Pt Integra Indocabinet Tbk · IDX:WOOD
Pt Integra Indocabinet Tbk — Q3 2020 Earnings Presentation
63 slides from Pt Integra Indocabinet Tbk's earnings presentation, December 2020
Slide 1: PT Integra Indocabinet Tbk Investor Presentation 3Q20
PT INTEGRA INDOCABINET TBK Integrated Wood-Based Company Investor Presentation 3Q20 Desa Betro, Kecamatan Sedati Sidoarjo 61253 – Indonesia Phone: +62 31 8910434, +62 31 8910435, +62 31 8910436 Faximile: +62 31 8911391 E-mail: corsec.integra@iil.co.id Website: www.integrafurniture.co.id
Slide 2: Table of contents
Table of contents Corporate Business ESG, sustainability Growth Financial Introduction overview overview and safety drivers overview Company profile Milestones Business model and UN Sustainable Opportunity in US Sales order update growth strategy Development Goals protectionism Investment case Corpo
Slide 3: Company profile
Company profile Establishment date 19 May 1989 Listing date 21 June 2017 Security code WOOD IJ Industry, trade, and processing services of wood-based furniture and other wood products, forest concessions, as well as retail Business field and distribution of furniture and home decorations through the
Slide 4: Investment case
Investment case Efficient operations Largest vertically-integrated timber products manufacturer, which results in margin improvement due to cost efficiencies. Immense growth potential Taking advantage of the US-China trade war opportunity and AD & CVD implementation on China’s timber products, Integ
Slide 5: Table of contents
Table of contents Corporate Business ESG, sustainability Growth Financial Introduction overview overview and safety drivers overview Company profile Milestones Business model and UN Sustainable Opportunity in US Sales order update growth strategy Development Goals protectionism Investment case Corpo
Slide 6: Milestones
Milestones Establishment of Relocation of Interkraft’s Integriya Dekorindo factory to an 8-ha site in (furniture distribution and Lamongan; establishment of Converted Barecore Acquisition of Belayan retail) and of the door Woodone Integra (wooden production facility Establishment Establishment of In
Slide 7: Corporate structure
Corporate structure PT. INTEGRA INDO LESTARI PUBLIC 69.9% 30.1% Forestry Manufacturing Retail & Distribution PT Narkata Rimba PT Intertrend Utama PT Integriya Dekorindo PT Belayan River Timber PT Interkraft PT Intera Indonesia 7
Slide 8: Board of Commissioners
Board of Commissioners Hendro Rusli President Commissioner ▪ President Commissioner since 2016 ▪ Director at PT Interkraft, PT Belayan River Timber, and PT Narkata Rimba ▪ Commissioner at PT Intera Indonesia. ▪ Previously served as President Commissioner at PT Intertrend Utama (2013-2016), Director
Slide 9: Board of Directors
Board of Directors Halim Rusli President Director ▪ President Director since 1989 and one of the founders of the Company ▪ Received his Bachelor of Business Administration degree from Redlands University, United States in 1985 Meity Lin Lin Vice President Director ▪ Vice President since 2016 ▪ Presi
Slide 10: Shareholder structure
Shareholder structure As of 31 October 2020: No. Name Number of Shares % of Shares 1 PT Integra Indo Lestari 4,408,795,050 69.9 2 Public float 1,897,454,950 30.1 Total shares 6,306,250,000 100.0 10
Slide 11: Commitment to minority shareholders
Commitment to minority shareholders As a listed Company, we are committed to creating value for minority shareholders and acting in their best interests through: Fair Disclosure The Company is committed to fairly disclosing information to all our shareholders. Voting in General Meeting All our share
Slide 12: Table of contents
Table of contents Corporate Business ESG, sustainability Growth Financial Introduction overview overview and safety drivers overview Company profile Milestones Business model and UN Sustainable Opportunity in US Sales order update growth strategy Development Goals protectionism Investment case Corpo
