aapico hitech plc [ah] - listed...

AAPICO HITECH PLC [AH]

Presentation for Q1 2020 financial statements

Disclaimer

2

The information contained in this material has been prepared by AAPICO Hitech PLC (“AH” or “AAPICO”) solely for information purpose and does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to purchase or subscribe for shares in AAPICO.

Some statements made in this material are forward-looking statements. These statements typically contain words such as “expects” and “anticipates” and words of similar import. Any statement in these materials that are not a statement of historical fact is a forward-looking statement that involves various risks and uncertainties. These include statements with respect to our corporate plans, strategies, and beliefs. These statements are based on our management assumptions and beliefs in light of the information currently available to us. These assumptions involve risks and uncertainties which may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements.

None of the future projections, expectations, estimates or prospects in this presentation should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct and exhaustive or, in the case of the assumptions, fully stated in the presentation. We assume no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements.

Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of AAPICO or any of its shareholders, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of AAPICO nor any of its shareholders, directors, officers or employees accepts any liability (in negligence or otherwise) whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. Individual situations and local practices and standards may vary, so viewers and others utilizing information contained within a presentation are free to adopt differing standards and approaches as they see fit. Products and names mentioned in materials or presentations are the property of their respective owners and the mention of them does not constitute an endorsement by AAPICO. The information contained in this presentation is only current as of the date its date. In giving this presentation, neither AAPICO nor its respective advisers and/or agents undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent. You must make your own assessment of the relevance, accuracy, and adequacy of the information contained in this presentation and must make such independent investigation as you may consider necessary or appropriate for such purpose. The presentation should not be construed as legal, tax, investment or other advise.

[email protected] | +66-(0)-2613-1504

AAPICO HITECH PUBLIC COMPANY LIMITED

Agenda

3

1. Company Information

2. Automotive Industry Updates

3. Financial Performance

4. Strategy & Direction


AAPICO Hitech PLC

Company Overview


5


• A leading OEM automotive parts manufacturer in Thailand with global operations.

• Core businesses: OEM Auto Parts, Jigs and Dies, Car Dealerships and IoT Connectivity & Mobility.

• Registered capital of Baht 322.65 million and paid-up capital of Baht 322.58 million, comprising of 322,583,844 ordinary shares at par value of Baht 1 each.

• Major shareholders are Yeap Swee Chuan and Family holding 39.35% of total capital.

Index : SET / THSIIndustry/Sector : AutoCurrent price : Baht 8.60*Market Cap : Baht 2,774 million*P/BV : 0.38*Dividend yield : 4.11%TRIS / CG Rating : BBB+ /

* Data as of May 18, 2020 ** Dividend yield is calculated based on current share price

AAPICO’s Vision


6

Where do we want to go?How do we want people to remember us?

MANUFACTURINGRESEARCH & DEVELOPMENTCAR RETAILING

TO BECOME ALEAN, GREEN, HAPPY, DIGITALWORLD-CLASS CORPORATION

• S : Safety • Q : Quality • C : Cost • D : Delivery • E : Engineering • M : Management (Focus Digital)

• Teamwork • Look at problems as

opportunities • Love Family,

Company and Country

• Loyalty and Honesty • Mutual Respect

• Profitability • Reasonable Dividend

• Corporate Social Responsibility

Happy Employees Happy Shareholders Happy PublicHappy Customers

AAPICO Key Fundamental Values

Core Pillars of AAPICO Business


7

Auto Part Manufacture

Car Dealerships

IoT Connectivity

& Mobility

Business Segments


8

Manufacture of Auto Parts(Thailand, Portugal & China)

Car Dealerships(Thailand & Malaysia)

IoT Connectivity(Thailand)

~77% of Sale ~22% of Sale <1% of Sale

Thailand

Malaysia

Stamping & Assemblies

Forging & Machining

Plastic

Jigs and Dies

(Distribution & Retail)

Iron Casting

Countries of Operations


9

Q1 2020China

3%

Portugal20%

Malaysia11%

Thailand67%

Sales by Country

CHINA Kunshan Production: Connecting rods and Copper Forging

MALAYSIA Car dealers: Honda car

Proton

Mitsubishi Dealers Navanakorn, Pakkret and Pathumthani

Ford Dealers Samutprakarn & Ramindra

THAILAND Ayutthaya, Chonburi, Rayong, Samutprakarn

Hitech Industrial Estate Production: Stamping parts and Stamping Dies & Jigs

Amata City Industrial Estate Chonburi Production: Stamping & Chassis Frames and Forging & Machining Parts

