S. Khonkaen Foods Public Company Limited

Transcription

1 S. Khonkaen Foods Public Company Limited From Farm to Table Opportunity Day June 3 rd, 2013 Q1/2013 Operating Result

2 A G E N D A SORKON in Brief Financial Review SORKON The Future

3 DISCLAIMER This Investor Presentation has been prepared by S. Khonkaen Plc for investors, solely for information purposes. The views expressed here contain some information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect. Financial numbers if presented in other currencies other than THB are strictly for illustrative purpose only and based on prevailing interbank lending exchange rate at the time of presentation. This presentation should not be relied upon as a recommendation or forecast by S. KhonkaenPlc. Nothing in this release should be construed as either an offer to sell or a solicitation of an offer to buy or sell shares in any jurisdiction.

4 SORKON in Brief 4

5 Strong Market Positioning in Core Businesses ( Traditional Thai Foods and Seafood Balls) SORKON is the largest player in Traditional Thai Foods and Seafood Balls market (together accounting for almost 80% of total sales) with more than 80% market share in modern trade Multi-brand/multi-grade strategy, strong brand loyalty, price leadership Barrier to entry for new comers in modern trade segment (high listing fee, high committed volume, and cost efficiency) Niche Player in Ready Meal Not to compete in high competitive segments To be a niche player in few selected categories, i.e. Frozen Thai dessert tweet Yunnan stewed pork leg Frozen facilities will serve our owned fast growing QSR QSR Zaap: Successfully Launched Pioneer in Meat-Base-Snack SORKON is the single largest producer in Meat-Base-Snacks with strong brand recognition Strong R&D and know-how Cost efficiency Ready Meal 7% Snack 6% QSR 1% Sales Mix-2012 Swine 9% Seafood Balls 34% Traditional Thai Foods 43% Zaap has continuously gained its popularity from its four flagship restaurants (Soi Aree, Silom, All Seasons Building, and Bangplee), and 2 outlets in Central Rama 3 & Rama 9 Food Court Ready Meal Traditional Thai Foods 5

6 Financial Review 1Q/2013 6

7 7.3% Sales Growth Y-o-Y (lower than target) From THB 425 million in 1Q-12 to THB 456 million in 1Q-13. Most of our products had sales growth in line with the budget, except for Snack Unit: THB Million Q-12 1Q Traditional Thai Foods Seafood Balls Frozen (Ready Meals) QSR and F&B Traditional Thai Foods had normal growth (3.6%) Seafood Balls (one of our core businesses) continuing high sales growth of 17% y-o-y Frozen (Ready Meals) posted 29% sales growth, increasing demand in both our own brand products and orders from OEM QSR had 80% sales growth more outlets in 1Q/13 Increase in sales/month/outlet 26 Snack 15 Snack posted a negative sales growth due to the following reasons: Overall Thailand snack market dropped in Q New products launched postponed to Q

8 Gross Profit (GP) Margin slightly Dropped from 30% to 29% 1Q/12 1Q/13 39% 44% 26% 24% 32% 17% 25% 8% 39% 38% 5% 30% 29% Overall Gross Profit (GP) Margin dropped from 30% in Q1/12 to 29% in Q1/13 (or 1% less) Traditional Thai Foods: Cost of Goods Sold(CGS) increase mainly due to raw material price increase Seafood Balls: CGS increased due to high Overtime Cost to run the production to fulfill a very high demand in Q1/13-15% Ready Meals: GP margin improved from 8% to 25% as a result of economy of scale and increased in our own branded products with higher margin Selling Expenses maintained the same percentage, while Admin Expenses increased Selling & Administration expenses increased from THB 88 million to THB 100 million, or 14% increase, mainly due to increase in payroll (approx 50% of total Selling & Admin Expenses) as a result of: salary adjustment to be in line with minimum THB 15,000 for under-grad Increase in manpower to accommodate our rapid business expansion THB 25.6 Million Net Profit (13.7% growth) Financial expenses reduce from THB 8 million to THB 5 million Net Profit of THB25.6 million or 5.6% was in line with our budget 8

9 Financial Status Unit: THB Million 332 1, Current Assets P&E Land (Invest.) Total Assets (Excl Cash) Current Liabilities Net Int. Bearing Debt Other Liabilities Total Equity To maintain Net Interest Bearing Debt to Equity not more than 1.25 times As of Mar-13, Net Debt to Equity Ratio = 0.6 time To maintain the Financing Structure at the optimum level, Net Debt to Equity not higher than 1.25:1 Estimated major CAPEX scheduled for 2013 at THB 300 million, Net Debt to Equity ratio will still lower than the ceiling (partly financed by internal cash-flow) Existing Land for Investment To be Liquidated Book value of land for Investment as of Mar-13 = THB 332 million To gradually liquidate these lands to lower the leverage 9