Slide 13: Business model and growth strategy
Business model and growth strategy 2020 business plan US-China Trade War & Anti- Financial Strategy Dumping Opportunities ▪ Providing financial support to WOOD should benefit from wooden ensure growth products impacted by the Anti-Dumping & ▪ Improving financial structure Countervailing Policies 202
Slide 14: Business model and growth strategy
Business model and growth strategy Strategy in facing 2020 challenges Increasing competitiveness WOOD is making sure both material and labor costs are competitive versus those of regional competitors by moving to more efficient levels of production processes Preparing material resources WOOD is prep
Slide 15: Product portfolio
Product portfolio Knock-down furniture Fully-assembled furniture Building components Millwork Plywood Wall paneling Window blinds Doors 15
Slide 16: Product portfolio
Product portfolio Target: Knock-down furniture Coaster/Scott Living Furniture: Setup furniture Costco: Setup furniture 16
Slide 17: Product portfolio
Product portfolio Government projects: Mid-low housing and Government projects: boarding house furniture School furniture On Friday, 04 January 2019, Indonesian President Jokowi Widodo inaugurated 3 apartment towers, in which one was a student apartment named “STKIP PGRI” in Tulungagung, East Jakart
Slide 18: Product portfolio
Product portfolio Fast-growing products Window blinds Millwork Wall panel Plywood 18
Slide 19: Vertically-integrated operations
Vertically-integrated operations Forestry (FSC Certified) o Logs (Shorea / Meranti) o 2 forestry concessions of over 163,425 Forest mgmt, planning, ha with capacity of 90,000 m3 per year Forest resources Heavy equipment Logs pond and and harvesting and infrastructure grading Distribution & Retail o
Slide 20: Value chain
Value chain Forestry Manufacturing Log yard Fully-assembled Knock down Building furniture furniture components Dry sawn timber Dry sawn timber Dry sawn timber Sawmill process warehouse warehouse warehouse Wet sawn timber Processing Processing Processing warehouse Sanding Final sanding Packing Kiln d
Slide 21: Geographic footprint and key customers
Geographic footprint and key customers Costco Wholesale Composite Technology Target Store Flexsteel Top 10 Customers IKEA Export 2019 Hampton Lumber Sales Alpine Furniture Coaster Company of America Wonder Wood China National Forest Products - 50 100 150 200 250 300 in IDR (bn) PT Jatim Sentra Utama
Slide 22: Production capacity
Production capacity Installed capacity (in m3) Integra Indocabinet Intera Interkraft Intertrend Total BC: BC: BC: BC: Year Furniture BC: FJLB Furniture Furniture Furniture Wooden Furniture BC Millwork Millwork Plywood Blind 2018 19,688 43,000 6,125 35,833 7,088 8,750 25,927 - 22,000 41,651 126,760 2
Slide 23: Production area
Production area Area utilization (in ha) Integra Indocabinet Intera Interkraft Intertrend WII Total BC: BC: BC: BC: Products Furniture BC: FJLB Furniture Furniture Furniture Wooden Doors Millwork Millwork Plywood Blind Betro, 16 5 - 2 - - - - - 2 25 Sidoarjo Gedangan, - - 2.6 - - - - - - - 2.6 Sidoa
Slide 24: Production facilities
Production facilities PT Integra Indocabinet Address: Sidoarjo Area: 21 ha No. of employees: 1,268 24
Slide 25: Production facilities
Production facilities PT Intera Indonesia Address: Sidoarjo Area: 7.6 ha No. of employees: 166 25
Slide 26: Production facilities
Production facilities PT Interkraft Address: Lamongan Area: 10 ha No. of employees: 428 26
Slide 27: Production facilities
Production facilities PT Intertrend Utama Address: Sidoarjo Area: 14 ha No. of employees: 419 27
Slide 28: Impact of COVID-19
Impact of COVID-19 ▪ Safety and prevention efforts to protect our employees, such as: ▪ Public service announcements on sanitation and general recommendation to minimize contact and transmission ▪ Temperature checks upon entry ▪ Sanitation, protection and immune boosters ▪ Early social distancing tr
