Pt Integra Indocabinet Tbk · IDX:WOOD
Pt Integra Indocabinet Tbk — Q2 2021 Earnings Presentation
62 slides from Pt Integra Indocabinet Tbk's earnings presentation, Sep 1, 2021
Slide 1: PT Integra Indocabinet Tbk Investor Presentation 2Q21
PT INTEGRA INDOCABINET TBK Integrated Wood-Based Company Investor Presentation 2Q21 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 Relocation of Interkraft’s factory to an 8-ha site in Lamongan; establishment Increased the Establishment of Converted of Woodone Integra (wooden capacity of Integriya Dekorindo Barecore doors); commencement of Millwork/Gesso Acquisition of Belayan (furniture distribution and production r
Slide 7: Corporate structure
Corporate structure PT. INTEGRA INDO LESTARI PUBLIC 71.9% 28.1% 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 30 June 2021: No. Name Number of Shares % of Shares 1 PT Integra Indo Lestari 4,532,469,620 71.9 2 Public float 1,773,780,380 28.1 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 2021 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 2021 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 ORIGINS by Alpine LLC H & M HENNES & MAURITZ GBC AB OI-WOOD PRODUCTS LLC Starlight Forever PTE, LTD Top 10 Customers Flexsteel Export 2020 Alpine Furniture Inc Composite Technology International Target Store Cotsco Wholesale Corporation Hampton Lumber - 200 400
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 US Imposed AD and CVD on Chinese wood moldings and millwork products On 16 February 2021, the US Commerce Department Issued final Antidumping and Antisubsidy Determinations on Wood Moldings and Millwork Products from China (21,22). DOC imposed final antidumping duties
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 2020 to USD1.7bn or drop by -45.5% y/y. As of 06 March 2019, the American Kit
Slide 44: Export tariff to US
Export tariff to US China Others Potential Products Market Trade war Anti dumping duty Anti subsidy duty General GSP tariff Wood Mouldings 25% 45.49 - 231.60% 20.56% - 252.29% 3.2% Free USD1.3bn & Millwork Wooden Cabinets 25% 48.5% - 262.18% 20.93% - 293.45% Free Free USD8.7bn & Vanities Hardwood 25
Slide 45: 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 2019, the import value reached USD25.5bn and grew by 1.2% in 2020 to USD25.8bn. In 2020, Chinese wooden furniture export to the US drop
Slide 46: Opportunity in US-China tensions
Opportunity in US-China tensions Wooden Furniture Exporters to US (in USDmn) 6,000 5,516 5,292 5,134 5,000 4,597 4,228 4,000 3,442 3,537 3,243 2,947 2,889 3,000 2,165 2,000 1,381 923 1,071 1,000 619450 695471 733498 519 629 734 359 - 2016 2017 2018 2019 2020 5M21 China Vietnam Malaysia Indonesia Int
Slide 47: Global furniture trading
Global furniture trading Major furniture importing countries (in USDmn), 2014-2020 30,000 ▪ US remains the leading furniture importer with the value of 25,000 USD25.8bn imported in 2020, which grew by 1.2% y/y 20,000 ▪ The largest value of furniture type imported is the wooden 15,000 furniture which
Slide 48: US Furniture Retail Sales
US Furniture Retail Sales ▪ US furniture and home furnishing sales in 6M21 reached USD 58 billion or grew by 49.7% YoY. ▪ 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
Slide 49: 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 50: 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 51: Sales order update (as of July 2021)
