World Precision Machinery Ltd. · SGX:B49

World Precision Machinery — H1 2015 Earnings Presentation

34 slides from World Precision Machinery's earnings presentation, August 2015

  1. Slide 1: Company Presentation 2Q2015/1H2015

    COMPANY PRESENTATION 2Q2015/1H2015

  2. Slide 2: Forward-Looking Statements

    FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements which can be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. Such statements may include comments on industry, business or market tre

  3. Slide 3: Contents

    CONTENTS 1 Corporate Profile 2 Financial Highlights 3 Industry Outlook 4 Growth Strategies 5 Investment Merits 3

  4. Slide 4: Corporate Profile

    CORPORATE ~~ y PROFILE XY KiB

  5. Slide 5: Company Overview

    COMPANY OVERVIEW  Top 3 integrated manufacturer of precision metal stamping machines in the PRC  Strategically located in Jiangsu Province, close to Yangtze River Delta manufacturing hubs  Major supplier to Chinese automobile, home appliances and electronics sectors  Listed on SGX since April 20

  6. Slide 6: Business Model

    BUSINESS MODEL Components Branded vendors Manufacturers /Assemblers Home Appliances Steel Suppliers 32%* Automobile 38%* Electronics 12%* Distributors Others 18%* * Based on FY2014 revenue 6

  7. Slide 7: Diverse Customer Spread

    DIVERSE CUSTOMER SPREAD Jilin Market Presence Shandong Jiangsu Anhui / Zhejiang Chongqing Guangdong Fujian 7

  8. Slide 8: Wide Range of Products

    WIDE RANGE OF PRODUCTS  Over 200 different models of stamping machines  Average lifespan of products: 20 years Conventional • Manufacturing lead time: 1 – 3 months • Price range: RMB10,000 - 150,000 • e.g. Manually operated & simple structure High performance and high tonnage • Manufacturing lead

  9. Slide 9: Established Facilities

    ESTABLISHED FACILITIES Capacity Utilisation Subsidiary Location Completion Products Type FY2011 FY2012 FY2013 FY2014 Danyang, Since 1953, World Precise Jiangsu Conventional and upgraded in 69% 60% 62% 64% Machinery high performance 2006 Danyang, World Heavy Jiangsu High performance Year 2008 64% 43%

  10. Slide 10: High Barriers to Entry

    HIGH BARRIERS TO ENTRY  Estimated capex of RMB200 million at current prices to set up a typical equipment manufacturing plant of 20,000 sqm  Capex of about RMB1.098 billion already spent over 1953-2014 to build the Group’s existing plants; Current replacement cost of the plants is about RMB2 billi

  11. Slide 11: Brand Quality

    BRAND QUALITY  Products conform to various quality standards 2010 Jiangsu Province ISO14001:2004 GB/T28001-2001 ISO9001:2008 Renowned Product China Top 100 Enterprise Technology Leading Enterprise in Jiangsu Province First Recognised as High- overseas invested Centre of Jiangsu China's industrial s

  12. Slide 12: Experienced Management Team

    EXPERIENCED MANAGEMENT TEAM Ms. Jiang Hongdi  Executive Director  China CPA Mr. Shao Jianjun  In charge of overall Finance operations  > 10 years in stamping machine industry  Executive Chairman  Senior Machinery Professional Engineer Mr. Zheng Yulin  >35 years in stamping machine industry 

  13. Slide 13: Financial Highlights

    FINANCIAL HIGHLIGHTS 13

  14. Slide 14: Revenue Trend

    REVENUE TREND Revenue (RMB ‘000) 1,200,000 864,303 786,517 814,571 800,000 467,552 400,000 305,193 - 2012 2013 2014 1H2014 1H2015 14

  15. Slide 15: Growing High-End Contributions

    GROWING HIGH-END CONTRIBUTIONS Change In Sales Mix 100% 2.5% 2.9% 2.9% 2.3% 6.2% 80% 60% 72.4% 74.2% 80.1% 79.5% 74.6% 40% 20% 25.1% 22.9% 19.2% 17.0% 18.2% 0% FY2012 FY2013 FY2014 1H2014 1H2015 Conventional High performance and high tonnage Others

  16. Slide 16: Conventional Stamping Machines

    CONVENTIONAL STAMPING MACHINES Sales Volume (Unit) & ASP (RMB/Unit) 25,000 30,000 25,586 23,779 24,503 24,682 25,000 20,000 22,221 20,000 15,000 15,000 10,000 8,302 7,618 10,000 5,946 5,000 3,328 2,636 5,000 0 0 2012 2013 2014 1H2014 1H2015 Units Sold ASP 16

  17. Slide 17: High Tonnage/Performance Machines

    HIGH TONNAGE/ PERFORMANCE MACHINES Sales Volume (Unit) & ASP (RMB/Unit) 8,000 200,000 7,000 148,912 146,641 143,015 160,000 6,000 142,815 129,083 4,840 5,000 120,000 4,121 4,000 3,823 2,880 80,000 3,000 2,000 1,595 40,000 1,000 0 0 2012 2013 2014 1H2014 1H2015 Units Sold ASP 17

  18. Slide 18: Gross Profit and Margin

    GROSS PROFIT AND MARGIN Gross Profit (RMB ‘000) & Gross Margin (%) 600,000 40.0% 31.8% 31.9% 35.0% 500,000 30.9% 30.9% 29.3% 30.0% 400,000 25.0% 300,000 258,984 267,166 20.0% 230,660 15.0% 200,000 144,244 10.0% 97,367 100,000 5.0% 0 0.0% 2012 2013 2014 1H2014 1H2015 Gross profit Gross margin 18