Slide 29: Table of contents
Table of contents Corporate Business ESG, sustainability Growth Financial Introduction overview overview and safety drivers overview Company profile Milestones Business model and UN Sustainable Opportunity in US Sales order update growth strategy Development Goals protectionism Investment case Corpo
Slide 30: UN Sustainable Development Goals
UN Sustainable Development Goals Following the Company’s sustainability strategies and initiatives, we contribute to the following SDGs: ▪ Equal remuneration ▪ Recycle and reuse ▪ Given large ▪ Energy efficiency ▪ Source only legal and for women and men. our water. opportunity to through usage of ce
Slide 31: Preserving our environment
Preserving our environment Sustainable sourcing Our core principle in managing two of our forest concessions is to conduct responsible tropical natural management in line with both FSC and National guidelines to maintain our status as the well-managed tropical natural forest. Hence, we obtained both
Slide 32: Preserving our environment
Preserving our environment Climate We believe climate change poses a threat to our planet and its impact has become more visible. At Integra, we address this issue through energy efficiency by reducing energy usage. In our manufacturing division, in line with our spirit to realize a zero-waste strat
Slide 33: Preserving our environment
Preserving our environment Manufacturing Health & Safety We place health & safety as our first priority to realize Zero Accident strategy in our working environment. Moreover, to be a supplier for international buyers, providing healthy & safe working environment at our production facilities is esse
Slide 34: Nurturing our talent
Nurturing our talent 97% No. of employees Retention rate No. of trainings FY2019 2,419 32 Competitive Benefits At Integra, we value our employees who become part of our family and grow with the company. Understanding the economic growth and increasing inflation, we provide wages and benefits that me
Slide 35: Governance
Governance Integra adheres to the following good corporate governance (GCG) principles: Transparency Accountability Responsibility Independence Fairness Ease of access to Clarity of functions, Compliance in the Professionally managed Fair and equal treatment complete, accurate and structure, systems
Slide 36: Governance
Governance Governance structure General Meeting of Shareholders GMS – The Government regulation no.40/2007 on Limited Liability Companies (GMS) require a company to held GMS and placed it as the highest organ in the Company structure. Both BOC and BOD are responsible to the GMS. The latest GMS was h
Slide 37: Governance
Governance Whistleblowing policy The violation reporting system or also known as the Whistleblowing System was established in order to encourage the employees to report violations based on a reward system. The approach used by the Company to maintain management discipline aligns with the Company’s i
Slide 38: Certifications and awards
Certifications and awards Forest Stewardship Council is an international BSCI is an initiative of the Foreign Trade Association SVLK certification is required by Indonesian law non-governmental organization dedicated to (FTA), the leading business association of European and for all wood products ex
Slide 39: COVID-19 safety and prevention efforts
COVID-19 safety and prevention efforts Public services announcements Temperature checks upon entry PSAs are put on public & visible spaces to outline sanitation and general recommendations to minimize contact and transmission. Sanitation, protection and immune boosters Social distancing training and
Slide 40: Table of contents