10 SORKON The Future 10

11 Maintain Strong Positioning in Two Core Businesses (Traditional Thai Food and Seafood Balls) Seafood Balls Continuing High- Teens Growth Strong demand in 1Q-2013 from both Fresh Market segment and Modern Trade segment Gross Profit Margin would be improved for the rest of the year Temporary production line adjustment to increase capacity before the new plants will be in operation by the end of this year (or not later than Q1-14). This will reduce the overtime cost Expansion of Traditional Thai Foods in EU Relocating OEM plant from Poland to Netherland To improve the logistic cost Better terms & conditions of OEM contracts Increase competitive advantage to compete with the rival Bright Prospect for Expansion into the AEC Market SORKON is still the largest producer in AEC for Traditional Processed Meat and Seafood Balls Business collaboration with strong domestic strategic partners is underway (Laos, Cambodia, Myanmar, Vietnam, and Malaysia) The business model is to start with trade partners 11

12 Ready Meals (Frozen) Turning Around with Strong Growth Potential Momentum in 1Q-2013 High sales growth of 30% in 1Q-2013, y-o-y Increase in volume from existing OEM contracts Own Brand Products ( Thai Sweet tweet, and Yunnan Stewed Pork Leg Yunnan ) keeping in sales momentum New OEM contracts has not yet been started production ( will be started in Q2) Started Profitable with improved Gross Profit Margin of 25% Gross Profit Margin has been continuing improved to 25% in 1Q-2013 Reaching economy of scale Increase in %sales mix of Own Brand Products with higher margin Continuing Strong Sales Growth for the rest of the year 2013 Sales volume from existing OEM contracts will gradually increase New OEM contracts will be started in Q2 tweet - to increase number of modern trade (besides Makro ) High potential to export tweet to EU and Middle East 12

13 Meat -Base-Snacks (Huge Room To Grow) Huge Room to Grow THB 21.7 billion with 13% growth p.a (Source: AC Nielsen) Meat-Base-Snack category shares less than 1% SORKON is the pioneer and the single largest producer in Meat-Base-Snacks With proven technology, SORKON is in a better position to seek business collaboration with International Snack Producer to co-develop new products, or co-packer, or joint marketing New Products to be Launched To launch lower price products to compete in traditional trade channel in 3Q Pork Rind has being launched Distribution via Pens Marketing, Sahapat Group,(Entrée is distributed via DKSH) Diversify Export Market Ready for AEC market: Working with DKSH for the plan to distribute our products to AEC Some Business collaborations are being discussed with potential trade partners New Halal snacks line will be completed by the end of 2013/early 2014; to export to Middle East and Muslim countries 13

14 Zaap Revenues continue to grow strongly as more QSR s are opened Average Revenue per Outlet increasing continuously Zaap has continuously gained popularity/brand awareness Introducing Happy Hour in the evening Increase retail merchandising sales New Zaap Restaurant at So-Ho Successfully Launched New Zaap restaurant at So Ho started operation on May 20, 2013 As Zaap name has been established, the restaurant has been busy since the first day of opening Optimizing the Outlets and add Delivery Service Restaurant size and restaurant management is being reviewed: To reduce number of staffs avoiding labor shortage Delivery service will be added to enhance revenues and to quickly gain brand awareness The first Zaap Kios will be introduced during the 3 rd quarter this year Infrastructure for Franchise Business in Progress Infrastructure for Zaap franchise business Brand and operation manual are completed Training course and material are being finalized Logistic and network system implementation plan are being conducted The first franchise expected in

15 Major Business Expansion (THB 300 Million CAPEX in 2013) Seafood Balls Capacity Expansion (THB 250 Mil.) To be completed by Q to Q Double capacity Efficiency Improvement and Cost Saving (replace labor with technology) Frozen Foods Capacity Expansion (THB 50 Mil.) Start running 2 shifts in May 2013 To accommodate fast growing sales growth (increasing OEM contracts from domestic retailers and successfully launching our owned brand products) To be completed by not later than Q

16 SORKON The Next 3 Years 10%-15% CAGR Sales Growth Moderate growth in core businesses (Traditional Thai Foods and Seafood Balls) Strong growth in Snacks, Frozen Foods (Ready Meal), and QSR Diversifying export markets, especially AEC and Middle East Expand domestic distribution channels ( HoReCa, increase Fresh Markets coverage) Continuing new products development to match lifestyle change Improving Operating Results THB 300 minimum wage increase and staff s salaries adjustment to be in line with THB 15,000 (for undergraduate) taken place in 2012 Gross Profit Margin (GP) to be maintained/improved Increase in Frozen Foods GP - reaching economy of scale QSR (with 40% GP) will have more contribution in total sales revenue Replace labors with technology 16