  19. Slide 19: Net Profit and Margin

    NET PROFIT AND MARGIN Net Profit (RMB ‘000) & Net Margin (%) 500,000 12.4% 14.0% 10.5% 450,000 11.9% 12.0% 400,000 350,000 8.3% 10.0% 300,000 9.5% 8.0% 250,000 200,000 6.0% 150,000 4.0% 100,946 108,016 100,000 74,928 55,521 2.0% 50,000 25,440 0 0.0% 2012 2013 2014 1H2014 1H2015 Net profit Net margin

  20. Slide 20: Healthy Financial Position

    HEALTHY FINANCIAL POSITION (RMB’000) As at 30 June 2015 As at 31 Dec 2014 Total assets 1,614,527 1,665,571 - Cash & bank balances 17,453 50,916 - Inventories 382,591 347,792 -Trade receivables 255,958 300,980 - Property, plant and 739,503 764,895 equipment Total liabilities 519,714 556,942 - Trade p

  21. Slide 21: Turnover Days

    TURNOVER DAYS Turnover Days 350 300 283 288 241 278 250 267 281 222 238 200 158 150 135 117 146 142 100 128 91 115 50 0 2012 2013 2014 1H2015 Inventory Turnover Accounts Receivables Accounts Payables Cash Conversion Cycle 21

  22. Slide 22: Order Book Trend

    ORDER BOOK TREND Order Book (RMB ‘Million) 120 102 100 100 80 80 60 52 50 40 20 - 25 Apr'14 7 Aug'14 6 Nov'14 15 Feb'15 4 August 15 22

  23. Slide 23: Industry Outlook

    INDUSTRY OUTLOOK 23

  24. Slide 24: Investment-Led Stimulus

    INVESTMENT-LED STIMULUS  China exempts electric cars from 10% Purchase Tax (July 2014)  electric cars, plug-in hybrids and fuel-cell vehicles will be excluded from the levy till the end of 2017  China aims to put 5 million “new-energy” vehicles on the road by 2020 Source: Bloomberg, http://www.bl

  25. Slide 25: Investment-Led Stimulus

    INVESTMENT-LED STIMULUS  One Belt One Road Initiative strategy (March 2015)  Strengthen China’s links with South-east Asian countries, Africa and Europe  Railway industry is a new growth engine for exports  Focus on more 10 railway projects, including Laos, Thailand, Hungary, Serbia, Russia, Tan

  26. Slide 26: Growth Strategies

    GROWTH STRATEGIES 26

  27. Slide 27: Growth Strategies

    GROWTH STRATEGIES Vertically Moving Up The Integrated Business Model Technology Ladder Technical Alliance With Foreign Geographic Companies Expansion 27

  28. Slide 28: Vertically Integrated Business Model

    VERTICALLY INTEGRATED BUSINESS MODEL  In-house design and manufacturing  Capabilities to design about 90% of equipment produced  Over 200 R&D and technical staff in Danyang , and R&D expenditure typically takes up 2.5% of sales  Margin improvement with in-house design  Bulk purchase of steel at

  29. Slide 29: Moving Up the Technology Ladder

    MOVING UP THE TECHNOLOGY LADDER Conventional High Performance • Conventional • High performance • More High Products products performance • Higher Efficiency products Products • simple structure • 2 points / pistons • 4 pistons • Pressing Line • Manually • Computer Solutions Operated Numerical Contr

  30. Slide 30: Technical Alliance with AIDA

    TECHNICAL ALLIANCE WITH AIDA • Technological alliance with Aida Engineering Ltd, a Japan based global manufacturer of metal stamping presses for automotive industry, since 2002 • Blue chip customers including Honda, Magna Cosma, Flextronics, Fisher Barton • Opens doors to Japanese manufacturers eg.

  31. Slide 31: Shenyang New Plant

    SHENYANG NEW PLANT Estimated Designed annual Estimated Area capex output value Commence complete (m2) (RMB ‘Mil) (RMB ‘Mil) construction construction Land 364,923 123.3 N/A N/A May 2011 acquisition Phase I N/A 300-400 300 July 2011 2H2012 Not yet Phase II N/A 100-200 300 - commence Total 364,923 500

  32. Slide 32: Investment Merits

    INVESTMENT MERITS  China’s top 3 largest integrated manufacturer of precision metal stamping machines  Proxy to PRC’s booming auto parts and home appliance markets  The four-pronged strategies to further boost the Group’s profitability  Stable return with high dividend payout 33

  33. Slide 33: Continued Dividend Payout

    CONTINUED DIVIDEND PAYOUT Dividend payout per share (RMB ‘Cent) & ratio (%) 25.00 200% 20.00 180% 20.00 Proposed 160% 15.00 final 140% dividend of 15.00 100% 13.50 10 cents 120% 11.90 74% 100% 10.00 80% 38% 6.25 60% 30% 5.00 Interim 5.00 27% 25% dividend of 40% 10 cents 20% 0.00 0% FY2009 FY2010 FY2

  34. Slide 34: Thank You

    THANK YOU Contact Details: Samuel Ng CFO, World Precision Machinery Limited Tel: (65) 8180 2482 Email: saisamuelng@hotmail.com 35

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