quality control production • <1% of sales subject to claims of defects or returned • Quality control begins from the
Slide 18: Continuous improvement of productivity and efficiency
2 Distinctive focus on efficiency and high quality production (Cont’d) - Continuous improvement of productivity and efficiency Key initiatives to drive productivity and efficiency Modern and Highest productivity measures superior production Reduced wasteage equipment Efficient machineries allo
Slide 19: New initiatives to save costs and improve quality
2 Distinctive focus on efficiency and high quality production (Cont’d) - New initiatives to save costs and improve quality G&A and selling expenses remained stable during the high growth period EBITDA margin and gross margin 24.0% • Company has been able to increase EBITDA margin by c. 21.1% 21.4% 2
Slide 20: Prime clients on all its segments
3 Experience working with prime clients key for next phase of growth - Prime clients on all its segments Yarn Yarn Greige Greige Finishing Finishing Sritex is a major supplier of high quality yarn for Sritex greige or raw fabric, is renowned for its Sritex high-quality fabric is both extremely major
Slide 21: Repeat business with its prime clients
3 Experience working with prime clients key for next phase of growth - Repeat business with its prime clients Diversified geographic presence - Strong customer relationship 2016 • Sritex is able to maintain long relationship with EUROPE: key customers. More than 80% of Sritex’s 11 Countries, 24 Mark
Slide 22: Expertise in developing new products, designs and fabrics
4 Expertise in developing new products, new designs, and new fabrics to continue expansion in higher margin segments R&D – developing new fabrics with higher technology Yarn Finishing Garment Firefighting (since 2017) Chemical Biological, Radiological, and Nuclear defense (since 2016) “2-for-1 yarn”
Slide 23: Design process – internalizing a bigger scope of designing
4 Expertise in developing new products, new designs, and new fabrics to continue expansion in higher margin segments (Cont’d) Design process – internalizing a bigger scope of the designing for prime international clients Ability to procure materials required for each unique orders • Sritex is able
Slide 24: Experienced management team
5 Benefits both from an experienced management team and from strong human resources to deriver strategic vision One of the most experienced and best regarded management team in Indonesia Board of Board of Directors Commissioners Hj. Susyana Lukminto Iwan Setiawan Allan M. Severino Dr M Nasir Tamara
Slide 25: A professional and dedicated workforce
5 Benefits both from an experienced management team and from strong human resources to deriver strategic vision (Cont’d) A professional and dedicated workforce • Large base of 17,890 employees as of 2016 • Attracted an international team of experienced designers, sales managers and productions manag
Slide 26: CAPEX program over the past 5 years
6 Company to resume fast growth with continued robust financial performance CAPEX program over the past 5 years CAPEX by segment1 CAPEX 140 140 (past 5 years) 118 USD511mn 120 109 120 103 21 96 106 100 85 23 100 18 8 30 4 24 80 20 80 60 14 11 60 8 5 60 6 15 52 116 5 39 40 28 40 46 47 14 10 72 20 6.3
Slide 27: Balance sheet remains strong after CAPEX program
6 Company to resume fast growth with continued robust financial performance (Cont’d) After CAPEX program over the past 5 years, Sritex’ balance sheet remains strong Interest coverage ratio (US$mn) • Post realization of new capacities, Sritex has shown improvement 4.1x in its financial leverage shown
Slide 28: Sales and COGS breakdown, natural hedge
6 Company to resume fast growth with continued robust financial Lawyers to advise on wording for natural hedge performance (Cont’d) Sales breakdown (2016) COGS breakdown (2016) Depreciation 4% Electricity Others and water 2% 6% Direct labor 5% Domestic Export 47% 53% Raw materials 83% Given its busi
Slide 29: Management now expects growth to resume at fast pace
6 Company to resume fast growth with continued robust financial performance (Cont’d) Management now expects growth to resume at fast pace Average utilization1 Total Sales (USDmn) 12-16 CAGR: 110.0% 107.0% 8.5% 104.7% 102.7% 680 100.4% 105.0% 589 631 547 490 100.0% 95.0% 93.3% 90.0% 93.1% 169 180 85.
Slide 30: Quarterly improvement in financial performance
6 Company to resume fast growth with continued robust financial performance (Cont’d) Quarterly improvement in financial performance in line with management’s objective Quarterly Revenue and EBITDA YoY Growth 2017 strategic focus 29.0% 15.0% 18.0% 12.0% Normalization of new 4.0% 20.0% production 12.9
Slide 31: Conclusion
Conclusion Sritex at a glance key points • Established by the Lukminto family with history dating back to 1966, Sritex is headquartered in Sukoharjo (Central Java, Indonesia) and has a long history of achievements and growth: • Robust financial performance – Sales and EBITDA CAGR of resp. +9% and
PT Sri Rejeki Isman Tbk (Sritex) — Non-Deal Roadshow (June 2017) on 6ix