Bangpli Industrial Estate Production: Plastic Parts

Amata City Industrial Estate Rayong Production: Stamping Parts Plastic Washers & Fuel Tanks

PORTUGAL Maia Production: Iron casting

Major OEM Customers

10

Q1 2020

Others36%

NTPT2% AAM

2% FORD3% Vinfast

3%

NISSAN4%

DANA 4%

AAT**6%

CONTINENTAL8%

ISUZU31%

Top OEM Customer Profile

**Auto Alliance (Thailand) Co., Ltd – a JV between Ford and Mazda.

Our Partners


11

Joint Venture Technical Partner

Automotive Industry Updates

1Q19 1Q20

454

561

172 223

273 328

Thailand Car Production Volume


13

'-

450

900

1,350

1,800

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

441 506 504

561 564 548 517 540

172 198 202 223 221 224 212 220

259 296 294 328 332 313 295 310

Pick-Up/PPV Passenger Others Total Domestic SalesExport Sales

Total Car Production by Quarter Jan-Mar Production

‘000 Units

-19.2% yoy

Source: The Federation of Thai Industry (Automotive Industry)

Thailand Export Volume


14

Export Volume by Quarter Jan-Mar Export Volume

1Q19 1Q20

250

300

-16.5% yoy

'-

100

200

300

400

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

233 261 260

300 282 297 267

295

1Q18 2Q183Q18 4Q181Q19 2Q193Q19 4Q19

‘000 Units


1Q19 1Q20

200

264

25 28

78 103

97 133

Thailand Domestic Car Sales Volume


15

Domestic Car Sales by Quarter Jan-Mar Domestic Sales

'-

150

300

450

600

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

246 238 260 264

295

257 252 237

31 28 31 28 35

34 33 29

93 99 104 103 109 101 100 90

122 111 126 133 151 123 119 118

1-Ton Pick-Up/PPV Passenger carsOther vehicles Total

‘000 Units -24.1% yoy


No. 1Q20 1Q19 %

1 Toyota 56,053 86,131 -34.9%

2 Isuzu 42,398 44,922 -5.6%

3 Honda 28,678 30,004 -4.4%

4 Mitsubishi 16,974 23,991 -29.2%

5 Nissan 13,504 18,958 -28.8%

6 Mazda 10,152 16,579 -38.8%

7 Ford 7,209 14,330 -49.7%

8 Hyundai 784 1,409 -44.4%

Others 24,312 27,225 -10.7%

Total 200,064 263,549 -24.1%

Brand

Thailand Total Industry Volume Jan-Mar

16

Source: Toyota

No. 1Q20 1Q19 %

1 Perodua 44,977 60,659 -25.9%

2 Proton 21,757 18,281 19.0%

3 Honda 11,100 22,190 -50.0%

4 Toyota 10,415 13,722 -24.1%

5 Nissan 2,747 5,166 -46.8%

6 Mazda 2,723 3,311 -17.8%

7 Mitsubishi 1,765 2,273 -22.3%

8 BMW 1,600 2,565 -37.6%

Others 9,344 14,897 -37.3%

Total 106,428 143,064 -25.6%

Brand

Malaysia Total Industry Volume Jan-Mar

17

Source: MAA

Financial Performance Q1 2020

Financial Highlights


19

Q1 2020 Key Financials

▪ Revenue increased by 16.50% year-on-year, with 25.01% increase in sales of automotive parts and 10.30% decline in dealership revenue.

▪ Cost of sales and services increased in accordance with higher sales. Gross profit margin as a percentage of sales was maintain at 8.86% in Q1 2020.

▪ Selling and administrative expenses were Baht 166 million higher than last year, due to consolidation of AAPICO Maia (Portugal) since Q4 2019.

▪ Gain on foreign currency exchange rate was at Baht 199 million, compared to a loss of Baht 33 million in Q1 2019, caused by exchange rate fluctuation.

