Slide 1: K LASER (2461)
(lz K LASER K LASER (2461) Nov 2015
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: 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 4: Agenda
Agenda Company Background Strategy Focus Our Goals Financial Performance Appendix 4
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% ► 2014 Revenue: NT$4.2 bn (US$135 m) Hologram sales mix Holographic Market cap*: NT$2.1 bn (US$65 m) 25% ► paper ► Employee number **: 700+ Holographic film 24% Hot stamping ► 7 manufacturing site
Slide 7: Corporate Structure
Corporate Structure K Laser (2461 TT) Hologram 46.81%** Optical Optivision* K Laser(TW)* R&D center (US) (3666 TT) China International Ningbo* US Thailand* Wuxi* Japan* Dong Guan* Dubai Hong Kong India* Korea* * With manufacturing facilities ** K Laser holds 46.81% of Optivision as of 3Q15 7
Slide 8: Milestones
Milestones 2014 Optivision listed on OTC 2005 Introduced 1 m wide rainbow pattern 2003 2013 Entered Tobacco Security Introduced Truly Seamless market and Consumer Products market in China 2004 Subsidiary – Optivision 1999 Established 2001 Listed on OTC Listed on Taiwan Stock Exchange 1990 Hsinchu he
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 ► Target ROE to reach 10% shareholder value ► Maintain 5%+ revenue CAGR Pursue growth & ► Reach 30% gross margin efficiency in core ► Keep opex ratio below 17% business 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 +50% • Yield rate +3-5% • Yield rate +10% • Higher production rate • Cost-saving for Holographic Paper by • Lower inventory level 20-25%
Slide 18: TSL - Strategy
TSL - Strategy Increase product offerings TSL Targets TSL as % of total sales (excl. Optivision) • Offer more patterns Gross margin (excl. Optivision) Target markets • Continue to focus on China market 27.2% • Penetrate US and Europe 17-20% 24.9% 24.7% New opportunities >9% >10% >6% • Develop new ap
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 • Holograms are more customer industry affordable for Consumer customers with truly seamless Other Consumer Tobacco & Alcohol products (TSL) • Leverage successful 15% 16% 21% 20% experience in Tobacco market 34% 34% 36% 38%
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 Improve subsidiaries’ financial independence ► Optivision (3666 TT) Reduce impact from non-core holdings listed on OTC in Dec 2014 ► Lessen financial Refocus on core business ► Boxlight (BOXL) filed impact from non- for IPO on Nasdaq in core subsidiaries Nov 2015 ► Relocate res
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 Target ROE to reach 10% Expand operating Gross margin to margin to 13%+ reach 30% in in core business Maintain 5%+ core business core revenue CAGR 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 4% 6% Europe America Europe 1% America 2% 8% 10% Asia ex Greater China Asia ex 12% Greater Taiwan China 3% 15% China China Taiwan 64% 71% 4% Note: as of 9M15 29
Slide 30: Gross Margin
Gross Margin Consolidated Consolidated excl. Optivision 27.2% 26.6% 24.9% 24.5% 24.8% 24.7% 24.9% 23.8% 23.6% 23.8% 22.4% 22.4% 4,079 4,216 3,845 3,343 3,234 3,343 3,234 3,246 2,954 2,985 3,085 2,363 2010 2011 2012 2013 2014 9M15 2010 2011 2012 2013 2014 9M15 Revenue NT$ million Revenue NT$ million
Slide 31: Operating Margin