Sales order update (as of July 2021) in IDR Value Growth YoY 2Q21 2,140,232,154,006 92.0% O/S sales order 1,588,785,957,368 Total 2021FY sales target 3,711,000,000,000 25% • By July 2021, the company sales order reached IDR3.7tn, with IDR2.1tn realized in the 6M21. • This strong sales order indicate
Slide 52: Highest 2Q21 Earnings Result
Highest 2Q21 Earnings Result Revenue Op. profit (IDRbn) (IDRbn) 88.4% 34.7% 10.6% 1,500 250 67.6% YoY 1,228 QoQ 1,228 209 QoQ 209 200 YoY 189 1,000 912 652 150 125 500 100 50 - - 2Q20 2Q21 1Q21 2Q21 2Q20 2Q21 1Q21 2Q21 Net profit (IDRbn) • Strong sales in 2Q21 has brought the Company’s Revenue 150 1
Slide 53: Sales by segment 1H21 vs 1H20
Sales by segment 1H21 vs 1H20 0.4% Forestry 7.5% 97.1% Forestry 86.9% 2.5% Manufacturing Manufacturing Manufacturing (export) 5.6% (export) (domestic) Manufacturing (domestic) 1H21 1H20 in IDR 1H21 1H20 Growth Our 1H21 export sales grew significantly by Manufacturing – export 2,078,309,043,263 969,0
Slide 54: Sales by segment FY20 vs FY19
Sales by segment FY20 VS FY19 1% Retail and 2% 4% distribution Retail and 66% Forestry Manufacturing 82% distribution Manufacturing 66% (export) (export) Forestry 13% Manufacturing (domestic) 2020 25% 2019 Manufacturing (domestic) in IDR 2020 2019 Growth Manufacturing export segment showed Manufactu
Slide 55: Sales by region 1H21 vs 1H20
Sales by region 1H21 vs 1H20 1H21 94% 2% 2%3% 1H20 77% 7% 3% 13% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% in IDR 1H21 1H20 Growth Sales by region as of 1H21, US sales showed strong America 2,004,003,615,462 861,793,672,636 132.5% growth of 132.5% YoY. Concurrently, Europe sales Asia 33,390,250,71
Slide 56: Sales by region FY20 vs FY19
Sales by region FY20 VS FY19 2020 74% 5% 2% 18% 2019 53% 7% 6% 34% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% in IDR 2020 2019 Growth US sales showed strong growth of 96% y/y, while other America 2,196,919,994,012 1,120,908,444,133 96.0% regions dropped Asia 152,874,910,471 156,939,950,965 -2.6% Eu
Slide 57: Financial highlights
Financial highlights in IDR’b 2016 2017 2018 2019 2020 1H20 1H21 Sales 1,323 1,734 2,101 2,136 2,969 1,115 2,140 1H21 sales growth was strong with 92.0% growth due Gross profit 458 561 739 744 997 357 674 to strong demand from US market. GPM 34.6% 32.3% 35.2% 34.8% 33.6% 32.0% 31.5% The Company stil
Slide 58: Balance sheet
Balance sheet in IDR’b 2016 2017 2018 2019 2020 1H21 Cash & ST investments 30,450 54,484 64,216 23,743 42,105 38,356 Inventories 893,017 1,172,715 1,431,983 1,775,706 2,112,620 2,479,392 Account receivable 187,912 165,131 460,194 936,334 687,421 797,701 Others 216,324 274,066 369,674 316,038 550,817
Slide 59: Capex and production capacity
Capex and production capacity Capex (IDR’m) FY 2017 FY 2018 FY 2019 FY 2020 Manufacturing 115,811 85% 201,382 97% 270,633 98.8% 95,763 99.5% Forestry 15,263 11% 5,675 2% 813 0.3% 42 0.0% Commerce 4,580 3% 5,273 1% 2,385 0.9% 401 0.4% Total 135,654 212,330 273,831 96,206 Advances 269,443 285,548 221,
Slide 60: Capital structure
Capital structure Debt IDR facilities USD facilities Total debt in IDR Short term debt facility 1,965,282,957,367 6,000,000 2,038,142,957,367 Long term debt facility 213,942,218,221 - 213,942,218,221 Total debt facility 2,078,653,018,277 6,000,000 2,245,491,667,844 Undrawn debt facility 4,131,750,52
Slide 61: 2021 Earnings guidance
2021 Earnings guidance 25% sales growth y/y 10-12% net profit margin 14-35% EPS growth y/y Integra allocated IDR100-120bn capex in 2021 for expansion and maintenance capex 61
Slide 62: 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 — Q2 2021 Earnings Presentation on 6ix