Table of contents Corporate Business ESG, sustainability Growth Financial Introduction overview overview and safety drivers overview Company profile Milestones Business model and UN Sustainable Opportunity in US Sales order update growth strategy Development Goals protectionism Investment case Corpo
Slide 41: Opportunity in US protectionism
Opportunity in US protectionism In addition to US trade war tariffs implemented on imported Chinese products which started in 06 July 2018, China also faced additional anti-dumping (AD) and anti-subsidy (CVD) duties that cause its products becoming less competitive compared to the other countries. W
Slide 42: Opportunity in US protectionism
Opportunity in US protectionism Potential AD and CVD on Brazilian and Chinese wood moldings and millwork products On 06 August 2020, the US Commerce Department Issues Preliminary Antidumping Determinations on Wood Moldings and Millwork Products from China and Brazil (21, 22). DOC imposed preliminary
Slide 43: Opportunity in US protectionism
Opportunity in US protectionism US-imposed AD and CVD duties on Chinese wooden cabinets and vanities products US imports of wooden cabinets and vanities product from China reach USD4.7b in 2018 but dropped significantly in 2019 to USD3bn or by -35.8% y/y. As of 06 March 2019, the American Kitchen Ca
Slide 44: Opportunity in US-China tensions
Opportunity in US-China tensions ▪ US furniture imports has been the largest among other importing countries, with wooden furniture as the most imported product. In 2018, the import value reached USD27.5b but dropped by 6.9% in 2019 to USD25.6b which was due to the tension between the US and China w
Slide 45: Global furniture trading
Global furniture trading Major furniture importing countries (2014-19) ▪ US remains the leading furniture importer with the value of USD27.4bn 30,000 imported in 2018, which grew by 8.7% y/y 25,000 ▪ The largest value of furniture type imported is the wooden furniture 20,000 which accounted for more
Slide 46: Rise in online home furnishing sales in 2020
Rise in online home furnishing sales in 2020 (9) ▪ Bed Bath & Beyond digital sales were up 16% YoY in March 2020. ▪ Wayfair sales doubled since the COVID-19 crisis started. ▪ Target has seen very strong growth in e-commerce sales of home furnishing products in 1H 2020. ▪ V12, a leading provider of p
Slide 47: Business outlook
Business outlook Integra will continue to benefit from: ▪ Market expansion ▪ China and US tensions; implementation of tariffs, AD and CVD on Chinese exports (particularly wood-based products) to the US and potentially other large exporting countries, such as Brazil and Vietnam; opportunity to take o
Slide 48: Table of contents
Table of contents Corporate Business ESG, sustainability Growth Financial Introduction overview overview and safety drivers overview Company profile Milestones Business model and UN Sustainable Opportunity in US Sales order update growth strategy Development Goals protectionism Investment case Corpo
Slide 49: Sales order update (as of Oct 2020)
Sales order update (as of Oct 2020) in IDR Value Growth YoY 1Q20 482,137,457,059 -2.2% 2Q20 651,816,884,259 34.5% 3Q20 751,125,264,814 74.2% Realized 9M20 sales 1,885,079,606,132 33.8% O/S 4Q20 sales order 741,243,222,171 4Q20 sales order target 714,920,393,868 Total sales order as of Oct 2020 2,626
Slide 50: Highest 3Q20 Earnings Result
Highest 3Q20 Earnings Result Revenue Op. profit (IDRbn) 15.2% (IDRbn) 800 74.2% 751 751 45.1% YoY 34.2% 652 QoQ 200 YoY 167 QoQ 167 600 150 125 431 115 400 100 200 50 - - 3Q19 3Q20 2Q20 3Q20 3Q19 3Q20 2Q20 3Q20 Net profit • Strong sales in 3Q20 has brought the Company’s Revenue (IDRbn) growth to be
Slide 51: Sales by segment 3Q20 vs 3Q19
Sales by segment 3Q20 vs 3Q19 Retail and distribution 1% 3% Retail and distribution 82% 92% 3% Manufacturing 1% Manufacturing Forestry Forestry (export) 4% (export) 14% Manufacturing Manufacturing (domestic) (domestic) 3Q20 3Q19 in IDR 3Q20 3Q19 Growth Our 3Q20 export sales grew by 55.0% YoY Manufac