Operating Margin Consolidated Consolidated excl. Optivision 8.3% 6.1% 6.5% 5.3% 6.2% 4.7% 4.7% 4.8% 2.9% 2.9% 3.3% 3.1% 272 249 204 196 184 156 156 156 93 93 97 95 2010 2011 2012 2013 2014 9M15 2010 2011 2012 2013 2014 9M15 Operating Profit NT$ million Operating Profit NT$ million 31
Slide 32: Historical Dividend Payout
Historical Dividend Payout 2012 2013 2014 Net Income (NT$ mn) 127 228 91 Cash Dividend (NT$ mn) 64 105 55 Dividend per Share (NT$) 0.45 0.65 0.42 Payout Ratio (%) 50% 46% 61% Cash Yield (%)* 2.5% 3.8% 2.9% * Cash yield is based on K Laser’s closing share price on the day before ex-dividend day (July
Slide 33: 3Q15 Income Statement (consolidated)
3Q15 Income Statement (consolidated) NT$ Million 3Q15 2Q15 3Q14 QoQ (%) YoY (%) Sales Revenue 1,059 952 1,089 11.2 (2.7) Gross Profit 263 237 301 11.1 (12.6) Operating Profit 75 57 99 31.0 (24.4) Income before Tax 92 52 98 79.4 (5.7) Net Income to Parent 66 40 54 63.7 21.3 EPS (NT$) 0.46 0.26 0.33 7
Slide 34: 3Q15 Income Statement (Optivision unconsolidated)
3Q15 Income Statement (Optivision unconsolidated) NT$ Million 3Q15 2Q15 3Q14 QoQ (%) YoY (%) Sales Revenue 844 786 806 7.4 4.7 Gross Profit 230 215 204 6.9 12.5 Operating Profit 77 66 37 17.3 108.6 Income before Tax 85 56 42 50.6 103.5 Net Income to Parent 66 40 54 63.7 21.3 Key financial ratio (%)
Slide 35: 5-year Income Statement (consolidated)
5-year Income Statement (consolidated) YoY (%) NT$ Million 2010 2011 2012 2013 2014 9M15 2011 2012 2013 2014 9M15 Sales Revenue 3,343 3,234 3,845 4,079 4,216 2,954 (3.3) 18.9 6.1 3.4 (5.9) Gross Profit 794 725 908 1,017 1,122 725 (8.8) 25.4 12.0 10.3 (15.6) Operating Profit 156 93 204 249 272 184 (4
Slide 36: 5-year Balance Sheet (consolidated)
5-year Balance Sheet (consolidated) YoY (%) NT$ Million 2010 2011 2012 2013 2014 9M15 2011 2012 2013 2014 9M15 TOTAL ASSETS 4,609 5,114 5,464 5,624 6,175 5,938 10.9 6.8 2.9 9.8 2.3 Cash 612 1,134 923 992 1,106 963 85.4 (18.6) 7.4 11.5 13.3 NR & AR 1,159 1,152 1,542 1,504 1,696 1,630 (0.6) 33.8 (2.5)
Slide 37: 5-year Income Statement (Optivision unconsolidated)
5-year Income Statement (Optivision unconsolidated) YoY (%) NT$ Million 2010 2011 2012 2013 2014 9M15 2011 2012 2013 2014 9M15 Sales Revenue 3,343 3,234 3,246 2,985 3,085 2,363 (3.3) 0.4 (8.1) 3.4 3.5 Gross Profit 794 725 804 738 767 643 (8.8) 11.0 (8.2) 4.0 11.4 Operating Profit 156 93 156 97 95 19
Slide 38: 5-year Balance Sheet (Optivision unconsolidated)
5-year Balance Sheet (Optivision unconsolidated) YoY (%) NT$ Million 2010 2011 2012 2013 2014 9M15 2011 2012 2013 2014 9M15 TOTAL ASSETS 4,609 5,114 4,961 5,050 5,189 5,210 10.9 (3.0) 1.8 2.7 1.2 Cash 612 1,134 816 796 721 689 85.4 (28.1) (2.4) (9.4) 9.1 NR & AR 1,159 1,152 1,195 1,095 1,068 1,194 (
Slide 39: Appendix
APPENDIX 2 K LASER
Slide 40: Optivision at a glance
Optivision at a glance Sales mix by size ► Ticker: 3666 TT 5% 1% 3% 2% 18% 16% 26% 20% 19% 28% ► Founded in 2004 35% 53% 17"+ 10 to <17" 78% 78% ► Listed on OTC on Dec 4 2014 67% 72% <10" 50% 30% ► Market cap*: NT$1.2 bn (US$38 m) 2012 2013 2014 1Q15 2Q15 3Q15 Sales mix by application ► Key product:
Slide 41: General TFT-LCD Structure
General TFT-LCD Structure Source: NPD DisplaySearch 41
Slide 42: Optivision transformation
Optivision transformation Product strategy: Dedicated to small size films Dedicated to small size films • Smaller devices require better tech in films Quality • Milder ASP pressure for high quality films End of 2015 High Penetrate new customers • ASP for incumbents are much higher vs. Optivision • G