▪ Net profit attributable to equity holders was Baht 321 million compared to Baht 217 million in Q1 2019. The major increased in the profit was due to lower loss sharing from associates and joint ventures and gain on foreign currency exchange rate.

3,000

5,250

7,500

9,750

12,000

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

5,464

4,603 4,759 4,479 4,576 4,416 4,283 4,496

Sale Interest Income one-time gainsOther Income Column1

AH Group : Revenue


20

THB million

1Q19 1Q20

5,217 4,479

Jan – Mar RevenueRevenue by quarter

Q12020

Other7%Car Dealerships

21%

Auto Parts72%

▪ Q1 2020 Revenue grew 16.5% YOY, with 25.01% increase in sales of automotive parts and 10.30% decline in dealership revenue.

▪ Gain on foreign currency exchange rate was at Baht 199 million, compared to a loss of Baht 33 million in Q1 2019, caused by exchange rate fluctuation.

+16.5% yoy

AH Group : Gross Profit


21

THB million

'- 0

150

300

450

600

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

10.9%

8.9%7.7%

8.9%9.9%

6.8%6.5%7.2%

571

383 356 375

423

284 260 309 7.2%

6.5% 6.8%

9.9%8.9%

7.7%8.9%

10.9%

1Q19 1Q20

8.9%

8.9%

430 375

Jan – Mar RevenueGross Profit by quarter

▪ Q1 2020 Gross Profit increased by 14.6% YOY in terms of amount and Gross Profit Margin was maintain at 8.9% in Q1 2020. Increase sales volume of new model, internal cost reduction activities and productivity improvement helped the company to maintain gross profit margin.

+14.6% yoy

▪ Q1 2020 sales grew by 25.0% YOY. The increase are from revenue contribution of AAPICO Maia (Portugal) which the company acquired in Q4 2019..


22

'- 0

2,000

4,000

6,000

8,000

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

10.1%

8.5%5.1%9.2%10.9%7.3%9.6%7.8%

3,794

2,9913,1282,9952,9012,5822,4732,685

Thailand Portugal China Sales EBIT%THB million

1Q19 1Q20

10.2%

9.2%3,744

2,995

Jan – Mar Sales & EBITSales and EBIT by quarter

Q12020

Others36%

NTPT2%AAM

2%FORD3%

Vinfast3% NISSAN

DANA 4%

AAT6%

CONTINENTAL8%

ISUZU31%

+25.0% yoy

Auto Parts

Car Dealers


23

'- 0

1,000

2,000

3,000

4,000

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

0.2%0.8%

0.3%

1.5%1.5%

1.5%1.5%1.3%

1,4401,321

1,484

1,2331,388

1,5871,5281,578

Thailand Malaysia SalesEBIT%

1Q19 1Q20

0.9%1.5%

1,1061,233

Q1 2020

Proton10%

Honda42%

Mitsubishi32%

Ford16%

THB million

Jan – Mar Sales & EBITSales and EBIT by quarter

-10.3% yoy

▪ Q1 2020 Sales declined by 10.3% year on year, mostly from lower car sales in both Thailand and Malaysia which was partly driven by coronavirus situation in March.

AH Group : EBIT & EBITDA Margin


24

-1,200 -900 -600 -300 '- 0

300 600 900

1,200

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

-447

564

301

517560468512461

EBIT Depreciation Column1

1Q19 1Q20

643517

408 368

Unit: as % of revenue

-14%

-7%

0%

7%

14%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

10.3% 11.9% 10.6% 12.2% 11.5%6.3%

12.3%

-8.2%

6.7% 8.0% 6.9%10.0% 8.2%

3.4%9.0%

-12.9%

EBIT% EBITDA%

1Q19 1Q20

11.5% 12.3%8.2% 7.8%

EBIT% EBITDA%

THB million+24.3%

yoy

*Excluded Share of profit (loss) from investments in associates and JV

AH Group : Net Profit

25

THB Million

'(1,800)

'(1,350)

'(900)

'(450)

'- 0

450

900

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

-742

204140216

295302305

397

AH and Subsidiaries Associates and JV Column1

1Q19 1Q20

321217

AH and subsidiariesAssociates and JVColumn1

Unit: as % of revenue

-14%-11%-7%-4%0%4%7%

11%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

8.8% 7.1% 6.8% 6.4% 4.8% 2.9% 4.4%

-13.6%

Net Profit %

1Q19 1Q20

4.8% 6.1%

Net Profit %

+48.1% yoy


AH Group : Financial Indicator

26

Return on Equity (ROE)

