Masan High-tech Materials Corp. · UPCOM:MSR
Masan High-tech Materials — Merger or Acquisition (August 2018)
18 slides from Masan High-tech Materials's merger presentation, August 2018
Slide 1: JV Acquisition and Tungsten Chemical Strategy
JV Acquisition and Tungsten Chemical Strategy August 2018 1
Slide 2: 5-year game plan to become integrated Tungsten dominating player
5-year game plan to become integrated Tungsten dominating player Phase 1 Phase 2 GO FURTHER DOWNSTREAM WHERE PROFITABLE CONSOLIDATE APT + OXIDES MARKET OPTIMIZE CURRENT BUSINESS TUNGSTEN: LARGEST SINGLE DEVELOP CARBIDE + TUNGSTEN CHEMICAL (APT, POWDER CAPABILITY BTO, YTO) PLATFORM EX- THROUGH PARTNE
Slide 3: Part 1: Details of JV Acquisition
Part 1: Details of JV Acquisition 3
Slide 4: Fully funded by MSR with no capital support from Masan Group
A value accretive deal for MSR shareholder… Consideration 2018 EPS accretion of 2019 ROIC* $29.1mn 14% 50%+ Fully funded by MSR with no capital support from Masan Group JV Financial Position in FY2018 and FY2019E (USD mn) 14 34 39 85 26 2018 Ending Cash 2019E EBITDA 2019E Change in WC + 2019E Capex
Slide 5: A critical step to become the only scalable integrated tungsten chemical player
…and a critical step to become the only scalable + integrated tungsten chemical player in the world. 1. Consolidates ownership of Advanced Processing Technologies 2. Expects USD8.5mn of total benefit from operational synergies + economics improvement per annum 3. Enhances our Cash Position and Decis
Slide 6: Consolidates ownership of Advanced Processing Technologies
1. Consolidates ownership of Advanced Processing Technologies Solvent Extraction process of H. C. Stack ensure highest quality Oxides and APT vs global peers HCS grant JV the perpetual, royalty-free right to apply advanced processing technology in Vietnam MSR reinvests 1% of annual revenue on Resear
Slide 7: Creating shareholder value through operational efficiencies and cash position improvement
2+3. Further creating shareholder value through operational efficiencies + cash position improvement Operational Synergies USD3mn Waste disposal + Processing optimization Economics Improvement USD4.5mn USD1mn Greater capacity Higher price realization utilization Expects USD8.5mn of total benefit fro
Slide 8: Better position MSR for Strategic Partnership and International IPO
4. Better position MSR for Strategic Partnership + pursue an International IPO Ex-China Tungsten Value Chain Masan Resources Post Deal 6.5k 6.5K 12K 9.2K Masan Resources 2018 6.5k 6.5K 9.4K 5.5K HC Starck 10K 5K 2K 3K Kennametal 1K 5K 4K 3K 4K 1K 3K Plansee 9K 5K 2K 3K 1K 3K Iscar 3K 3K 1K 2.5K 2.5K
Slide 9: Part 2: Masan Tungsten Chemicals Plan
Part 2: Masan Tungsten Chemicals Plan 9
Slide 10: Growing demand book calls for Tungsten chemical plant expansion
Growing demand book calls for Tungsten chemical plant expansion MSR APT and Tungsten Oxides Order Book Demand (tons) 14,840 15,660 11,650 12,000 7,004 4,107 2014 2018E 2019E 2020E 2021E 2019-2021E Capacity Planned expansion of Tungsten chemical plant Increase APT plant capacity Expected CAPEX: USD5-
Slide 11: Need to solve raw material constraint
Need to solve raw material constraint … Tungsten Contained Metal Production vs Order Book Demand (tons) 3,016 1,200 1,200 12,000 11,650 7,434 7,434 7,434 2019E Capacity 2019E Demand 2019E NPM Supply 2019E External Procurement 2019E Supply Gap Trade tension driving European and West Asia – ex-China c
Slide 12: Strict selection criteria for raw material supply
… with strict selection criteria. Annual Volume of > 3,000 tonne WO3 Long-term Offtake Contract Raw material quality on par with Nui Phao’s spec Purchased at 70% of APT Low or below 12
Slide 13: Resolving raw material supply constraints leads to superior financial performance
Resolving raw material supply constraints leads to superior financial performance across pricing environment (*) APT low = $275/mtu Revenue EBITDA NPAT (USDmn) (USDmn) (USDmn) 416 187 48 APT low = $300/mtu Revenue EBITDA NPAT 2-3 years (USDmn) (USDmn) (USDmn) to pay down all outstanding 444 210 75 M
Slide 14: Assessing partnership model to go downstream where it is profitable
Assessing partnership model to go downstream where it is profitable Miners (Upstream) Oxides Producer Metal & Chemical Downstream Processors Manufacturers Product Tungsten Tungsten Oxides Tungsten Carbides Cemented Carbides Concentrate (APT, BTO, YTO) Tungsten Metal Powders Milled Products Value-add
Slide 15: Down-stream product financial snapshot
Down-stream product financial snapshot TUNGSTEN METAL TUNGSTEN CARBIDES POWDER Prouction Unit tonne 1,500 2,500 Price realization % of APT Low 110%-150% 115%-150% Additional Production Cash Cost 29-34 35-40 USD/mtu CAPEX USDmn 25-35 Strategic Consideration: Tunsgten carbides and Tungsten metal pow
Slide 16: Obtain recycling materials to improve sustainability and profitability
Obtain recycling materials to improve business model’s sustainability and profitability Midstream products Downstream MSR manufacturers Soft scrap Sustainable scrap supply Scrap Production Cost Advantage vs APT Low = APT Low Scrap Production Cost ROIC improvement on both lower CAPEX and 350 330 cost
Slide 17: MSR 2022 Ambition
MSR 2022 Ambition 2018 2019-2020 2022 Integrated midstream Dominating midstream Fully integrated dominating Tungsten player Tungsten player Tungsten player 36% ex-China market 45%+ 50%+ Ex-China market share Ex-China market share share Core Strategy: Partnership model + Technology acquisition = Supe
Slide 18: Disclaimer
Disclaimer This Presentation has been prepared by Masan Group Corporation and/or its affiliated companies (collectively, “MSN”; together with any officer, director, employee, advisor or agent of MSN, collectively, the “Preparers”) for the purpose of setting out certain information in respect of MSN’
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