Slide 52: Sales by segment 9M20 vs 9M19
Sales by segment 9M20 vs 9M19 2% 2% Retail and Retail and 84% distribution 77% distribution 6% Manufacturing Manufacturing Forestry (export) 9% (export) 9% Forestry Manufacturing (domestic) 11% Manufacturing (domestic) 9M20 9M19 in IDR 9M20 9M19 Growth Our export sales grew 40.3% YoY due to strong d
Slide 53: Sales by segment FY19 vs FY18
Sales by segment FY19 VS FY18 2% Retail and 2% distribution Retail and 67% 6% 66% distribution Manufacturing Forestry (export) Manufacturing (export) 16% Forestry 25% Manufacturing 2019 15% 2018 (domestic) Manufacturing (domestic) in IDR 2019 2018 Growth Manufacturing – export 1,408,547,774,733 1,40
Slide 54: Sales by region 3Q20 vs 3Q19
Sales by region 3Q20 vs 3Q19 3Q20 76% 4% 2% 18% 3Q19 83% 3% 6% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% in IDR 3Q20 3Q19 Growth Sales by region as of 3Q20, US sales showed strong growth of 59.9% YoY. Concurently, entering 2H20, Asia America 570,466,184,017 356,847,449,161 59.9% and Domestic ma
Slide 55: Sales by region 9M20 vs 9M19
Sales by region 9M20 vs 9M19 9M20 76% 6% 2% 16% 9M19 62% 9% 7% 23% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% in IDR 9M20 9M19 Growth US sales showed strong growth of 64.5% y/y, above America 1,432,259,856,653 870,488,250,326 64.5% expectations and domestic market gradually improved. Meanwhile, oth
Slide 56: Sales by region FY19 vs FY18
Sales by region FY19 VS FY18 2019 52% 7% 6% 34% 2018 45% 8% 14% 33% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% in IDR 2019 2018 Growth US sales showed strong growth of 18.9% y/y, while other America 1,121,022,720,939 942,230,609,155 18.9% regions dropped Asia 156,939,950,965 176,444,089,220 -11.1%
Slide 57: Top Customers 9M20
Top 10 Customers 9M20 H&M Hennes & Mauritz GBC AB ORIGINS by Alpine LLC OI-WOOD PRODUCTS LLC PT. Kayu Lapis Murni Flexsteel Alpine Furniture Inc Composite Technology International Cotsco Wholesale Corporation Target Store Hampton Lumber - 100 200 300 400 500 in IDR (bn) 57
Slide 58: Financial highlights
Financial highlights in IDR’b 2016 2017 2018 2019 9M19 9M20 Sales 1,323 1,734 2,101 2,136 1,409 1,885 9M20 sales growth was strong with 33.8% growth due to Gross profit 458 561 739 732 504 625 strong demand from US market and gradual improvement of domestic sales. GPM 34.6% 32.3% 35.2% 34.3% 35.8% 3
Slide 59: Balance sheet
Balance sheet in IDR’b 2016 2017 2018 2019 9M20 Cash & ST investments 30,450 54,484 64,166 23,692 31,897 Inventories 893,017 1,172,715 1,431,983 1,775,706 2,039,980 Account receivable 187,912 165,131 460,194 936,334 567,188 Others 216,324 274,066 369,674 316,038 503,722 Current assets 1,327,702 1,66
Slide 60: Capex and production capacity
Capex and production capacity Capex (IDR’m) FY 2017 FY 2018 FY 2019 Manufacturing 115,811 85% 201,382 97% 270,633 98.8% Forestry 15,263 11% 5,675 2% 813 0.3% Commerce 4,580 3% 5,273 1% 2,385 0.9% Total 135,654 212,330 273,831 Advances 269,443 285,548 221,270 Production capacity FY 2017 FY 2018 FY 20
Slide 61: Capital structure
Capital structure Production capacity IDR facilities USD facilities Total debt in IDR Short term debt facility 1,777,847,695,524 12,000,000 1,944,686,345,092 Long term debt facility 300,805,322,753 - 300,805,322,753 Total debt facility 2,078,653,018,277 12,000,000 2,245,491,667,844 Undrawn debt faci
Slide 62: 2020 Earnings guidance
2020 Earnings guidance 21.7% sales growth y/y 10-12% net profit margin 14-35% EPS growth y/y Integra allocated IDR100-120b capex in 2020 for buying machineries and maintenance capex 62
Slide 63: Thank you!
THANK YOU! Desa Betro, Kecamatan Sedati Sidoarjo 61253 – Indonesia Phone: +62 31 8910434, +62 31 8910435, +62 31 8910436 Faximile: +62 31 8911391 E-mail: corsec.integra@iil.co.id Website: www.integrafurniture.co.id
PT Integra Indocabinet — Q3 2020 Earnings Presentation on 6ix