-40%

-23%

-5%

13%

30%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

ROE (In the Quarter) ROE (Seasonally adjusted)

-1.0%-2.4%11.0%12.4%14.4%17.7%19.8%18.9%19.5%19.5% 18.9%19.8% 17.7%14.4% 12.4%11.0%

-2.4% -1.0%

Return on Asset (ROA)

-20%

-11%

-3%

6%

15%

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

ROA (In the Quarter) ROA (Seasonally adjusted)

-0.3%-0.9%5.0%5.7%6.8%8.2%9.2%9.0%10.3%10.3% 9.0% 9.2% 8.2% 6.8% 5.7% 5.0%

-0.9% -0.3%

Interest Coverage Ratio (ICR)

-7.5-5.0-2.50.02.55.07.5

10.0

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

ICR (In the Quarter)ICR (Seasonally adjusted)

1.51.2

4.65.46.57.78.88.59.19.1 8.5 8.8 7.7 6.5 5.4 4.6

1.2 1.5

Debt to EBITDA

-6.0-4.0-2.00.02.04.06.08.0

1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Debt/EBITDA (In the Quarter)Debt/EBITDA (Seasonally adjusted) 7.57.8

2.93.02.72.82.72.92.12.1 2.9 2.7 2.8 2.7 3.0 2.9

7.8 7.5


AH Group : Net gearing

27

▪ Net interest-bearing debt to equity ratio as of March 2020 was 1.20x, compared to 1.11x as of December 2019.

▪ Total liabilities net cash (Net debt) to equity ratio as end of March 2020 was 1.88x,.

LT Bond24%

LT Loan25% CPD

3%

CPLTD15%

ST Loan33%

Interest-bearing Debt

Interest-bearing debts as of March 2020 was THB 9.3

billion.

Unit: in THB Billion

0.0

0.5

1.0

1.5

2.0

0.0

2.0

4.0

6.0

8.0

10.0

2016 2017 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

Debts Equity D/E (L-C)/E

1.881.77

1.151.221.211.181.010.910.920.99

0.74

1.201.11

0.770.830.800.800.620.560.600.69

0.40

0.74

0.99 0.92 0.91 1.011.18 1.21 1.22 1.15

1.771.88

0.40

0.69 0.60 0.56 0.620.80 0.80 0.83 0.77

1.11 1.20


Strategy & Direction

Thailand Automotive Outlook in 2020


29

'-

1,250,000.0

2,500,000.0

3,750,000.0

5,000,000.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

1,330,000.00

2,013,710.002,167,694.001,988,823.001,944,417.001,913,002.001,880,007.00

2,457,057.002,453,717.00

1,457,795.001,645,304.00

999,378.00

1,394,029.001,287,346.001,188,044.001,125,316.00928,081.00

750,512.00584,951.00459,418.00

Production Domestic Export ForecastUnit: Million

Export growthGlobal

Financial Crisis

Flood

First car campaign


Thailand automotive industry in 2020 is expected car production volume to be at 1.33 million cars, of which 665,000 cars to be sold locally and 665,000 cars for

export.

-7.1%

Continued orders going forward


30

Confirmed orders – 5 years for cars and 10-12 years for pick-up truck

ISUZU D-Max Mu-X

NissanNavara Terra

TOYOTA Hilux Revo Fortuner

FORDRanger Rapter Everest

MitsubishiTriton Pajero Sport

Honda City

HRV BRV

ToyotaHRV Camry

Altis Vios Yaris

MazdaMazda 2

BT-50 PRO

NissanTeana Almera

Syphy Note March

FORDFiesta Focus

Eco Sport

China #1

USA #2

Japan #3

Germany #4

India #5

Mexico #6

S.Korea #7

Brazil #8

Spain #9

France #10

Thailand #11

Millions

20192018

Global Business Opportunities


31

2019

Africa1%

America22%

Europe23%

Rest of Asia8%

Thailand2%

India5%

Japan11%

China28%

Source: OICA

Top 10 Motor Vehicle Production Country in 2019

2019 Global Production Volumewas 92 million units

Major OEM Brands in Thailand

Thailand Volume 2 Million

Business Strategy


32

CHINAINDIA

EUROPE

USA JAPAN

THAILANDMALAYSIA

Key Milestones


33

Taking steps toward globalization

2017-2018• Established strategic global partnership with Sakthi Group and invested US$100 million for 25.1% stake in Sakthi Global Auto Holding Limited (SGAH).

• Increased equity holding in SGAH from 25.10% to 49.99% with total investment of US$65 million

• Established Proton Dealership in Malaysia (49%)

2013-2016

2008-2012

2005-2007

2002-2004• Listed on SET.

• Acquired a chassis frame factory from Dana Corporation.

• Expanded to China.

• Established strategic global partnership with Sojitz Corp.

• Established JV with Mitsuike Corp.

• Acquired forging business from KPN.

• Established JV with Minth Corporation.

• Established JV with Takagi Seiko.

• Completed construction of 3S showroom in Malaysia.

• New factory in Kunshan (China) started operation.

• Established JV with; ▪ Lemtech (Taiwan) ▪ Edscha

(Germany) ▪ Sumino (Japan) ▪ Sodecia (Portugal)

• Explored opportunity in the start-up business.

• Established AAPICO Training Center.

• Issued bond with a BBB+ credit rating.

• Achieved 4-star CG rating.

2019

• Established Vroom a 40% joint venture with business of the distribution & retail of KTM, Husqvarna and Bajaj brand motorcycles.

• Appropriated 50.01% shares of SGAH, now holds 100% of SGAH shares

• Acquired 100% shares of AAPICO Maia, S.A. (Portugal) and two subsidiaries

Global Footprints


34

Detroit, USA

Coimbatore/Erode, India

Rushan, China

Porto, Portugal

Thailand Malaysia Singapore

Kunshan, China

London, UK

AAPICO Facilities

Other JV partners

Japan

Taiwan

Germany

New York, USA


35

Loan moratorium In April 2020, the Company received a letter to grant a grace period of 6 months for loan repayment from a bank, in response to COVID- 19.

Events after Q1 2020

Key focus points


36

1. Net Profit increase due to lower loss sharing from associates and joint ventures and gain on foreign currency exchange rate.

2. Fair financial position with good governance and credit rating.

3. Clearer direction regarding the Sakthi’s transaction

4. Operational efficiency gradually improved.

5. Global expansion of AAPICO is established.

Effect of Covid-19


37

1. Market forecast is production will be severely down. Hence cash flow planning is very important at this time. 2. Profit will be seriously impacted in 2020. After Q2, profit guidance would be clearer. 3. China auto market has recovered. Domestic market is strong. Car industry do not depend on export. We see a small 12 percent drop from forecast. Cash flow of china operations is stable and self sustainable. 4. Malaysian dealership operations are affected as revenue will drop significantly. However, cash flow and reserves are strong and sustainable 5. Portugal cash flow is improved due to the government support paying up to 80 percent of all staff salaries. Banking support is strong as government passed regulations for banks to support all industries and compulsory moratorium for bank loan repayments

Effect of Covid-19


38

6. Hence, Aapico has time to focus more on local operations. 7. Cost reductions, stock reduction, quicker cash collections, headcount reductions are being actioned and aligned to the reduced forecasted revenue. 8. Focus on health and safety of associates is our primary objective. We had zero infection for our Group of 6000 employees as we practiced social distancing early. Strict discipline was also enforced. 9. April, May and June will be the lowest point in our business operations. We expect to be in the loss territory. The forecast from customers is a very gradual increase going forward from July onwards.

Guidance for 2020


39

1. Thailand Car Industry - Down

2. Dealership car sale - Revenue down

3. Profit - Still uncertain but very much below the budget. Clarity will be more visible after Q2.


41

Significant matters in Q1 2020

1. The Company has adopted the revised (revised 2019) and new financial reporting standards and interpretations which are effective for fiscal years beginning on or after 1 January 2020, which were comprised of • Financial reporting standards related to financial

instruments • TFRS 16 Leases

2. Accounting Guidance on Temporary Relief Measures for Accounting Alternatives in Response to the Impact of Coronavirus Disease 2019 (COVID-19) Pandemic

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